Residual Land Value Calculation: The Saudi Inputs

A residual land value calculation is gross development value minus construction cost, profit, fees and finance, and in Saudi Arabia exactly one of those five terms is published as a level. REGA's Q3 2025 Riyadh file prices residential land in Al Malqa at SAR 6,846.9/sqm on 63 deeds and finished apartments in the same district and quarter at SAR 9,305.7/sqm on 45 (REGA / MOJ). The cost side has no price at all: GASTAT's Construction Cost Index stood at 103.99 in July 2026, up 2.26% year on year on a 2023 base, and measures movement with no SAR/sqm behind it (GASTAT).

Key figures at a glance

What a residual land value calculation needs, and what the Kingdom publishes

Five inputs, one published level. Registered deeds give the gross development value, at Al Malqa SAR 9,305.7 per apartment metre on 45 deeds in Q3 2025 (REGA / MOJ). Cost is an index of movement: GASTAT's index "quantifies changes in construction costs" and carries no price behind it (GASTAT). Fees are published as rates, never as amounts. Finance is not published at all.

Profit is the awkward one. Retal booked a 24.9% gross margin in FY2025 on revenue that is 98.15% development contracts, so that is a contracting margin (Retal). Dar Al Arkan, selling units off land carried at historic cost, booked 47.3% in the same year, and financing expense alone took 56.3% of its FY2025 gross profit (Dar Al Arkan). Borrow neither. A profit line is an assumption about a business model, and it is the same argument as yield on cost against cap rate read from the other end. The construction cost index is an escalator, not a rate.

The Saudi price everyone calibrates against, and reads wrong

REGA's per-metre average is not value divided by area, and on the Riyadh land line that distinction is worth 45.2% in Q4 2025. REGA calls the figure a mean of per-deed metre prices "after excluding outliers", and its own FAQ says it "does not show the actual price per square meter of the property" (REGA, page last modified 25 Jun 2026).

Test that against the quarterly files. Divide a Riyadh-city row's published total value by its published total area and compare the answer with the mean REGA prints on the same row. Apartments come out at 5,856.19 against a published 5,861.71 in Q1 2026 and 5,729.07 against 5,732.61 in Q4 2025, agreement to one part in a thousand, twice (REGA / MOJ). Land does not come out at all: 45.2% adrift in Q4 2025 and 84.4% the other way in Q1 2026, because a few very large peripheral plots drag a value-weighted rate where a per-deed mean never goes.

Go down to district grain and nothing reconciles, apartments included. In the Q3 2025 Riyadh file 34 of 49 apartment cells sit more than 2% from their own value over area, Al Malqa's published apartment metre 5.7% above the value-weighted rate and its land cell 10.8% below (REGA / MOJ). So calibrate on the city apartment row, the one Saudi price statistic that survives its own arithmetic twice, and never on a published land average, the cell a land model reaches for first. REGA publishes nothing below six deeds (REGA), and the district column disappears from the open-data release after Q3 2025, which is why every district figure below carries that quarter and no fresher one.

That quarter also kills a rule of thumb. Across the 29 Riyadh districts publishing both a residential land price and an apartment price in Q3 2025, the median plot metre is 0.58 of the finished apartment metre, 0.51 across the ten with at least 20 deeds a side, and the full range runs 0.19 to 1.77 (REGA / MOJ; the district cells are laid out on Riyadh land prices by district). Land at 20% to 30% of gross development value is a rule imported from another market, and it confuses two quantities: a metre-for-metre ratio only becomes a share of gross development value once a density is fixed. Three districts price land above the finished product: Al Qirawan at 1.77 times its apartment metre on 11 land deeds, Al Nada 1.30 on 7, Hittin 1.17 on 6. A low-density residual is arithmetically impossible there, so those prices are coherent only as a bet on density. The national index tilts the same way. At Q2 2026 the residential plot line reads 107.65, up 6.3% year on year against apartments at 101.43, up 1.1% (GASTAT), while the construction input basket moved 2.26% to July 2026 (GASTAT).

An Al Malqa plot, worked backwards

Al Malqa in Q3 2025 carries 63 land deeds against 45 apartment deeds, one of the few Riyadh districts deep on both sides that quarter. Forwards, the formula needs a build rate nobody publishes. Backwards, the market prices the unknown for you.

