Commercial Real Estate in Saudi Arabia Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The Market Report Covers Commercial Real Estate Development Companies in Saudi Arabia and is Segmented by Type (Offices, Retail, Industrial, Logistics, Multi-family, and Hospitality) and by Key Cities (Riyadh, Jeddah, and Makkah). The market size and forecasts for the Saudi Arabia commercial real estate market are provided in terms of value (USD billion) for all the above segments.

Saudi Arabia Commercial Real Estate Market Size

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Saudi Arabia Commercial Real Estate Market Summary
Study Period 2020 - 2029
Base Year For Estimation 2023
Forecast Data Period 2024 - 2029
Historical Data Period 2020 - 2022
CAGR 8.65 %
Market Concentration Low

Major Players

Saudi Arabia Commercial Real Estate Market Major Players

*Disclaimer: Major Players sorted in no particular order

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Saudi Arabia Commercial Real Estate Market Analysis

The Saudi Arabia Commercial Real Estate Market size is estimated at USD 20.71 billion in 2023, and is expected to reach USD 31.35 billion by 2028, growing at a CAGR of 8.65% during the forecast period (2023-2028).

  • Saudi Arabia's real estate market has begun to show an overall improvement in business activity following a downturn caused by the COVID-19 pandemic. The government of Saudi Arabia, in response to the pandemic, is implementing various initiatives to contain the economic fallout and protect the Kingdom's economy.
  • The oil sector grew 9% year-on-year, while the non-oil economy expanded by 6.2%. The continued government spending on giga-projects, coupled with increasing developments in the entertainment sector, is likely to stimulate demand in the commercial real estate market in Saudi Arabia.
  • With conditions remaining soft across most of the commercial real estate sectors of the market in 2022, the hospitality industry witnessed several major development announcements. According to STR data, Saudi Arabia is leading the world in hotel supply growth.
  • As part of Vision 2030, the government has also launched international tourist e-visas in Saudi Arabia to boost tourism in the country and increase global competitiveness, which is set to positively impact the Kingdom's real estate market.
  • The office market, however, remained slightly under pressure across the major cities in Saudi Arabia. However, with the improving economic conditions in the country, it is expected that in the medium to long term, corporate demand will pick up as business conditions improve, owing to various new projects such as Riyadh's 176.7 km metro and Dammam's King Salman Energy Park (SPARK).
  • In addition, increased investment opportunities and the ease of travel stimulated by the new King Abdulaziz International Airport (KAIA) are also expected to positively affect commercial real estate expansion, especially in Riyadh, as it remains the primary business center of the western region.

Saudi Arabia Commercial Real Estate Market Trends

Rise in the retail sector in Riyadh driving the market

The retail real estate market in Saudi Arabia, particularly in cities like Riyadh, is witnessing developments that have transformed the retail market, which consists of various outlets ranging from high-end dining to fast-food restaurants, in addition to luxury brands that were once absent from Riyadh's retail scene.

Retail destinations recorded an increase in footfall as the Saudi government began to ease restrictions on restaurants, cafes, and cinemas. With the growth of e-commerce, shopping centers have to shift their focus to enhance customer experiences. Developments are positioning their assets among other strategies to improve their entertainment and F&B offerings. If executed properly, such changes can add value by attracting greater levels of footfall.

Retail Gross Leasable Area (GLA) in Riyadh was at 3.3 million sq.m. in Q3 2022, with Lumiere Centre being a key development. Over the same period, Jeddah's total retail stock reached 1.8 million sq. m. with the completion of approximately 2,000 sq.m, according to industry associate's data.

Although there may be some delays in the handover of the retail spaces, most of this stock was expected to be of high-quality shopping centers with strong entertainment and food and beverage elements. These include retail centers such as Qurtoba Boulevard, River Walk Center, and Shorofat Al Nada Park, which come as developers in the Kingdom and look to differentiate their products to secure a large consumer base.

Saudi Arabia Commercial Real Estate Market - Distribution of Retail Stock within the Retail Market, Saudi Arabia, by City, in Million SQM, Q2 2021

Demand for office spaces is likely to increase across key cities in Saudi Arabia

The occupancy rate for Grade A office space, which stands out for its coveted location and top-notch infrastructure, is 98 percent, while the occupancy rate for Grade B office space is 75 percent, which is the highest level in five years.

