Saudi Arabia’s real estate market is entering a new phase of transformation, underpinned by strong non-oil economic growth, landmark reforms and unprecedented development activity, according to CBRE Middle East’s Q3 2025 Saudi Arabia Real Estate Market Review.
CBRE said the sector continues to show “resilience and rapid evolution” as the Kingdom’s economic diversification gathers pace.
Saudi Arabia’s real GDP grew by 3.9 per cent year-on-year in Q2 2025, prompting an upward revision of the annual forecast to 4.2 per cent, with the non-oil sector now contributing 56 per cent of total GDP.
That expansion is fuelling sustained demand across residential, office, retail, hospitality and industrial markets, supported by an active pipeline of government reforms and giga-scale projects.
Saudi real estate reforms
Three major policy interventions in Q3 2025 are expected to shape the Kingdom’s real estate trajectory:
- New ownership law for non-Saudis: Announced in July and effective from January 2026, the law opens the market to foreign investors, aligning with Saudi Arabia’s ambition to attract $100bn in annual foreign direct investment (FDI) by 2030
- Expanded white land tax (WLT): Initially launched in April 2025 and refined in August, the updated WLT introduces a tiered rate structure targeting over 411 million square metres of undeveloped land to encourage construction and limit speculation
- Five-year rent freeze in Riyadh: Introduced in September, the freeze aims to stabilise costs for residents and businesses, reinforcing Riyadh’s position as a global business hub
Saudi Arabia’s development pipeline totals $440bn in committed projects and a further $1.55tn in potential long-term investments, led by giga developments such as NEOM and Qiddiya City.
Upcoming events like Expo 2030 Riyadh and municipal restructuring are also driving a wider urban transformation agenda.
Office market: near-zero vacancy
The office sector remains a standout performer, underpinned by Riyadh’s emergence as a regional corporate hub.
Grade A office rents rose 15 per cent year-on-year, with average occupancy at 98 per cent, reflecting near-zero vacancy across prime assets.
The Regional Headquarters (RHQ) Programme continues to boost demand, with 34 new licences issued in Q2, bringing the total to 634.
At the centre of this expansion, the King Abdullah Financial District (KAFD) is doubling its footprint and will accommodate 40,000 daily visitors. Infrastructure upgrades, including the reactivation of its 3.6-kilometre monorail, are reinforcing its “10-minute city” concept.
Beyond the capital, Jeddah maintains approximately 95 per cent occupancy for Grade A offices, while Dammam remains steady in the high 80s, with Grade B assets softening to 81 per cent, signalling a flight-to-quality trend. Rising supply over the next year is expected to further test market dynamics.
Residential: transactions up 17.9 per cent
Residential activity stayed strong, recording 17.9 per cent quarter-on-quarter growth in transaction volumes valued at SR7.7bn ($2.05bn).
In Riyadh, apartment prices increased 6.3 per cent year-on-year, while villa prices rose 11.6 per cent.
To address escalating rents, the government’s five-year rent freeze aims to stabilise affordability and maintain investor confidence.
Retail: mixed-use focus and new destinations
Retail performance remained supported by higher consumer spending, with sales volumes projected to grow at a 4.4 per cent compound annual growth rate (CAGR) through 2027.
Rental growth has been modest over the past year, reflecting balanced market conditions.
A landmark partnership between Majid Al Futtaim and Diriyah Company will see VOX Cinemas and seven global brands anchor Diriyah Square, underscoring the shift toward mixed-use, pedestrian-first destinations.
The retail development pipeline now includes 800,000 square metres of new space, with 100,000 sqm due by year-end. Major projects such as Westfield Riyadh (formerly Jawharat Riyadh), Bellevue Riyadh, and Avenues Mall are scheduled for 2026–2027, positioning Northern Riyadh as the city’s next major retail corridor.
Hospitality: 10 per cent RevPAR growth and new Saudi brands
Saudi Arabia’s hospitality market recorded a 10 per cent year-on-year increase in revenue per available room (RevPAR) in August, driven by an 11 per cent rise in occupancy.
Riyadh’s RevPAR rose by 2.7 per cent, while Jeddah saw a 7.3 per cent decline, reflecting competitive rate adjustments.
Localisation is accelerating, with Adeera Hospitality, backed by the Public Investment Fund (PIF), launching three Saudi-born hotel brands — Alia, Sama, and Noor — to operate across Qiddiya City.
Tourism also surged, with 32 million visitors during the summer season and SAR53.2 billion ($14.19 billion) in spending, up 15 per cent year-on-year, reinforcing the sector’s growing contribution to the non-oil economy.
Industrial: strong output and rising logistics rents
The industrial sector continues to expand rapidly, with the Industrial Production Index up 7.1 per cent year-on-year and manufacturing output increasing by 5.6 per cent.
Riyadh’s logistics rents remain on an upward trajectory, led by Al Faisaliyah and Al Mashael districts, where rates reached SR299 ($80) per sqm per annum.
In Jeddah, the Asfan submarket recorded the highest national rent at SAR350 ($93) per sqm per annum.
The sector’s expansion is supported by $116bn in construction-related investment, along with a sharp rise in industrial licensing and factory openings.
Market entering transformation phase
Matthew Green, Head of Research, MENA at CBRE, said the market is evolving amid an unprecedented reform wave and long-term investment cycle/
He said: “Saudi Arabia’s real estate market is currently moving through a major transformation phase, amidst significant regulatory reforms, and sustained strategic investments, creating a dynamic environment for investors, developers, and occupiers alike.”
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