Saudi Arabia: The real estate market in Riyadh is experiencing significant growth, with average rents for office spaces rising 18 percent year on year in the fourth quarter of 2024, according to an analysis. 

In its latest report, real estate services firm CBRE said that average rates in Jeddah and Dammam also witnessed a rise of 10 percent and 12 percent year on year over the same period.

The rapid increase in average rents for office space in Riyadh signifies the city’s expanding economic activity, driven by both a thriving private sector and ongoing government initiatives aimed at positioning the capital as a global business and investment hub.

It also underscores the progress of Saudi Arabia’s growing real estate sector which is expected to reach a market value of $101.62 billion in 2029, with an anticipated compound annual growth rate of 8 percent from 2024. 

“The high occupancy rates across the capital’s prime office districts reflect the strong prevailing demand, driven by the Kingdom’s thriving non-oil economy which is a key component of the government’s Vision 2030 diversification strategy,” said CBRE. 

It added: “Despite the rapidly rising rents, global occupiers and investors remain attracted to the Kingdom, as reflected in the continuation of the RHQ (regional headquarters) license growth through the fourth quarter of 2024.” 

In January, Saudi Arabia’s Investment Minister Khalid Al-Falih said that 571 international companies have opened Middle East bases in the Kingdom — exceeding the original target of 500 firms by 2030. 

The regional headquarters program provides benefits for international firms, including a 30-year exemption from corporate income tax and withholding tax on headquarters’ activities for companies, as well as discounts and support services.

“Saudi’s real estate market continues to benefit from the country’s strong non-oil sector and wider investment environment, driven by the highly successful RHQ initiative which continues to see the setup of new regional headquarter offices, supporting growth not only in the commercial market but across the wider economy,” said Matthew Green, CBRE’s head of research for the Middle East and North Africa region. 

In February, a report released by property consultancy Sakan revealed that Saudi Arabia’s real estate market continued its rapid expansion in 2024, with transactions surging 47 percent year on year to $75.7 billion. 

Residential sector

According to CBRE, Saudi Arabia’s residential market is expected to experience significant growth over the next few years, driven by a strong economic foundation and a rapidly growing population. 

The report added that positive demographics and increasing demand for new homes, particularly in Riyadh, Jeddah, and Dammam, are some other factors that will propel the growth of the residential real estate segment in the Kingdom. 

“This demand is driving prices and rental rates higher, a trend that is expected to continue, with the value of new residential mortgages in the Kingdom rising 17 percent year on year in 2024,” said CBRE. 

The real estate consultancy added that average property prices in Riyadh’s residential sector saw an annual increase of 6 percent.

In Riyadh, the villa market has seen steady growth, with average prices now approaching SR6,000 ($1,599.82) per sq. meter, while apartment prices currently stand at SR5,200 per sq. meter 

In Jeddah, apartment values are slightly lower, averaging approximately SR4,000 per sq. meter, while villa values are notably higher, reaching nearly SR5,700 per sq. meter.

In January, a report released by the General Authority for Statistics revealed that Saudi Arabia’s property sector maintained its growth trajectory in the fourth quarter of 2024, with the Kingdom’s real estate price index increasing by 3.6 percent year on year. 

According to GASTAT, this rise was largely attributed to a 2.5 percent year-on-year increase in residential land plot prices in the fourth quarter, which accounted for 45.7 percent of the index. Apartment prices rose by 2.9 percent, while villa prices saw a sharper uptick of 6.5 percent.

The Real Estate Price Index, a key statistical tool, measures changes in property prices in Saudi Arabia based on transaction data across the Kingdom.

In February, another report released by Knight Frank said that residential transaction values in Saudi Arabia surged 35 percent over the past five years to reach SR164.8 billion. 

The findings fall in line with the Kingdom’s Vision 2030 goal to reach a 70 percent homeownership rate by 2030. It also aligns well with Saudi Arabia’s commitment to supporting access to affordable, quality housing for all citizens.

According to the latest official data from the Housing Program — an initiative under Vision 2030 — Saudi family home ownership reached 63.74 percent in 2023.

In its latest report, Saudi Central Bank revealed that banks in the Kingdom issued SR91.1 billion in new residential mortgages to individuals in 2024, representing a 17 percent rise compared to the previous year. 

Hospitality industry

According to CBRE, average daily rates among hotels in Saudi Arabia increased by 2.1 percent year on year in December, resulting in a relatively stable revenue per available room, rising by 0.3 percent. 

While the long-term prospects for Saudi’s tourism industry are promising, the recent surge in new hotel supply has led to a slight decline in occupancy rates, down 1.7 percent year on year in the final month of 2024. 

In Riyadh, average daily rates increased by 14.6 percent year on year in December, while occupancy edged up by 0.7 percent. 

Average daily rates in Jeddah saw an annual decrease of 26.7 percent over the month, while occupancy rates dropped by 14.5 percent during the same period. 

Regarding future outlook, CBRE said: “With room growth expected to accelerate in the coming 12-24 months, hotels are likely to experience heightened competition, particularly in markets like Jeddah and Makkah where a significant volume of new keys are expected to complete.” 

Retail sector

CBRE said that Saudi Arabia’s point of sales data reflected the country’s strong underlying fundamentals and year-on-year growth in the Kingdom’s retail market in 2024, up around 9 percent from 2023.

The real estate services firm added that several major shopping centers are expected to be completed in the coming years, which will help to change the landscape of the Kingdom’s retail market.

“Whilst market dynamics have been improving, with rising rental rates and occupancy rates in recent quarters, the quantum of new space expected in the medium term may shift the dynamic back in the tenant’s favor,” said CBRE.