Additionally, the average rent for premier office space increased by 18% in the previous 12 months to USD 472 per square meter. The average rent for Grade A office space in Jeddah increased by 6.5 percent over the previous year to USD 283 per square meter, indicating that the city's leasing market is also on the rise. In the second city of Saudi Arabia, Grade A offices are currently 92 percent filled, while Grade B occupancy is 80 percent.

In Jeddah, in upcoming years, a large amount of potential office space could be released to the market, the majority of which is Grade A (60%-70%), while an additional 30% of the stock is set to come online in smaller projects along major arterial routes. A prime scheme in the pipeline is Jeddah Gate, which is a master plan developed by Emaar. The development will offer nearly 230,000 sq. m. of high-quality office space within a mixed-use environment.

In the longer term, it is anticipated that the demand for office space will pick up from the current levels as economic reforms under the National Transformation Plan (NTP) and Vision 2030 start getting implemented and benefit the economy.

Moreover, various urban regeneration initiatives, including mixed-use communities and large-scale infrastructure projects, are also expected to act as a catalyst for the commercial real estate market. Furthermore, it is expected that the planned wave of privatization will boost investment and foster growth in the business environment, creating favorable conditions for the office sector.

Saudi Arabia Commercial Real Estate Market - Distribution of Office Stock Within the Office Market, Saudi Arabia, by City, in Million SQM, Q2 2021

Saudi Arabia Commercial Real Estate Industry Overview

The Saudi Arabia Commercial Real Estate Market is highly fragmented and highly competitive. The demand for new properties is increasing due to growth in commercial activities and an increase in competition. Competition among developers majorly happens on parameters such as land banks, location of the property, upcoming projects, construction costs, the reputation of the company, and other parameters.

Some of the significant real estate development companies operating in Saudi Arabia are Al Saedan Real Estate, Kingdom Holding Company, SEDCO Development, Jabal Omar Development Company, Makkah Construction & Development Co., Dar Alaskan Real Estate Development Co., and Saudi Taiba Investment and Real Estate Development Co.

Saudi Arabia Commercial Real Estate Market Leaders

  1. Al Saedan Real Estate

  2. Kingdom Holding Company

  3. SEDCO Development

  4. Jabal Omar

  5. Dar Ar Alkan

*Disclaimer: Major Players sorted in no particular order

Saudi Arabia Commercial Real Estate Market Concentration
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Saudi Arabia Commercial Real Estate Market News

  • May 2023: Rotana, one of the leading hotel management companies, has signed four 'Edge by Rotana' and one 'Rayhaan by Rotana' properties in partnership with Memar Development & Investment at the Future Hospitality Summit 2023. Rotana currently operates 73 hotels in the Middle East, Africa, Eastern Europe and Turkiye, serving more than six million guests per year, including 10,012 keys across 36 hotels in the UAE alone.
  • October 2022: ROSHN, the national real estate developer of the Kingdom of Saudi Arabia, and Esri, the world authority in location intelligence, signed a memorandum of understanding (MOU). ROSHN is supported by the PIF, the nation's Public Investment Fund. With the help of the partnership, ROSHN will be able to better design and create 200 million square meters of sustainable neighborhoods across Saudi Arabia by utilizing Esri's spectrum of geographic information system (GIS) products and solutions.

Saudi Arabia Commercial Real Estate Market Report - Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Current Market Overview

    2. 4.2 Commercial Real Estate Buying Trends - Socio-economic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

    4. 4.4 Insights into Existing and Upcoming Projects

    5. 4.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending

    6. 4.6 Insights into Rental Yields in the Commercial Real Estate Segment

    7. 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights into Public-private Partnerships in Commercial Real Estate

    9. 4.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)

    10. 4.10 Impact of the COVID-19 Pandemic on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Drivers

      1. 5.1.1 Increasing Spending on the Commercial Construction

      2. 5.1.2 Increasing Demand for Commercial Spaces Due to Increasing E-commerce

    2. 5.2 Restraints

      1. 5.2.1 Work-from-home Model

      2. 5.2.2 Materials and Labor Shortages

    3. 5.3 Opportunities

      1. 5.3.1 Growing Investment in Industrial and Logistics Real Estate

      2. 5.3.2 Government Support

    4. 5.4 Industry Attractiveness- Porter's Five Forces Analysis

      1. 5.4.1 Threat of New Entrants

      2. 5.4.2 Bargaining Power of Buyers/Consumers

      3. 5.4.3 Bargaining Power of Suppliers

      4. 5.4.4 Threat of Substitute Products

      5. 5.4.5 Intensity of Competitive Rivalry

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Type

      1. 6.1.1 Offices

      2. 6.1.2 Retail

      3. 6.1.3 Industrial

      4. 6.1.4 Logistics

      5. 6.1.5 Multi-family

      6. 6.1.6 Hospitality

    2. 6.2 By Key Cities

      1. 6.2.1 Riyadh

      2. 6.2.2 Jeddah

      3. 6.2.3 Makkah

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Market Concentration Overview

