The Saudi retail market shows mixed performance between Riyadh and Jeddah in Q2 2025, highlighting a notable disparity in trends and consumer behavior between these two major cities. A recent report reveals that Riyadh has outperformed Jeddah in various retail categories, driven by robust economic fundamentals, enhanced consumer spending power, and a strategic focus on investment. This analysis sheds light on the evolving landscape of the retail sector as it navigates the complexities of changing market dynamics.
Riyadh’s Dominance in Retail Performance
In the second quarter of 2025, Riyadh outperformed Jeddah across all retail categories, supported by stronger fundamentals and higher consumer spending power. The JLL KSA Retail Market Dynamics report indicates that super-regional malls in Riyadh maintained an impressive occupancy rate, with vacancies hovering around just 2.5 percent. While regional and community malls experienced higher vacancy rates of 11.2 percent and 13.4 percent respectively, strategically located community centers managed to achieve impressive occupancy rates below 5 percent.
Challenges in Jeddah’s Retail Environment
Conversely, the retail market in Jeddah presented a mixed picture. Super-regional malls there reported an 8.3 percent vacancy rate, while regional and community malls faced even steeper challenges with vacancies at 23.5 percent and 20.9 percent, respectively. This disparity in performance underscores the need for Jeddah’s retail sector to adapt and innovate to regain competitiveness.
Rental Trends in Both Cities
Community centers emerged as the strongest performers in terms of rental growth in both Riyadh and Jeddah. In Riyadh, rental prices surged by 6.2 percent year-on-year, reaching SAR 2,149 per sqm per annum. Super-regional and regional malls saw more modest increases of 1.1 percent and 2.8 percent, respectively. In contrast, Jeddah’s community malls recorded a 4.2 percent gain, while regional malls saw a modest rise of 1.2 percent. However, super-regional mall rents in Jeddah faced a decline of 3.7 percent, highlighting ongoing challenges in that segment.
Insights from Market Experts
“Saudi Arabia’s retail market is evolving and is poised for significant transformation under the future-focused Vision 2030 agenda,” stated Saud Al Sulaimani, Country Head, KSA at JLL. He further noted that the growing influence of tourism and the diversification of consumer demographics, combined with a robust retail supply pipeline, are reshaping the market, particularly in Riyadh.
Landlords in both cities are increasingly adopting incentives such as flexible lease terms, rent-free periods, and CAPEX contributions to attract and retain tenants. Fashion retailers are demonstrating stability and growth, while food and beverage operators, especially local coffee shops, are navigating operational hurdles. Additionally, entertainment venues, including cinemas, are contending with concerns over oversupply, according to the report.
In terms of new developments, Riyadh added 114,100 sqm of retail gross leasable area (GLA) in the first half of 2025, elevating its total stock to 4.35 million sqm, with an additional 195,430 sqm set to complete by year-end. Meanwhile, Jeddah saw the introduction of 223,240 sqm of new supply in the same period, increasing its total to 2.58 million sqm, with a further 92,380 sqm anticipated in the latter half of the year.