Omran estimate: the all-in allowance at Al Malqa, Q3 2025. At a plot ratio of 2.0 and a net-sellable-to-gross ratio of 0.75, (2.0 x 0.75 x 9,305.7 - 6,846.9) / 2.0 leaves SAR 3,556 per sqm of gross floor area for construction, fees, finance and profit combined. At a plot ratio of 1.0 the same arithmetic leaves SAR 132, which is to say the deal is impossible. Hold that allowance and solve for land instead. A 10% rise in the apartment price lifts the residual land value 20.4%, to 8,243 per sqm of site; a 10% rise in the allowance cuts it 10.4%, to 6,136; half a storey of plot ratio moves it 25.0% either way, to 5,135 at 1.5 and 8,559 at 2.5. Density is the largest lever in the calculation and the one input the public record would not give us. Derivation: Omran arithmetic on the two REGA cells above; the plot ratio and the efficiency ratio are stated assumptions, published by no Saudi source.

Two bidders 30% apart on one plot is not evidence that either is wrong.

Omran estimate: where a 30% spread comes from. The base bid is the market's own land price, SAR 6,846.9 per sqm of site at a plot ratio of 2.0. Move the second bidder to 2.5 and 2.5% more on the apartment price, holding the same SAR 3,555.8 allowance per sqm of gross floor area: 2.5 x 0.75 x 9,305.7 x 1.025 = 17,884.4 of gross development value, less 2.5 x 3,555.8 of allowance, leaves SAR 8,994.8 per sqm of site. The two bids sit 31% apart on two assumptions and no disagreement about any published number. Derivation: Omran arithmetic on the two REGA cells and the allowance above; the plot ratio, the efficiency ratio and the price uplift are stated assumptions.

Density and price make that spread. The tax and the fee do not, and a "30%" quoted without naming the two assumptions behind it is a mood.

What the 5% tax and the white land fee take out

Two deductions are published as rates and never as amounts. ZATCA has charged the 5% real estate transaction tax to the seller since 10 April 2025 (ZATCA), and the Riyadh white land tiers announced on 27 August 2025 reach 10% of land value a year (MOMRAH). Both rates are knowable before a bid. Neither becomes an amount until a density and a holding period are fixed.

On the tax, ZATCA is explicit that "the general rule is that the tax collection is the responsibility of the Assignor (Seller)", while recording in the same guideline that "it is customary in practical reality" for the buyer to bear it (ZATCA, Version 6, May 2026). A UK or US template deducts acquisition tax above the line as a buyer's cost. In Saudi Arabia it belongs in the vendor's net receipt unless the contract moves it, which is where an imported real estate transaction tax line goes wrong.

The fee behaves differently again. Riyadh's tiers are invoiced from 1 January 2026 (MOMRAH), and since 25 August 2026 no transfer of land subject to the law is notarised until the fees on it are paid (MOMRAH). That converts an accrued white land fee from a soft holding cost into a settlement-day deduction: the seller cannot convey until it is cleared, so the buyer's bid moves by the accrued amount.

Omran estimate: what those two lines cost on the worked plot. At a plot ratio of 2.0 the gross development value is SAR 13,959 per sqm of site, so 5% on the unit sales is SAR 698 per sqm of site, 10.2% of the residual land value. On land valued at the district's published Q3 2025 rate, the top announced tier costs SAR 685 per sqm a year, and two years of holding before a spade goes in is SAR 1,369, 20% of the land's own value. Derivation: Omran arithmetic on the REGA cell and the published rates. The fee is assessed on a value set by MOMRAH's licensed appraisers, not on a district transaction mean, and no tier is claimed here for Al Malqa.

Where the published record stops

Four inputs have no Saudi source at all: a build rate in SAR per square metre at any grade in any city, the plot ratio and setbacks for a given site, a net-to-gross efficiency benchmark, and a development finance rate. Nor is a developer's forward hurdle published, only an accountant's realised margin after the fact. A fifth deduction hides off the face of the formula: real-estate supplies are VAT-exempt under Article 30 of the Implementing Regulations (Eighth Edition, 09/11/2021), so a developer recovers input VAT on construction only once the housing ministry has approved him as an Eligible Real Estate Developer under Article 70(14) (ZATCA). Two bidders, one registered and one not, price the same inputs differently.

