Saudi Arabia Commercial Real Estate Market Size
|CAGR:||> 10 %|
*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 was valued at USD 19.06 billion in 2022, 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 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 billion) for all the above segments.
|By Key Cities|
Saudi Arabia Commercial Real Estate Market Trends
This section covers the major market trends shaping the Saudi Arabia Commercial Real Estate Market according to our research experts:
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.
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.
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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 (1,775 riyals) 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 (1,065) 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 development 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 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. 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. 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.
Saudi Arabia Commercial Real Estate Market Leaders
Al Saedan Real Estate
Kingdom Holding Company
Dar Ar Alkan
*Disclaimer: Major Players sorted in no particular order
Saudi Arabia Commercial Real Estate Market News
- 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.
- April 2022: Rawabi Holding of Saudi Arabia has established a new business, Magnom Properties, the company's real estate vertical. Magnom Properties will manage the building of high-value commercial, residential, and leisure projects in Egypt, Saudi Arabia, and the larger MENA region. The real estate endeavor of Rawabi Holding will center on developing dynamic surroundings and developments that will accommodate the quickly changing lifestyles and aspirations of businesses, industries, and future generations.
Saudi Arabia Commercial Real Estate Market Report - Table of Contents
1.1 Study Deliverables
1.2 Study Assumptions
1.3 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Current Market Overview
4.2 Commercial Real Estate Buying Trends - Socio-economic and Demographic Insights
4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector
4.4 Insights into Existing and Upcoming Projects
4.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending
4.6 Insights into Rental Yields in the Commercial Real Estate Segment
4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate
4.8 Insights into Public-private Partnerships in Commercial Real Estate
4.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)
4.10 Impact of the COVID-19 Pandemic on the Market
5. MARKET DYNAMICS
5.4 Industry Attractiveness- Porter's Five Forces Analysis
5.4.1 Threat of New Entrants
5.4.2 Bargaining Power of Buyers/Consumers
5.4.3 Bargaining Power of Suppliers
5.4.4 Threat of Substitute Products
5.4.5 Intensity of Competitive Rivalry
6. MARKET SEGMENTATION
6.1 By Type
6.2 By Key Cities
7. COMPETITIVE LANDSCAPE
7.1 Market Concentration Overview
7.2 Company Profiles
188.8.131.52 Al Saedan Real Estate
184.108.40.206 Kingdom Holding Company
220.127.116.11 SEDCO Development
18.104.22.168 Jabal Omar
22.214.171.124 Abdul Latif Jameel
126.96.36.199 Dar Ar Alkan
7.2.2 Other Companies (Real Estate Brokerage Firms, Startups, Associations, etc.)
188.8.131.52 JLL Riyadh
184.108.40.206 Century 21 Saudi Arabia
220.127.116.11 Saudi Real Estate Company
18.104.22.168 Nai Saudi Arabia
22.214.171.124 360 Realtors LLP Riyadh*
- *List Not Exhaustive
8. FUTURE OF THE MARKET
Saudi Arabia Commercial Real Estate Market Research FAQs
What is the study period of this market?
The Saudi Arabia Commercial Real Estate Market is studied from 2019 - 2028.
What is the growth rate of Saudi Arabia Commercial Real Estate Market?
The Saudi Arabia Commercial Real Estate Market is growing at a CAGR of >10% over the next 5 years.
Who are the key players in Saudi Arabia Commercial Real Estate Market?
Al Saedan Real Estate, Kingdom Holding Company, SEDCO Development, Jabal Omar, Dar Ar Alkan are the major companies operating in Saudi Arabia Commercial Real Estate Market.
Saudi Arabia Commercial Real Estate Industry Report
Statistics for the 2023 Saudi Arabia Commercial Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Saudi Arabia Commercial Real Estate analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.