Between Demolition and Development: The Impact of Slum Demolitions on Housing Prices in the Makkah Region

Abstract

This study examines the causal impact of slum demolitions on housing prices in Saudi Arabia’s Makkah region, where clearance initiatives were implemented as part of broader economic and infrastructural reforms. Employing the Synthetic Control Method (SCM) as the primary identification strategy, alongside robustness checks via Synthetic Difference-in-Differences (SDID) and standard Difference in-Differences (DiD) models, the analysis finds consistent post-demolition price surges. SCM estimates a 13.3% nominal increase (≈275 SAR/m2), while SDID andDiDreportcomparableeffectsof252.31SAR/m2 (0.117logpoints)and328.33 SAR/m2 (0.05 log points), statistically significant at the 5% and 1% levels, respec tively. The results contribute to a growing body of literature linking demolition-led urban renewal to housing market restructuring.