Saudi Arabia’s real estate market is showing a remarkable growth, with Riyadh driving the surge in economic expansion. Grade A office rents in Riyadh increased by 20.8% year-on-year, reaching SR2,131 ($567.31) per square meter in Q3 2024. This growth underscores the city’s transformation into a global business hub, fueled by private sector initiatives and government support. A recent analysis from JLL reveals that demand for premium office spaces has pushed vacancy rates to a historic low of 1.6%. Economic diversification strategies are enhancing Riyadh’s appeal, attracting both local businesses and international investors.
Economic Diversification Fuels Demand
Saudi Arabia’s economic diversification efforts are boosting Riyadh’s real estate sector. The non-oil sector’s projected 5% growth in 2024 supports this trend. Foreign direct investment increased by 23.4% in Q2 2024, totaling SR11.7 billion. Over 120 foreign companies, including Goldman Sachs and Frost & Sullivan, have established regional headquarters in Riyadh this year. This influx underscores strong investor confidence in the Kingdom’s market.
Northern Riyadh is becoming increasingly popular among businesses. Its superior accessibility and high-quality developments attract occupiers seeking efficient workspaces. Ample parking facilities in this area help mitigate rising traffic congestion. This makes it a strategic choice for companies aiming for long-term regional presence.
Jeddah’s Market Rise Amid Tourism Boom
Jeddah’s Grade A office rents increased by 11.6% year-on-year, reaching SR1,338 per square meter. The city maintains a low vacancy rate of 3.7%, reflecting strong market demand. This trend indicates broader real estate market strength across Saudi Arabia’s key cities.
Saudi Arabia’s hospitality sector is experiencing impressive growth. High-profile events and expanding tourism infrastructure fuel this trend. International leisure and entertainment arrivals surged by 656% in the first seven months of 2024.
The Kingdom’s hotel market is expected to reach US$15.40 billion in 2024. It is projected to grow at a CAGR of 6.55% to US$27.26 billion by 2033.
Residential Market Shows Strong Performance
Riyadh added 4,000 new residential units in Q3 2024, bringing the total to 1.46 million. Jeddah saw 8,000 new units, increasing its stock to 899,000 units. Residential property prices rose by 12% year-on-year in Riyadh and 6% in Jeddah. This growth reflects strong demand and shifting buyer preferences in the housing market.
Saudi Arabia’s commitment to economic diversification is evident. The combination of rising office rents, a booming hospitality sector, and a growing residential market presents immense opportunities. Investors and businesses alike stand to benefit from the Kingdom’s dynamic environment.