    2. 7.2 Company Profiles

      1. 7.2.1 Developers

        1. 7.2.1.1 Al Saedan Real Estate

        2. 7.2.1.2 Kingdom Holding Company

        3. 7.2.1.3 SEDCO Development

        4. 7.2.1.4 Jabal Omar

        5. 7.2.1.5 Abdul Latif Jameel

        6. 7.2.1.6 Dar Ar Alkan

      2. 7.2.2 Other Companies (Real Estate Brokerage Firms, Startups, Associations, etc.)

        1. 7.2.2.1 JLL Riyadh

        2. 7.2.2.2 Century 21 Saudi Arabia

        3. 7.2.2.3 Saudi Real Estate Company

        4. 7.2.2.4 Nai Saudi Arabia

        5. 7.2.2.5 360 Realtors LLP Riyadh*

    3. *List Not Exhaustive
  8. 8. FUTURE OF THE MARKET

  9. 9. APPENDIX

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Saudi Arabia Commercial Real Estate Industry Segmentation

Commercial real estate (CRE) refers to non-residential property that serves to generate income. This includes shopping malls, hotels, and office spaces, among others. A complete background analysis of the Saudi Arabia Commercial Real Estate Market, including the assessment of the economy and contribution of sectors in the economy, market overview, market size estimation for key segments, and emerging trends in the market segments, market dynamics, and geographical trends, and COVID-19 impact is included in the report.

The commercial real estate market in Saudi Arabia is segmented by type (offices, retail, industrial, logistics, multi-family, and hospitality) and by key cities (Riyadh, Jeddah, and Makkah). The report offers the market size and forecasts for the Saudi Arabia commercial real estate market in value (USD) for all the above segments.

By Type
Offices
Retail
Industrial
Logistics
Multi-family
Hospitality
By Key Cities
Riyadh
Jeddah
Makkah
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Saudi Arabia Commercial Real Estate Market Research FAQs

The Saudi Arabia Commercial Real Estate Market is projected to register a CAGR of 8.65% during the forecast period (2024-2029)

Al Saedan Real Estate, Kingdom Holding Company, SEDCO Development, Jabal Omar and Dar Ar Alkan are the major companies operating in the Saudi Arabia Commercial Real Estate Market.

The report covers the Saudi Arabia Commercial Real Estate Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the Saudi Arabia Commercial Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.

The key drivers behind the growth of the Saudi Arabia Commercial Real Estate Market are a) Expanding travel and tourism industry b) Rise of mixed-use developments and focusing on convenience and optimizing land use c) Increasing emphasis on sustainability and energy efficiency in building practices

Commercial Real Estate in Saudi Arabia Industry Report

The Saudi Arabia commercial real estate market is experiencing robust growth, driven by socio-economic reforms, increased foreign investment, and government initiatives aimed at diversifying the economy. This sector includes various segments such as offices, retail, industrial, logistics, multi-family, and hospitality, all of which are undergoing significant development. A key trend in the Saudi Arabia commercial real estate market is the rise of mixed-use developments that cater to a dynamic population seeking integrated environments combining residential, commercial, and leisure spaces. These developments are popular for their convenience and efficient land use. Additionally, there is a growing demand for properties with modern amenities, advanced technological infrastructure, and sustainable designs. The sector is further supported by eased tourism visa regulations and substantial investments in mega-projects, expected to boost demand for commercial spaces nationwide. This evolution is closely tied to the broader economic landscape, reflecting the nation's ambitious economic and social goals. For detailed statistics, market share, size, and revenue growth rate, refer to Mordor Intelligence™ Industry Reports, which include a market forecast outlook and historical overview, available as a free report PDF download. Top real estate companies in Saudi Arabia are actively participating in this growth, enhancing the commercial real estate landscape across the country.

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Commercial Real Estate in Saudi Arabia Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)