Saudi Arabia Commercial Real Estate Market By Retail (Regional Malls, Community Centers, Strip Malls), By Specialty (Self-Storage, Data Centers, Entertainment Venues), By Region, Competition Forecast & Opportunities, 2020-2030F

Market Overview

Saudi Arabia Commercial Real Estate Market was valued at USD 34.9 Billion in 2024 and is expected to reach at USD 71.01 Billion in 2030 and project robust growth in the forecast period with a CAGR of 12.4% through 2030. The commercial real estate market in Saudi Arabia is experiencing significant growth, driven by the country's Vision 2030 initiative, which aims to diversify the economy beyond oil. Government-led reforms, including foreign investment incentives, regulatory enhancements, and large-scale infrastructure projects, have created a favorable business environment. Key cities such as Riyadh, Jeddah, and Dammam are witnessing increased demand for office spaces, retail outlets, and industrial hubs, fueled by expanding sectors like tourism, finance, and technology.

Mega-projects such as NEOM, The Red Sea Project, and Qiddiya are attracting global investors and reshaping the commercial real estate landscape. Additionally, the influx of multinational corporations and the rise of entrepreneurship have bolstered demand for modern office spaces, co-working hubs, and mixed-use developments. The retail sector is also undergoing transformation, with the rise of luxury malls, entertainment complexes, and e-commerce-driven logistics centers.

Moreover, the government's push for Public-Private Partnerships (PPPs) and streamlined regulations has made the real estate sector more accessible and investor-friendly. With strong economic fundamentals, urban expansion, and an increasing focus on sustainability, Saudi Arabia’s commercial real estate market is poised for sustained growth, presenting lucrative opportunities for both local and international investors.

Key Market Drivers

Vision 2030 Initiative

Saudi Arabia's Vision 2030 aims to diversify the economy and reduce dependence on oil revenues. By 2024, the Kingdom had invested approximately $1.3 trillion in infrastructure, significantly boosting residential, commercial, and hospitality capacities. This includes plans to introduce over a million residential units and expand retail and office spaces by 7 million square meters each. Such substantial investments have created a robust environment for commercial real estate development, attracting both local and international investors.

Foreign Direct Investment (FDI)

The Saudi government's efforts to attract foreign companies have led to a significant influx of international businesses establishing regional headquarters in the Kingdom. By November 2023, 180 companies had relocated their regional headquarters to Saudi Arabia, surpassing the initial goal of 160 relocations by the end of 2023. This surge has driven demand for high-quality office spaces, particularly in Riyadh, where Grade A office spaces reached full capacity in the third quarter of 2023.

Demand for Quality Office Spaces

The influx of international companies and domestic entities has led to a surge in demand for quality office spaces. In Riyadh, prime rents experienced record growth rates of 23.6% in the third quarter of 2023, with rents reaching SR2,617 per square meter. Grade A rents grew by 12.9%, reaching an average of SR1,900 per square meter. This trend underscores the increasing need for modern, well-equipped office environments to accommodate the growing business landscape.

Industrial and Logistics Sector Growth

The introduction of the Logisti platform in the third quarter of 2023 aims to provide 59 logistics centers across Saudi Arabia by 2030. This initiative is part of the National Transport and Logistics Strategy, which seeks to supply the required infrastructure and associated services to help develop these future centers. Key agreements within the Saudi Authority for Industrial Cities and Technology Zones include Eva Pharma acquiring 50,000 square meters of land in Sudair to establish an industrial complex, and retailer B4L creating a 38,000 square meter fully automated distribution center. These developments highlight the rapid expansion of the industrial and logistics sectors, contributing to the overall growth of the commercial real estate market.

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Key Market Challenges

High Construction Costs and Supply Chain Disruptions

One of the major challenges facing Saudi Arabia’s commercial real estate market is the rising cost of construction materials and supply chain disruptions. The country’s ambitious development projects, including NEOM and Qiddiya, have significantly increased demand for raw materials, labor, and specialized equipment. This demand surge has led to cost inflation, making it expensive for developers to complete projects within budget. Additionally, global supply chain issues, exacerbated by geopolitical tensions and fluctuating oil prices, have caused delays in material shipments, leading to project slowdowns and increased costs. The reliance on imported construction materials also exposes the market to currency fluctuations and international trade restrictions, further impacting profitability. While Saudi Arabia is taking steps to localize production through industrial development initiatives, bridging the gap between demand and supply remains a key challenge for sustained commercial real estate growth. 

