Saudi Arabia Commercial Real Estate Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Saudi Arabia Commercial Real Estate Market Trends and Insights

Accelerated Demand for Prime Industrial and Logistics Space Driven by E-Commerce

E-commerce order fulfillment rose to 290 million transactions in 2024, illustrating a step-change in distribution intensity and the need for modern, well-located warehouse space. Class A logistics sites near major airports and arterial highways are attracting multi-user developments from global operators, with one leading provider committing EUR 130 million (USD 140.4 million) for a large facility at Riyadh’s Special Integrated Logistics Zone, supported by bonded corridors and long-term land arrangements. Near-airport nodes and special zones have emerged as strategic anchors for automotive, technology, and retail supply chains, supporting temperature-controlled storage, value-added services, and compliance. Across the network, 23 activated logistics centers now cover 34.6 million square meters, with the Makkah region accounting for 20.4 million square meters, reinforcing regional fulfillment reach. As build quality improves and operating standards converge to global benchmarks, the Saudi Arabia commercial real estate market is positioned to see further consolidation of logistics footprints by multinational tenants.^{[1]https://www.stats.gov.sa/}

Government-backed Infrastructure Pipeline Lifting Commercial Land Values

Large-scale urban programs, cultural assets, and mixed-use districts are redefining commercial corridors and elevating demand for surrounding plots. In Riyadh, New Murabba’s planned downtown redevelopment anchors prime offices, R&D spaces, and innovation hubs across 14 million square meters, with associated infrastructure catalyzing new corporate locations and retail-led experiences. Diriyah has rapidly executed awards across mixed-use clusters, including a major arena superblock with office towers and commercial amenities that broaden the occupier base and community services. Along the western coast, Red Sea Global’s phased resorts and mixed-use offerings are tying hospitality to retail and experiential spaces that require high standards for building performance and operations. These programmatic investments signal long-cycle demand creation and underpin the land value uplift that feeds into the Saudi Arabia commercial real estate market.^{[2]https://www.diriyahcompany.sa/en}

Surge in Institutional Capital Allocation to Core Office Assets

Multinational corporations continue to scale their presence in Riyadh to align with the Regional Headquarters framework, reinforcing demand for Grade A offices in locations that concentrate policymaking and corporate decision centers. The requirement for substantive local operations has steered occupiers toward integrated districts with institutional property management and modern specs. King Abdullah Financial District has captured key tenants, including recent signings by global financial services firms, demonstrating sustained momentum for prime stock. The district’s extensive certified inventory and amenities support larger floorplates and higher space efficiency, improving occupier economics over long leases. As anchor tenants commit, institutional capital follows through acquisitions and development funding, deepening the liquidity profile of the Saudi Arabia commercial real estate market.^{[3]https://www.kafd.sa/}

Re-rating of ESG-Compliant Green Buildings Unlocking Premium Rents

The Mostadam program has scaled local green building certifications, creating a clear pathway for projects to achieve recognized environmental and performance standards. International validation has strengthened the program’s credibility, allowing investors and tenants to benchmark outcomes against frameworks such as GRESB and LEED. KAFD’s concentration of LEED-certified assets and its smart neighborhood credential illustrate the leasing advantage of high-performing buildings, especially for multinationals with corporate sustainability commitments. Government-led schemes increasingly embed green standards from the outset, nudging private developers to adopt efficient MEP systems, smart energy management, and water-saving features to remain competitive. As operational savings accumulate and tenant preferences shift, ESG enhancements support stronger pricing and occupancy in the Saudi Arabia commercial real estate market.

Elevated Construction Costs and Labour Shortages Delaying Project Delivery

Input cost inflation and tight contractor capacity are pressuring delivery schedules for complex mixed-use and hospitality projects. Official construction cost indices showed persistent year-on-year increases through late 2025, driven by non-residential categories and high materials demand. Project owners are adopting modular construction and BIM-enabled coordination to improve productivity and protect timelines. Labor-market policies that promote localization are also reshaping workforce planning and wage structures across project ecosystems. These dynamics raise near-term execution risk and may stagger supply additions in the Saudi Arabia commercial real estate market.

Persistent Work-from-Home Adoption Softening CBD Office Net Absorption

As hybrid work practices mature, some occupiers are recalibrating space needs, adjusting layouts, and consolidating non-core locations. CBD Grade A remains supported by mandates that require senior executives to be present and by large organizations that prioritize proximity to government stakeholders. However, secondary submarkets with older buildings may experience slower leasing velocity as tenants seek flexible agreements and higher fit-out standards. Flexible workspace providers are expanding tailored solutions that blur the line between serviced offices and traditional leases. Over the medium term, selective softness in peripheral nodes may persist, even as prime CBD assets in the Saudi Arabia commercial real estate market maintain tight conditions.

Segment Analysis

By Property Type: Core Office Strength Contrasts with Logistics Surge

Offices held the largest share at 32% in 2025, supported by policy-driven corporate relocation and the clustering benefits of integrated business districts. Prime office districts with LEED-certified assets and smart infrastructure have attracted leading financial and professional services firms that value proximity to regulators and clients. At King Abdullah Financial District, global tenants have expanded footprints and deepened long-term commitments, creating a base of stable demand. Complementing office momentum, retail and hospitality components within mixed-use districts are being calibrated to new lifestyle and experiential formats. Select large projects in Riyadh, including New Murabba and Diriyah, continue to expand the corporate and retail ecosystem that supports the Saudi Arabia commercial real estate market.