Omran escalation method, in place of a published rate. Take a build rate you already hold, name the month it was priced in, and move it by the ratio of the cost index in the target month to the index in the benchmark month. July 2025 to July 2026 is 103.991292 / 101.694822 = 1.02258, or +2.26%. Where the cost plan is not shaped like the national basket, escalate each block by its own section index and reweight: basic materials carry 48.5% of the index, labour 29.9%, equipment rental 19.0%, energy 2.5%. Label the output an escalation of a dated benchmark, never a Saudi build rate. Derivation: Omran method on GASTAT's index levels and Table 2 weights.

None of this is a complaint about the Saudi record. A quarterly deed price by district, with its transaction count printed beside it, is a serious public statistic, and it is candid enough to fail its own reconciliation test in front of you. It stops where a bidder starts earning his fee. The residual to distrust is the one that hides that stop behind a single confident land value, and the fix costs nothing: write the density and the efficiency ratio on the face of the bid. For the Riyadh table behind this page, every district cell with its deed count and its own reconciliation test, ask us for the underlying table.

FAQ

Which residual land value inputs can I source in Saudi Arabia? Only the gross development value, from REGA and Ministry of Justice deed prices: Al Malqa apartments at SAR 9,305.7/sqm on 45 deeds in Q3 2025. Cost is an index of movement, profit is two audited margins 22 points apart, finance is nothing.

Where do I get a Saudi construction cost per square metre? Nowhere in the public record: GASTAT's index reached 103.99 in July 2026 on a 2023 base and measures change, not level. Escalate a dated benchmark you already hold by the ratio of the index in the two months.

Land in my district trades above the finished apartment. Is the market wrong? Probably neither side is. Al Qirawan printed a plot metre 1.77 times its apartment metre in Q3 2025, Al Nada 1.30 and Hittin 1.17, each on 6 to 11 land deeds, and at those ratios the price is only coherent as a bet on density.

Who pays the 5% transaction tax on a Saudi land purchase? The seller, in law: ZATCA's Detailed Guideline (Version 6, May 2026) puts collection on the assignor, then notes that agreements customarily shift it to the buyer. On the Al Malqa plot that 5% is 10.2% of the residual land value, so say which convention you assumed.

Does the white land fee change what I can pay for a plot? Twice over. On land valued at Al Malqa's published Q3 2025 rate the top announced Riyadh tier is SAR 685 per sqm a year, so two years of holding costs 20% of the land's own value. Since 25 August 2026 it also blocks the exit: no transfer is notarised until the fee is paid, and any party can check an outstanding fee by deed number on MOMRAH's portal before bidding.

Sources

• REGA / Ministry of Justice, Riyadh quarterly sales indicators, Q3 2025 to Q1 2026: link
• REGA, Real Estate Indicators Platform (definition of the per-metre average): link
• REGA, data refinement and verification mechanism (six-deed floor, IQR trimming): link
• GASTAT, Construction Cost Index July 2026 (levels, sections, weights): link
• GASTAT, Construction Cost Index FAQ (what the index measures): link
• GASTAT, Real Estate Price Index Q2 2026 (plot and apartment lines): link
• ZATCA, RETT Detailed Guideline, Version 6, May 2026 (rate, incidence, exemptions): link
• ZATCA, VAT refund guideline for eligible real estate developers, Third Edition, May 2026: link
• ZATCA, Implementing Regulations of the VAT Law, Eighth Edition, 09/11/2021 (Article 30): link
• MOMRAH, Riyadh white land tiers, 27 August 2025: link
• MOMRAH, first Riyadh invoice from 1 January 2026: link
• MOMRAH, notarisation conditional on paid fees, 25 August 2026 (Arabic): link
• MOMRAH, White Land Fees programme statement (enforceable instrument; fee lookup by deed number): link
• Retal Urban Development, Integrated Annual Report 2025: link
• Dar Al Arkan, Annual Report 2025: link