Regulatory and Bureaucratic Hurdles

Despite significant reforms under Vision 2030, regulatory complexities and bureaucratic processes continue to pose challenges for investors and developers in Saudi Arabia’s commercial real estate sector. The country has made strides in improving transparency, land registration, and foreign ownership policies, but navigating local regulations remains time-consuming. Obtaining construction permits, securing approvals for large-scale projects, and adhering to evolving zoning laws often create delays, discouraging investment. Moreover, while the Saudi government has introduced incentives for foreign direct investment (FDI), international investors still face challenges related to land acquisition, lease agreements, and legal frameworks that differ from global norms. Streamlining approval processes, improving digital infrastructure for property transactions, and enhancing regulatory clarity will be crucial for attracting sustained investment and ensuring smoother project execution. 

Market Oversupply and Vacancy Rates

As Saudi Arabia accelerates its urban development and commercial real estate expansion, concerns about oversupply and rising vacancy rates have emerged. Cities like Riyadh and Jeddah have witnessed a rapid influx of office spaces, retail centers, and mixed-use developments, leading to an imbalance between supply and demand. The shift towards hybrid work models post-pandemic has also affected demand for traditional office spaces, causing rental price stagnation in some segments. Similarly, while high-end retail and hospitality projects continue to expand, consumer spending habits and e-commerce growth have influenced foot traffic in physical retail spaces. Developers must adopt more adaptive strategies, such as flexible leasing options and mixed-use developments, to mitigate risks associated with oversupply. Aligning future projects with actual market demand and diversifying asset classes will be critical in maintaining a balanced and sustainable commercial real estate sector in Saudi Arabia.

Key Market Trends

Rise of Mixed-Use Developments

Saudi Arabia’s commercial real estate market is witnessing a growing preference for mixed-use developments that integrate residential, commercial, retail, and entertainment spaces within a single project. This trend is driven by increasing urbanization, evolving consumer preferences, and the need for sustainable and efficient land use. Projects such as King Abdullah Financial District (KAFD) in Riyadh and The Avenues Mall in Khobar exemplify this shift, offering a combination of office spaces, luxury retail outlets, high-end residential units, and entertainment hubs. Mixed-use developments attract a diverse tenant base, ensuring higher occupancy rates and long-term investment returns. Additionally, these projects align with Saudi Arabia’s Vision 2030, which promotes smart cities and sustainable urban planning. Developers are incorporating green building designs, energy-efficient infrastructure, and digital connectivity to enhance the appeal of these integrated communities. With changing lifestyles and the demand for convenience, mixed-use developments are set to become a dominant segment in Saudi Arabia’s commercial real estate landscape. 

Expansion of the Logistics and Industrial Real Estate Sector

The rapid growth of e-commerce, supported by government initiatives such as the National Industrial Development and Logistics Program (NIDLP), is fueling demand for modern logistics and industrial real estate. Saudi Arabia aims to establish itself as a regional logistics hub, and its strategic location between Europe, Asia, and Africa makes it an attractive center for trade and distribution. The launch of the Logisti platform, which targets the development of 59 logistics centers across the country by 2030, reflects the government’s commitment to enhancing supply chain infrastructure. Investors are increasingly focusing on high-tech warehousing, cold storage facilities, and last-mile delivery centers to support the rising demand from online retailers and multinational corporations. Major cities such as Riyadh, Jeddah, and Dammam are experiencing a surge in logistics real estate projects, driven by rising consumer expectations for fast delivery and efficient supply chain operations. This sector is expected to see continued investment and technological advancements, shaping the future of Saudi Arabia’s commercial real estate market. 

