How to work out residual land value in Saudi Arabia

Residual land value is what is left for the land once you take construction, profit, fees and finance off the gross development value. In Saudi Arabia, only one of those five inputs is published as a price.

That input is the sale price of finished homes. REGA's Q3 2025 Riyadh file puts Al Malqa apartments at SAR 9,305.7/sqm on 45 deeds, and residential land in the same district at SAR 6,846.9/sqm on 63 (REGA / MOJ). Construction cost has no price at all. GASTAT's Construction Cost Index stood at 103.99 in July 2026, up 2.26% on a year earlier. That tells you how fast costs move, with no price per metre attached (GASTAT).

Key figures at a glance

What the calculation needs, and what is published

Registered deeds give you the gross development value. Cost comes only as an index: GASTAT says it "quantifies changes in construction costs", with no price behind it (GASTAT). Fees come as percentages, and only turn into riyals once you fix a density and a holding period. Finance is not published at all.

Profit is harder. Retal booked a 24.9% gross margin in FY2025, but 98.15% of its revenue came from development contracts, so that is a contractor's margin (Retal). Dar Al Arkan sells units off land held at historic cost. It booked 47.3% in the same year, and financing expense took 56.3% of its gross profit (Dar Al Arkan). We would borrow neither. A profit line is an assumption about a business model, the same debate as yield on cost against cap rate. The construction cost index can only move an old build rate forward in time.

How REGA calculates its land price

REGA's per-metre average is not total value divided by total area. REGA describes it as a mean of per-deed prices "after excluding outliers". Its own FAQ says it "does not show the actual price per square meter of the property" (REGA, page last modified 25 Jun 2026).

You can test this in the quarterly files. Divide a Riyadh row's total value by its total area and compare it with the mean REGA prints. For apartments the two agree to within one part in a thousand: 5,856.19 against 5,861.71 in Q1 2026, and 5,729.07 against 5,732.61 in Q4 2025 (REGA / MOJ). For land they do not. The gap was 45.2% in Q4 2025 and 84.4% the other way in Q1 2026, because a few very large plots on the edge of the city pull the value-weighted rate around (total value divided by total area, so big deeds count for more).

At district level nothing reconciles, apartments included. In the Q3 2025 file, 34 of 49 apartment cells sit more than 2% away from their own value over area. Al Malqa's apartment price is 5.7% above the value-weighted rate, and its land price 10.8% below (REGA / MOJ). So we calibrate on the city apartment row, which passes the test twice, and never on a published land average.

Two more limits. REGA publishes nothing below six deeds (REGA). And the district column drops out of the open data after Q3 2025, which is why every district figure here is from that quarter.

Land is not a fixed share of value

The Q3 2025 data also breaks a common rule of thumb. In the 29 Riyadh districts with both a land price and an apartment price, the median land metre is worth 0.58 of an apartment metre, and the spread between districts is wide (REGA / MOJ; district detail on Riyadh land prices by district).

The idea that land is worth 20% to 30% of gross development value comes from other markets. It also mixes two things: a metre-for-metre ratio only becomes a share of value once you fix a density.

In three districts land costs more per metre than the finished flat. Al Qirawan is at 1.77 times on 11 land deeds, Al Nada 1.30 on 7 and Hittin 1.17 on 6. A low-density scheme cannot pay those prices, so buyers there are betting on density. GASTAT's national index points the same way: at Q2 2026 residential plots were up 6.3% on the year and apartments 1.1% (GASTAT).

An Al Malqa plot, worked backwards

Al Malqa had 63 land deeds and 45 apartment deeds in Q3 2025, one of the few Riyadh districts with depth on both sides. Working forwards needs a build rate nobody publishes, so we start from the two prices REGA does give and see what is left over.

Omran estimate: what Al Malqa leaves for building and everything else, Q3 2025. Assume a plot ratio of 2.0 (two square metres of floor space for every square metre of land) and that 0.75 of that floor space is sellable, the rest being cores, corridors and walls. Sales then come to 1.5 times the apartment price per metre of site. Take off the land price and spread the remainder over the floor area: that leaves SAR 3,556 per sqm of gross floor area to cover construction, fees, finance and profit. At a plot ratio of 1.0 it leaves SAR 132, and the deal does not work. Derivation: Omran arithmetic on the two REGA cells above. Plot ratio and sellable share are our assumptions; no Saudi source publishes them.

Now hold that allowance fixed and ask what the land is worth when one assumption changes.

Density is the biggest lever, and the public record does not give it to us. It also explains how two bids on the same plot end up far apart. Give a second bidder a plot ratio of 2.5 and an apartment price 2.5% higher, with the same allowance, and he can pay SAR 8,994.8 per sqm of site, 31% above the market price, without disagreeing with anyone about a published number.

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

Both are published as rates. ZATCA has charged a 5% real estate transaction tax since 10 April 2025 (ZATCA). The Riyadh white land tiers announced on 27 August 2025 go up to 10% of land value a year (MOMRAH). Neither becomes an amount until you fix a density and a holding period.

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

The fee works differently. Riyadh invoices it from 1 January 2026 (MOMRAH). Since 25 August 2026, no transfer of land covered by the law is notarised until its fees are paid (MOMRAH). An accrued white land fee now blocks the sale itself. The seller cannot sell until it is cleared, so the buyer's bid drops by that amount.

Omran estimate: what the two cost on the worked plot. At a plot ratio of 2.0, gross development value is SAR 13,959 per sqm of site. A 5% tax on unit sales is SAR 698 per sqm of site, or 10.2% of the land value. On land at the district's Q3 2025 price, the top announced fee tier costs SAR 685 per sqm a year. Two years of holding before construction starts is SAR 1,369, or 20% of the land's 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 we do not claim a tier for Al Malqa.

Where the public data stops

Four inputs have no Saudi source: a build rate per square metre for any grade or city, the plot ratio and setbacks for a given site, a benchmark for the sellable share of a building, and a development finance rate. Developers do not publish a forward hurdle rate either, only realised margins after the fact.

VAT is a hidden fifth. Home sales are exempt (ZATCA), so a developer gets VAT on construction back only if the housing ministry has approved him for the refund scheme (ZATCA). Two bidders, one approved and one not, will price the same plot differently.

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

Our advice: write the density and efficiency ratio on the face of every bid. For the full Riyadh table, each district with its deed count and reconciliation test, ask us for the underlying table.

FAQ

Which residual land value inputs can I source in Saudi Arabia? Only gross development value, from REGA and Ministry of Justice deed prices. Al Malqa apartments sold at SAR 9,305.7/sqm on 45 deeds in Q3 2025. Cost is an index, profit is two audited margins 22 points apart, and finance is not published.

Where do I get a Saudi construction cost per square metre? Not from the public record. GASTAT's index reached 103.99 in July 2026 and only measures how costs move. 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 not. In Q3 2025 Al Qirawan's land metre was 1.77 times its apartment metre, Al Nada 1.30 and Hittin 1.17, on 6 to 11 land deeds each. At those prices, buyers are betting 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 it on the seller, then notes the buyer customarily pays. On the Al Malqa plot it equals 10.2% of the land value, so state which convention you assumed.

Does the white land fee change what I can pay for a plot? Yes. At Al Malqa's Q3 2025 land price, the top announced Riyadh tier is SAR 685 per sqm a year, so two years of holding costs 20% of the land's value. Since 25 August 2026, no transfer is notarised until the fee is paid. You 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