Office rents in Riyadh have skyrocketed, reaching a record high of SAR 2,700 per square meter, reflecting an impressive 23% increase year-on-year as of the end of March. This dramatic rise in office rents correlates with exceptionally high occupancy rates, marking a significant trend in the region’s commercial real estate landscape. The latest insights from Knight Frank’s Saudi Arabia Commercial Market Overview provide a comprehensive look at the factors driving this surge in demand for office space.
Rising Demand and Occupancy Rates
The increase in office rents in Riyadh illustrates a robust demand for Grade-A office spaces, which have achieved an occupancy rate of 98%. Meanwhile, Grade-B buildings are not far behind, boasting a 97% occupancy rate. As the quest for premium office locations intensifies, Grade-B rentals have also seen a substantial uptick, rising by 24% within the same time frame. This trend underscores the growing competition among businesses for limited prime spaces.
“Saudi Arabia’s economic momentum continued to strengthen across key sectors in 2024, underpinned by rising private sector activity. A total of 14,303 foreign business investment licenses were issued during 2024, a 67% increase from 2023, marking the highest annual figure on record and underscoring the sustained appeal of Saudi Arabia to global corporates and investors,” said Faisal Durrani, Partner and Head of Research MENA. This influx of foreign investment plays a pivotal role in the ongoing rise in office rents in Riyadh.
Strategic Initiatives Fueling Growth
Over 600 companies have announced their intentions to establish regional headquarters in Riyadh as of February 2025, consequently driving demand for premium office space. “As more companies expand their footprint across Saudi Arabia, Jeddah is attracting a growing number of regional and local firms. This rising interest is supported by a healthy office development pipeline,” noted James Hodgetts, Partner in Occupier Strategy & Solutions. The ambitious government initiatives, including the Regional Headquarters Programme, offer tax relief packages that further incentivize businesses to set up shop in the Kingdom.
Knight Frank anticipates a shift in the market over the next two years, forecasting the completion of 2.7 million square meters of new office space. The implications of this additional space could mitigate the soaring office rents in Riyadh, providing businesses with more options in a previously constrained market.
Jeddah’s Emergent Market Dynamics
Jeddah is also witnessing positive trends in office rentals, with occupancy rates for Grade-A and Grade-B offices rising to 95% over the past year. Grade-A rents have climbed to an average of SAR 1,280 per square meter, while Grade-B rents have ascended to SAR 845 per square meter. Furthermore, Jeddah’s total office stock is projected to grow from 1.6 million square meters currently to 1.8 million square meters by 2027, indicating a healthy real estate development pipeline.
“These latest figures point to resilient demand amid limited new supply and further highlight Madinah’s pricing strength. Pilgrim arrivals in the city are expected to reach 30 million by 2030, up from 17.3 million in 2025, reflecting the city’s growing role as a global hub for religious tourism,” remarked Amar Hussain, Associate Partner in Research, Middle East. This indicates the ongoing appeal of Saudi Arabia as a prime destination for corporate establishments and the fundamental reasons behind the rising office rents in Riyadh.
The Broader Impact of Tourism on Real Estate
With Saudi Arabia welcoming 30 million international visitors in 2024 and goals set to attract 70 million by 2030, the hospitality sector has also garnered attention, witnessing a rise in average daily rates by 10.8% and revenue per available room by 12.3% within the year ending in March. In Makkah, which remains vital to religious tourism, the average daily rates surged 28.9% year-on-year. With 8,500 hotel rooms under construction across various developments, ongoing construction projects further emphasize the interconnectedness of tourism and office space demand across the Kingdom.
As Saudi Arabia continues to reinforce its position in the global economy through enhanced infrastructure and strategic business opportunities, the notable increase in office rents in Riyadh signals a market primed for growth and development. Investors and businesses alike are keeping a watchful eye on these trends, preparing for what promises to be a transformative period in the Kingdom’s commercial landscape.