Growing Demand for Grade A Office Spaces

The influx of multinational companies and regional headquarters into Saudi Arabia has significantly increased the demand for high-quality Grade A office spaces. Riyadh, in particular, has become a key business destination, with prime office rents increasing by over 20% in 2023 due to limited supply. With the government mandating that international firms establish regional headquarters in the Kingdom to qualify for public contracts, demand for premium office locations is expected to rise further. Developers are responding by launching state-of-the-art office towers featuring smart technology, flexible workspaces, and sustainability-driven designs. Additionally, the trend towards hybrid work models is reshaping office layouts, with businesses seeking collaborative and digitally integrated work environments. The shortage of high-end office spaces has prompted a shift towards build-to-suit developments, where corporations partner with developers to create customized office solutions. As business activity in Saudi Arabia continues to expand, Grade A office spaces will remain a critical component of the commercial real estate market. 

Surge in Hospitality and Tourism Real Estate 

Saudi Arabia’s ambitious tourism strategy, underpinned by Vision 2030, is driving substantial investment in the hospitality and tourism real estate sector. The country aims to attract 100 million visitors annually by 2030, creating a strong demand for hotels, resorts, and entertainment complexes. Mega-projects such as the Red Sea Project, Diriyah Gate, and Amaala are set to redefine luxury and sustainable tourism in the region. The introduction of new visa policies, including e-visas and tourism visas, has made it easier for international travelers to visit the Kingdom, boosting hotel occupancy rates. Developers are focusing on creating world-class hospitality infrastructure, including luxury resorts, boutique hotels, and cultural heritage sites to cater to both leisure and business travelers. Additionally, the rise of experiential tourism—where visitors seek unique cultural and adventure-driven experiences—is influencing real estate investments in eco-tourism and heritage-focused developments. As Saudi Arabia continues its transformation into a global tourism destination, the hospitality real estate sector will play a pivotal role in shaping the country’s economic future.

Segmental Insights

Retail Insights

In 2024, the Saudi Arabian commercial  real estate market saw regional malls emerging as the dominant segment, a trend projected to continue in the foreseeable future. This dominance is attributed to several factors, including the country's rapid urbanization, a burgeoning middle class, and a cultural inclination towards comprehensive shopping experiences that combine retail, dining, and entertainment under one roof. Major urban centers such as Riyadh, Jeddah, and Dammam have witnessed significant investments in large-scale regional malls, catering to the diverse preferences of a youthful and affluent population. Developments like the Mall of Arabia in Jeddah and Riyadh Park Mall exemplify this trend, offering extensive retail spaces alongside entertainment zones and gourmet dining options. The government's Vision 2030 initiative, aimed at diversifying the economy and boosting the tourism sector, has further fueled the expansion of regional malls by encouraging foreign investment and easing regulations in the retail sector. While community centers and strip malls continue to serve local neighborhoods by providing essential services and convenience retail, they lack the scale and variety that regional malls offer. The emphasis on creating destination shopping experiences, coupled with the integration of technology and luxury brands, positions regional malls at the forefront of the retail real estate market. As consumer expectations evolve and the demand for multifaceted retail environments grows, regional malls are expected to maintain their dominance, driven by ongoing urban development projects and a strategic focus on enhancing the Kingdom's retail infrastructure.

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Regional Insights

Largest Region

In 2024, Riyadh solidified its position as the dominant force in Saudi Arabia's commercial real estate market, a status it is projected to maintain in the coming years. As the nation's capital and economic epicenter, Riyadh has attracted substantial investments across various real estate sectors. Notably, the city experienced a remarkable 77% year-on-year increase in residential sales transactions during the first quarter of 2024, totaling 23,900 transactions valued at approximately $8.72 billion (SAR 32.7 billion). This surge reflects the city's expanding population and the escalating demand for both residential and commercial properties. The office sector also witnessed significant activity, with major global firms securing prime spaces in developments like the King Abdullah Financial District and Laysen Valley, underscoring Riyadh's appeal as a regional business hub. Furthermore, ambitious projects such as the Mukaab—a colossal cube-shaped structure set to become the world's largest building—are underway, enhancing the city's commercial allure. These developments are in alignment with Saudi Arabia's Vision 2030 initiative, which aims to diversify the economy and position Riyadh as a global metropolis. While other regions like Jeddah and the Eastern Province are experiencing growth, Riyadh's strategic initiatives, infrastructural advancements, and economic diversification efforts position it at the forefront of the Kingdom's commercial real estate sector, a trend anticipated to continue into the foreseeable future.

