Riyadh’s premium office space has reached near-full occupancy at 98 per cent amid an influx of international companies, driving rental values up by 19 per cent year-on-year as Saudi Arabia’s capital cements its position as a regional business hub, according to Savills.
More than 120 foreign companies, including Goldman Sachs and Frost & Sullivan, have relocated their regional headquarters to Riyadh this year, fuelling a surge in demand for high-end office space, the property consultant said in its Q3 2024 market report.
Technology, media and telecommunications firms led the leasing activity, accounting for 40 per cent of new occupancies, followed by consulting and consumer goods companies at 20 per cent each, the report showed.
“The evolution of Riyadh’s office market is a clear indicator of the city’s pivotal role in advancing Vision 2030,” said Amjad Saif, head of transactional services at Savills Middle East.
“We’re seeing a diverse range of sectors drawn to Riyadh’s business environment, with heightened demand for high-quality office spaces.”
The robust office market performance comes as Saudi Arabia’s foreign direct investment jumped 23.4 per cent quarter-on-quarter to SAR11.7 billion in Q2 2024, reflecting growing investor confidence in the Kingdom’s economic diversification efforts.
The city’s non-oil sector is projected to expand by 5 per cent this year, helping drive overall GDP growth of 1.4 per cent amid stable inflation of 1.7 per cent, according to the report.
To meet surging demand, Riyadh plans to add more than 1.6 million square metres of Grade A office space by 2028. Major developments including Prince Mohammed Bin Salman Nonprofit City and Diriyah Gate are expected to reshape the commercial property landscape.
“Riyadh’s office market is quickly emerging as a regional powerhouse for business growth,” said Ramzi Darwish, head of Saudi Arabia at Savills Middle East.”
The combination of high occupancy rates and escalating rental values demonstrates Riyadh’s appeal to both regional and international companies.
The report also highlighted growing demand for flexible workspaces, with 48 per cent of enquiries focusing on offices under 250 square metres, reflecting a shift toward hybrid working models.
Saudi Arabia’s Regional Headquarters programme is helping attract foreign firms with incentives including Saudisation exemptions, tax benefits and accelerated visa processing. The Kingdom plans to update its investment system in 2025 to further ease regulatory restrictions and enhance investor rights.
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