Tracing the COVID-19 Footprint: A Sectoral Interrupted Time Series Analysis of Real Estate Price Dynamics in Saudi Arabia

Mesbah Fathy Sharaf (), Abdelhalem Mahmoud Shahen () and Mansour Alharaib ()
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Mesbah Fathy Sharaf: University of Alberta, Edmonton, Canada
Abdelhalem Mahmoud Shahen: Imam Mohammad Ibn Saud Islamic University (IMSIU)
Mansour Alharaib: Imam Mohammad Ibn Saud Islamic University (IMSIU)

No 1781, Working Papers from Economic Research Forum

Abstract: This study traces the impact of the COVID-19 pandemic on real estate price dynamics in Saudi Arabia through a sectoral analysis of residential, commercial, and agricultural markets. Using an Interrupted Time Series (ITS) approach on quarterly data from 2015Q1 to 2024Q3, it identifies structural shifts in price behavior before, during, and after the pandemic. The model integrates key macroeconomic variables such as inflation, unemployment, and SAIBOR, and explores sector-specific responses. Results show that prices fell across all sectors during the pandemic, with the steepest drop in commercial real estate. Residential and commercial prices rebounded post-pandemic, while agricultural prices remained relatively stable. Government-led housing initiatives and infrastructure spending supported recovery, especially in the residential sector, whereas interest rate cuts eased the downturn but were less influential. Inflation and unemployment, however, continued to suppress demand and affordability. Robustness checks confirm the consistency of results under alternative specifications. The study underscores the importance of tailored policy measures, such as expanding affordable housing and regulating commercial lease terms. It also highlights the role of inflation and labor market stability in shaping long-term real estate outcomes. This is among the first studies to provide sectordisaggregated evidence on COVID-19 s real estate effects in a Gulf economy.

Pages: 27
Date: 2025-07-20, Revised 2025-07-20
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Published by The Economic Research Forum (ERF)

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