Emerging Region

In 2024, the Eastern Province emerged as a significant growth area in Saudi Arabia's commercial real estate market, a trend projected to continue in the coming years. Cities like Dammam and Khobar have witnessed substantial development across various sectors, including hospitality, residential, and industrial. Notably, in mid-September 2024, Saudi asset manager Areeb Capital acquired a 32 million square meter plot in Dammam for $3.2 billion, intending to develop a mixed-use project. Additionally, the General Authority for Ports and Aljeri Logistics Services announced plans to build two new logistics areas in Jeddah and Dammam, with a combined investment of $43 million. These developments have been bolstered by an influx of Public Investment Fund (PIF) capital, enhancing the region's infrastructure and attracting both local and international investors. The strategic location of the Eastern Province, coupled with its robust industrial base and improved connectivity, positions it as a burgeoning hub for commercial real estate. As Saudi Arabia continues to diversify its economy under Vision 2030, the Eastern Province's dynamic growth trajectory is expected to sustain, offering lucrative opportunities for stakeholders in the commercial real estate sector.

Recent Developments

• In May 2024, Nakheel has awarded contracts for the commencement of infrastructure works at Palm Jebel Ali, a major development project in Dubai. The contracts include the construction of a public access road linking Sheikh Zayed Road to Palm Jebel Ali, and a service road for the central area of the Palm. DBB Contracting LLC, a prominent construction company, has secured the contract for these critical infrastructure works. This project marks a significant step in the development of Palm Jebel Ali, reinforcing Nakheel's commitment to enhancing Dubai's real estate landscape.
• In Dec 2024, Aldar Properties has successfully acquired a flagship commercial tower in Abu Dhabi, further expanding its portfolio. This strategic acquisition enhances Aldar’s presence in the capital’s prime real estate sector, offering high-quality office space to attract multinational companies. The acquisition aligns with Aldar’s continued growth strategy and strengthens its position as a leader in the UAE’s commercial property market. This move underscores the company’s commitment to diversifying its offerings and capitalizing on the region’s growing demand for premium office spaces.
• In August 2024, Lincoln Property Company (LPC) has made a strategic investment in Centennial, a prominent national large-format retail owner and operator. This partnership will provide Centennial with the capital to accelerate its expansion while creating opportunities for Lincoln in mixed-use development. By leveraging Centennial’s expertise in retail repositioning and Lincoln’s development strengths across various asset classes, the companies aim to transform underperforming retail spaces into community-centric, multi-use destinations. This collaboration aligns with both companies’ growth strategies, focusing on dynamic, value-creating developments.
• In March 2024, Lincoln Property Company has acquired a prime 4-acre development site at 2500 Cedar Springs Road in Uptown Dallas. The company plans to develop a Class A mixed-use project, featuring 400,000-500,000 sq. ft. of office space, 250 luxury apartments, a 200-key five-star hotel, and 25,000 sq. ft. of retail space. This strategic acquisition marks a significant step in expanding Lincoln's portfolio in one of Dallas' most sought-after submarkets, promising a modern, vibrant addition to the city's urban landscape.

Key Market Players

• Emaar Properties PJSC
• Nakheel PJSC
• Aldar Group
• Prologis, Inc.
• Tishman Realty & Construction LLC
• Lincoln Property Company
• Blackstone Inc.
• Realogy Holdings Corp.

Report Scope:

In this report, the Saudi Arabia Commercial Real Estate Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Saudi Arabia Commercial Real Estate Market, By Retail:

o   Regional Malls

o   Community Centers

o   Strip Malls

• Saudi Arabia Commercial Real Estate Market, By Specialty:

o   Self-Storage

o   Data Centers

o   Entertainment Venues

• Saudi Arabia Commercial Real Estate Market, By Region:

o   Riyadh

o   Makkah

o   Madinah

o   Jeddah

o   Tabuk

o   Eastern Province

o   Rest of Saudi Arabia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Saudi Arabia Commercial Real Estate Market.

Available Customizations:

Saudi Arabia Commercial Real Estate Market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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