Report Overview

The Saudi Government’s support and initiatives for large infrastructure development projects and economic diversification are expected to drive Saudi Arabia Commercial Real Estate Market during the forecast period between 2024 and 2030.

Saudi Arabia Commercial Real Estate Market – Industry Trends & Forecast Report, 2030

Saudi Arabia Commercial Real Estate Market size was estimated at USD 21.05 billion in 2023. During the forecast period between 2024 and 2030, Saudi Arabia Commercial Real Estate Market size is projected to grow at a CAGR of 8.48% reaching a value of USD 37.21 billion by 2030. Prominent drivers of the market include the government’s continued investment in giga-projects and expanding the entertainment sector, which are set to boost demand for commercial real estate. Vision 2030 initiatives, such as international tourist e-visas, are further enhancing the country's competitiveness, positively impacting real estate growth. The hospitality sector is leading in development, while corporate demand in the office market is expected to recover as business conditions improve, bolstered by major projects like Riyadh's metro and King Salman Energy Park. Additionally, the expansion of King Abdulaziz International Airport is expected to fuel real estate growth, particularly in Riyadh.

Commercial Real Estate – Overview

Commercial real estate refers to properties primarily used for business purposes, such as offices, retail spaces, industrial facilities, hotels, and multifamily housing. It encompasses income-generating properties where businesses operate, including shopping malls, warehouses, and medical centers. Commercial real estate is distinct from residential properties, as it focuses on providing spaces for commercial activities rather than living spaces. Investors in commercial real estate typically earn income through leasing spaces to businesses or selling the properties for a profit. The value of commercial real estate is influenced by factors like location, market demand, economic conditions, and property management.

Saudi Arabia Commercial Real Estate Market

Growth Drivers

Heightened Focus on Economic Diversification

Economic diversification is a key growth driver for Saudi Arabia Commercial Real Estate Market, with the country's Vision 2030 plan at the forefront of these developments. The government's focus on diversifying the economy away from oil has led to significant investments in urban development, infrastructure, and real estate, creating a dynamic environment for commercial properties such as office spaces, retail establishments, and industrial complexes. As Saudi Arabia continues to enhance its business-friendly environment, the demand for strategically located commercial properties is increasing, driven by technology integration, sustainable development, and changing tenant preferences. The rise of smart buildings, flexible office spaces, and sustainable commercial properties reflects global trends toward digital transformation and environmental responsibility. The e-commerce boom is reshaping retail spaces, while major urban development projects further highlight the importance of location and accessibility. With government support and a robust regulatory framework ensuring market transparency, investors are exploring opportunities to diversify portfolios and leverage long-term economic growth. Strategic partnerships, joint ventures, and innovative financing options are also contributing to the expansion of the sector, while risk mitigation remains a priority due to market volatility and geopolitical uncertainties. As Saudi Arabia positions itself as a major commercial real estate hub, the country's ongoing commitment to sustainability, technology, and economic diversification will continue to attract investors seeking long-term returns.

Challenges

Economic Uncertainties across the Globe

Global economic uncertainties, including fluctuating oil prices, rising inflation, and geopolitical tensions, are restraining the growth of Saudi Arabia Commercial Real Estate Market. As oil revenues remain a critical component of the Kingdom's economy, any volatility in global markets significantly impacts government spending and investment in commercial real estate projects. Additionally, tightening global liquidity and investor hesitancy are delaying large-scale developments. These challenges are compounded by the country's economic reforms, which, while ambitious, create uncertainty and slow down progress in key real estate sectors, hindering growth in the commercial property market.

Impact of Escalating Geopolitical Tensions on Saudi Arabia Commercial Real Estate Market

Escalating geopolitical tensions among countries across regions could have a significant impact on the growth of the Saudi Arabia Commercial Real Estate Market. Political instabilities and conflicts can disrupt investor confidence, delay international partnerships, and increase the cost of materials and construction. Sanctions or trade restrictions further compound these challenges by limiting access to essential resources and foreign capital. Additionally, heightened regional tensions could shift government focus and spending away from real estate projects toward defense or crisis management. Such uncertainties can stall ongoing developments and create a volatile environment, hampering the overall growth of the commercial real estate sector.

Saudi Arabia Commercial Real Estate Market

Segmental Coverage

Saudi Arabia Commercial Real Estate Market – By Type

On the basis of type, Saudi Arabia Commercial Real Estate Market is divided into Office Spaces, Retail Spaces, Industrial and Logistics, Hospitality, Others (including Healthcare Facilities (Hospitals, Clinics) and Educational Institutions) segments. The retail spaces segment holds the largest share of Saudi Arabia Commercial Real Estate Market by type. Retail real estate in cities like Riyadh is experiencing rapid transformation, with diverse outlets ranging from luxury brands to fast-food restaurants. The easing of government restrictions on restaurants, cafes, and cinemas has driven higher footfall in retail destinations. As e-commerce grows, shopping centers are enhancing customer experiences by improving entertainment and food and beverage offerings. Riyadh’s retail Gross Leasable Area (GLA) reached 3.3 million sq.m. in Q3 2022, with developments like Lumiere Centre leading the market. High-quality retail centers are driving growth, attracting a broad consumer base. Meanwhile, the office spaces segment is expected to witness the fastest growth rate during the forecast period. Grade A office spaces, known for their prime locations and superior infrastructure, have reached an impressive 98% occupancy, while Grade B spaces stand at 75%, the highest in five years. In Jeddah, Grade A offices are 92% occupied, with rents increasing by 6.5% to USD 283 per square meter. Future developments like Jeddah Gate, offering 230,000 sq.m. of high-quality office space, are expected to further drive demand. Economic reforms under Vision 2030 and large-scale urban regeneration projects will likely accelerate office sector growth.

Saudi Arabia Commercial Real Estate Market – By End User

Based on end user, Saudi Arabia Commercial Real Estate Market is divided into Corporate, Government, Retailers, Industrial and Logistics Companies, Hospitality Providers, and other Buyers segments.

Competitive Landscape

Major players operating in Saudi Arabia Commercial Real Estate Market include Dar Al Arkan Real Estate, Jenan Real Estate Company, SEDCO Development, Jabal Omar Development, Abdul Latif Jameel, JLL Riyadh, Century 21 Saudi Arabia, and Emaar Properties. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In July 2024 - Dorar Tammam Contracting Company (DTC) a leading company in Saudi Arabia's commercial real estate sector, was recognized for its portfolio of projects, including Atyaf Avenue Mall, Curvature Mall, and Ajlan Commercial Tower.

Scope of the Report

By Type

• Office Spaces

• Retail Spaces

• Industrial & Logistics

• Hospitality

• Others (including Healthcare Facilities (Hospitals, Clinics), Educational Institutions)

By End User

• Corporate

• Government

• Retailers

• Industrial & Logistics Companies

• Hospitality Providers