Saudi Arabia Flexible Office Space Market - Growth, Trends, Covid-19 Impact, And Forecasts (2022-2027)

Saudi Arabia's Flexible Office Space Market is Segmented by Type (Private offices, Co-working space, and Virtual Offices), by End User (IT and Telecommunications, Media and Entertainment, Retail and Consumer Goods, and Others), and by City (Riyadh, Dammam, Jeddah and Rest of Saudi Arabia). The report offers market size and forecasts for Saudi Arabia's Flexible Office Space Market in value (USD Billion) for all the above segments.

Market Snapshot

Saudi Arabia Flexible Office Space Market Growth
Study Period: 2018-2027
Base Year: 2021
CAGR: >6 %
Saudi Arabia Flexible Office Space Market Major Players

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Market Overview

The Saudi Arabia Flexible Office Space Market is expected to grow at a CAGR of more than 6% during the forecast period (2022 -2027).

The pandemic has resulted in the closure of several offices which impacted the growth in 2020. Companies resuming operations and adapting to the new normal while recovering from the COVID-19 impact, which had previously resulted in restrictive containment measures such as social distancing, remote working, and the closure of commercial activities, resulting in operational challenges, are driving growth in the flexible office space market.

The flexible office space industry is likely to grow in the coming years, and its entry into Saudi Arabia's market might have significant implications for the country, as a rising number of newer firms and well-established corporations opt to employ serviced workspaces. 

With Saudi Arabia's burgeoning business sector, there has been a surge in demand for coworking spaces. These coworking spaces have also received backing from the Saudi government. SoftBank's Vision Fund, which owns a majority position in one of the most well-known coworking companies, WeWork, has received a USD 45 billion investment from the country's Public Investment Fund.

More than half of the population in Saudi Arabia is under the age of 40, which is exactly the demographic that requires flexible office space. However, due to a scarcity of flexible office space in Saudi Arabia, key cities in the country have some of the highest rates in the world, disproportionate to their commercial real estate leasing pricing. 

Monsha'at, a government body that promotes, develops, and nurtures the SME sector, is actively engaging with public and private sector organizations to help and improve flexible office spaces on a number of fronts to address this difficulty.

Scope of the Report

Flexible workspace is also known as shared office space or flex space. This type of office space is fitted with basic equipment, like phone lines, desks, and chairs, a setup that allows employees who normally work from home or telecommute to have a physical office for a few hours every week or every month.

Furthermore, this report offers a complete analysis of the Flexible Office Market in Saudi Arabia, including a market overview, market size estimation for key segments and emerging trends by segments, and market dynamics. The report also offers the impact of COVID-19 on the market. Saudi Arabia's Flexible Office Space Market is Segmented by Type (Private offices, co-working space, and Virtual offices), By End User (IT and Telecommunications, Media and Entertainment, and Retail and Consumer Goods, and Others), and by City (Riyadh, Dammam, Jeddah and Rest of Saudi Arabia). The report offers market size and forecasts for Saudi Arabia's Flexible Office Space Market in value (USD Billion) for all the above segments.

By Type
Private offices
Co-working space
Virtual Office
By End User
IT and Telecommunications
Media and Entertainment
Retail and Consumer Goods
By City
Rest of Saudi Arabia

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Key Market Trends

Strong Growth in Riyadh To Drive the Market

The office market in Riyadh is still showing signs of fragmentation. Over the last 12 months (through Q2 2021), average Grade A rentals climbed by 1.5 percent, while Grade B rents fell by 1.1 percent. The relative outperformance of Grade A offices can be linked to a significant increase in the number of licenses issued to international investors seeking to establish businesses in the Kingdom.

Indeed, from over 700 in 2018 to nearly 1300 in 2020, the number of foreign investment licenses issued has nearly doubled. On the supply side, the construction of a small office development along King Fahad Road increased the city's supply by around 9,000 square meters. The total office stock remained largely steady at 4.2 million sqm as a result of this slight addition. By the end of 2023, total office space is estimated to reach 5.3 million sqm.

The demand for high-quality offices in Riyadh has surged since Saudi Arabia announced that foreign companies should relocate their regional headquarters to the kingdom in order to do business with it. The increased demand for Grade A office space in Riyadh, Saudi Arabia's capital, has put upward pressure on Grade A office lease rates, which have grown 2.9 percent in the year to the end of Q3 2021. Despite this, Saudi Arabia has the largest economy in the area and a population of over 35 million people, indicating that there is potential for more than one economic center in the region.