Logistics is the fastest-growing segment with a 7.88% CAGR, reflecting e-commerce fulfillment scaling to 290 million transactions in 2024 and continued investment in modern warehousing. International operators are committing capital to near-airport multi-user facilities, such as EUR 130 million (USD 140.4 million) allocated for a 53,000-square-meter site in Riyadh’s Special Integrated Logistics Zone. Nationwide, 23 activated logistics centers now cover 34.6 million square meters, with the Makkah region alone at 20.4 million square meters, extending last-mile reach for merchants. Riyadh’s prime office rents have also increased in recent years, with benchmark Grade A locations commanding premium annual rates around SAR 2,700 per square meter (USD 720), supported by constrained vacancy in the most sought-after assets. In parallel, evolving retail formats are aligning with mixed-use strategies that integrate F&B, entertainment, and hospitality to enhance dwell times and capture broader consumer spend within the Saudi Arabia commercial real estate market.

Note: Segment shares of all individual segments available upon report purchase

By Business Model: Sales Dominance Yields to Rental Momentum

Sales led with 71% in 2025, reflecting strong activity across master-planned communities, corporate plots, and pre-sales in integrated neighborhoods. Public-sector developers and partners continue to execute large residential and mixed-use agreements that expand community footprints and critical services. In the capital, flagship districts catalyze surrounding land sales as infrastructure deployment unlocks new corridors. Premium inventory tied to major nodes has seen consistent buyer interest from both local and expatriate households. These transactions reinforce construction pipelines that feed into the Saudi Arabia commercial real estate market.

The Rental segment is the fastest-growing model at a 7.33% CAGR as investors seek predictable income and as institutional-quality assets enter the market. Regulatory enhancements by the Capital Market Authority have expanded flexibility for real estate funds and REITs, including development participation in select markets and structured distribution policies. Large districts are exploring capital recycling through income funds, with assets that meet modern ESG and digital infrastructure standards gaining attention from long-horizon investors. Rental performance benefits from tightening in prime nodes and from operational improvements that reduce opex and enhance occupier experience. As balance sheets adjust to the rate environment, income assets remain central to capital deployment in the Saudi Arabia commercial real estate market.

Note: Segment shares of all individual segments available upon report purchase

By End-user: Corporate Giants Meet Rising Household Demand

Corporates and SMEs accounted for 66% in 2025, supported by the Regional Headquarters program that concentrates executive teams, consolidates decision-making, and increases demand for Grade A space. High-spec business districts that offer LEED-certified environments and resilient digital infrastructure continue to attract multinational businesses. KAFD’s tenant roster illustrates the appeal of integrated, amenitized hubs where financial services, advisory, and technology firms can co-locate. Corporate distribution footprints are also expanding due to e-commerce growth, with national logistics center coverage enabling faster deliveries across major routes. These occupier behaviors reinforce a broad base of demand and leasing depth within the Saudi Arabia commercial real estate market.

Individuals and Households are the fastest-growing cohort at 7.10% CAGR as policy reforms and master-planned communities enhance accessibility and lifestyle amenities. Large-scale communities continue to add apartments and townhomes that broaden the product mix beyond detached villas. Residential anchors connect residents to retail, education, and healthcare within short distances, improving live-work convenience. As new phases launch, integrated neighborhoods are attracting first-time buyers and long-stay tenants who value community services and modern building standards. This consumer-led momentum complements corporate demand, supporting mixed-use vitality in the Saudi Arabia commercial real estate market.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Riyadh captured 49% of 2025 turnover, reflecting its central role in headquarters consolidation and public investment activity. Flagship districts such as KAFD anchor blue-chip tenants, supported by LEED-certified buildings and sophisticated digital infrastructure. New Murabba advances plans for a 14-million-square-meter downtown with a signature mixed-use landmark and significant commercial and R&D space, while the broader corridor benefits from transit and amenities. Major logistics commitments include a EUR 130 million (USD 140.4 million) multi-user facility at the Special Integrated Logistics Zone near King Khalid International Airport, strengthening air cargo-led distribution. The pipeline of Grade A offices and logistics infrastructure reinforces Riyadh’s appeal to corporates and long-horizon capital in the Saudi Arabia commercial real estate market.

Jeddah’s coastal economy supports diversified commercial assets, including offices, logistics, and retail formats serving a large resident and visitor base. Grade A offices continue to attract professional services, with annual rent benchmarks in prime buildings around SAR 1,393 per square meter (USD 371.5) and healthy occupancy at the top end. Large retail destinations are being aligned with experiential concepts and stronger entertainment offerings to lengthen dwell times. Port-led logistics expansion and related industrial growth add to warehouse demand near key corridors. These features position Jeddah for steady leasing in high-quality assets within the Saudi Arabia commercial real estate market.

Makkah is projected as the fastest-growing region with a 7.33% CAGR, driven by religious tourism and accompanying mixed-use development. Jabal Omar’s multi-phase destination adjacent to the Holy Mosque integrates hotels, retail, and residences that elevate capacity and visitor services. Continued progress on adjoining transport and urban upgrades supports better circulation and expands commerce. Growth in hotel keys and retail adjacencies feeds into spillover demand for back-of-house logistics and workforce housing solutions. As the region scales, balanced planning around access, services, and environmental performance will be central to sustaining momentum in the Saudi Arabia commercial real estate market.