Saudi Arabia’s non-oil sector expanded by 4.3% in the year to the third quarter (Q3) of 2024, according to CBRE Middle East. Matthew Green, Head of Research MENA, highlighted the government’s investment drive, attracting global businesses to the Kingdom.
“This has significantly benefited Riyadh’s real estate market, with office occupancy near capacity and residential property availability remaining tight,” Green said. He noted that new supply will emerge in late 2025, but current market dynamics will persist for now.
Office Market Faces Tight Supply
The Saudi Arabia Real Estate Market Review Q3-2024 emphasized that Riyadh remains the focal point for office demand. Other cities, like Jeddah and Khobar, showed slower activity due to concentrated government investments.
Office rental rates in Riyadh rose sharply, with Prime, Grade A, and Grade B segments increasing by 6%, 14%, and 19%, respectively. Jeddah also saw significant growth, with Grade A and Grade B rentals increasing by 5% and 21%, respectively.
To address the lack of office space, landlords are repurposing retail properties into flex and serviced offices, providing quicker solutions.
Residential Sector Remains Resilient
Saudi Arabia’s residential market showed robust demand, with transaction volumes rising in major cities. Riyadh witnessed a 31% year-on-year increase in sales, reaching 24,000 transactions by Q3-2024. Dammam outperformed with a 37% growth, totaling 3,200 transactions.
Average villa prices in Riyadh climbed by over 5%, reaching SAR 6,000 per square meter, with further increases expected in 2025. Apartment prices grew by 4% year-on-year, averaging SAR 5,000 per square meter. Jeddah saw slightly lower apartment values but higher villa prices, averaging SAR 5,800 per square meter.
Tourism Drives Hospitality Growth
Saudi Arabia welcomed 60 million tourists in the first half of 2024, showcasing solid growth in its tourism sector. While occupancy rates softened, Average Daily Rates (ADRs) and Revenue Per Available Room (RevPAR) rose by 2.3% and 0.7%, respectively.
Dammam and Jeddah led occupancy growth as the Kingdom continues leveraging tourism under Vision 2030 to drive economic and social development. Annual visitor numbers are expected to surpass last year’s figures comfortably.
Industrial Investments Accelerate
The Saudi Authority for Industrial Cities and Technology Zones (MODON) signed SAR 2 billion deals with ALBADDAD for two new industrial cities in Makkah and Al Kharj. These projects will enhance exports to regional and global markets, creating jobs and advancing the National Industrial Development and Logistics Program (NIDLP).
Launched in 2019, NIDLP aims to position Saudi Arabia as a global hub for energy, mining, industry, and logistics sectors. This initiative continues driving industrial development, boosting exports, and creating employment opportunities.
