Saudi Arabian Crown Prince Mohammed bin Salman ordered a freeze on rent increases in the capital of Riyadh for the next five years, just weeks afte...

Saudi Arabian Crown Prince Mohammed bin Salman ordered a freeze on rent increases in the capital of Riyadh for the next five years, just weeks after vowing to halt an “unacceptable” rise in property prices.

The new rules are part of a fresh directive to regulate the market and will take effect as of Thursday on both residential and commercial properties, according to the state-run Saudi Press Agency

Rent for vacant space will be fixed according to the last price, while lease costs on new properties will be based on deals between landlords and tenants, SPA said.

The freeze comes as Prince Mohammed’s government grows increasingly concerned about the impact of surging Saudi real estate values on cost of living in the capital. High house prices and rents are undermining affordability, so much so that the Riyadh market saw a slowdown in deals for the first time in years in the first half of 2025, according to Knight Frank.

“Any measures to help bridge the gulf between affordability and current market rates is a welcome move,” said Faisal Durrani, head of Middle East research at the real estate consultancy.

Apartment rents in Riyadh jumped 15% in the first six months of 2025 from a year earlier, while villa rates climbed 8%, according to Matthew Green, head of Middle East and North Africa research at CBRE Group Inc.

In the commercial space, lease rates have jumped at an average annual rate of 20% over multiple years, he said. “We’re probably quite close to the peak of the rental cycle,” Green said.

To address the shortage in supply across commercial and residential properties, the kingdom recently cracked down on land owners sitting on idle plots. New rules stipulate that anyone hoarding undeveloped land in excess of 5,000 square meters will see their annual tax rate quadruple to 10% in high-priority areas in Riyadh unless they begin developments.

Saudi Arabia will also introduce a new annual levy of as much as 5% on vacant or unused buildings.

About 20,000 homes being built are set for completion in Riyadh this year and another 60,000 are set to be completed through 2027, according to CBRE data.

The firm expects about 600,000 square meters of commercial space to be added next year.

“Probably the freeze will have less impact now as the delivery of supply on both the commercial and residential sides is starting to ramp up,” Green said.