Saudi Arabia Flexible Office Space Market Share

Growth in Saudi Arabia’s Office Space Market To Provide More Opportunities

Saudi Arabia's office sector saw an increase in performance in 2021, owing to a number of government mandates that drew a large number of foreign corporations to the country. In Q4 2021, average year-on-year rental rates in Riyadh and Jeddah rose by 4% and 2%, respectively, in the office segment. Grade A rates in Jeddah climbed by 8% in the fourth quarter of 2021, averaging roughly SAR 1,036 square meters per year.

This demand will most likely be the biggest in Riyadh and Jeddah, which are becoming increasingly commercialized and have some of the highest rental yields in the country. The vast bulk (90 percent) of the 480,000 square meters of office floorspace delivered in Saudi Arabia in 2021 was in Riyadh, the country's capital. Over the period of 2022, another 360,000 square meters of office space is expected to be completed in the city.

The office sector is likely to grow substantially in the future years as Saudi Arabia pursues its ambitious aim of becoming a global hub for commerce, investment, and international trade. The overall office supply in the Kingdom is expected to reach 925,000 square meters by the end of 2022.

Another element driving this expansion was a new government regulation implemented last year that required foreign corporations to establish regional offices in the Kingdom of Saudi Arabia by 2024 in order to be eligible for government contracts. In October 2021, the government gave licenses to around 40 multinational enterprises to set up shop in the Kingdom, following the announcement of this strategy in February 2021.

Saudi Arabia Flexible Office Space Market Analysis

Competitive Landscape

The Saudi Arabia Flexible Office Space Market is fragmented with many players existing in the coworking office spaces market, also many more are entering the market to fulfill the rapid demand for casual environment offices. The competition between the players existing in the flexible office space market is expected to increase during the forecast period. Companies are leveraging on strategic collaborative initiatives to increase their market share and profitability.

Recent Development

August 2021: White Space (a Saudi Coworking Space-based hospitality company) and floward (online flowers platform) collaborated for a flower arrangement workshop. Many influencers were hosted in white space in Madinah branch and the bouquets were given as gifts to the orphanage.

January 2022: For a better customer experience, White Space (a Saudi Coworking Space-based hospitality company) entered into a partnership with Yourspace. (Yourspace is an app for those who are looking for a space to work, meeting rooms, or has that extra space in the office no one is using).

Table of Contents

  1. 1. Introduction

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. Research Methodology

  3. 3. Executive Summary

  4. 4. Market Insights

    1. 4.1 Market Overview

    2. 4.2 Technological Trends in the Industry

    3. 4.3 Government Initiatives and Regulatory Aspects

    4. 4.4 Industry Value Chain Analysis

    5. 4.5 Insights on Office Rents

    6. 4.6 Insights on Office Space Planning

    7. 4.7 Impact of COVID-19 on the Market

  5. 5. Market Dynamics

    1. 5.1 Drivers

    2. 5.2 Restraints

    3. 5.3 Opportunities

    4. 5.4 Porter's Five Forces Analysis

      1. 5.4.1 Bargaining Power of Suppliers

      2. 5.4.2 Bargaining Power of Consumers/Buyers

      3. 5.4.3 Threat of New Entrants

      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 Private offices

      2. 6.1.2 Co-working space

      3. 6.1.3 Virtual Office

    2. 6.2 By End User

      1. 6.2.1 IT and Telecommunications

      2. 6.2.2 Media and Entertainment

      3. 6.2.3 Retail and Consumer Goods

    3. 6.3 By City

      1. 6.3.1 Riyadh

      2. 6.3.2 Dammam

      3. 6.3.3 Jeddah

      4. 6.3.4 Rest of Saudi Arabia

  7. 7. Competitive Landscape

    1. 7.1 Market Concentration Overview

    2. 7.2 Company Profiles

      1. 7.2.1 Wework

      2. 7.2.2 Regus

      3. 7.2.3 Servcorp

      4. 7.2.4 Easyoffices

      5. 7.2.5 White Space

      6. 7.2.6 Gravita

      7. 7.2.7 Scale

      8. 7.2.8 Vibes offices

      9. 7.2.9 The Space

      10. 7.2.10 Heydesk

      11. 7.2.11 67|22 Coworking Space

      12. 7.2.12 Diom*

    3. *List Not Exhaustive
  8. 8. Market Opportunities and Future Trends

  9. 9. Appendix

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Frequently Asked Questions

The Saudi Arabia Flexible Office Space Market market is studied from 2018 - 2027.

The Saudi Arabia Flexible Office Space Market is growing at a CAGR of >6% over the next 5 years.

Wework, Regus, Servcorp, Easyoffices, White Space are the major companies operating in Saudi Arabia Flexible Office Space Market.

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