Saudi Arabia: Saudi Arabia’s commercial real estate market is heating up, with prime office rents in Riyadh climbing 7.3 percent year on year in the second quarter of 2025 to SR3,630 ($967) per sq. meter per year, according to JLL.

The sharp rise reflects tight supply and robust demand, particularly in the capital and Jeddah, as the Kingdom pushes ahead with its Vision 2030 diversification drive and its Regional Headquarters Program to attract multinational firms.

Saudi Arabia’s Real Estate General Authority expects the property market to hit $101.62 billion by 2029, with a compound annual growth rate of 8 percent from 2024.

“The continued expansion of the KSA office market directly reflects the Kingdom’s strategic vision for economic diversification and urban development,” said Saud Al-Sulaimani, country lead and head of capital markets at JLL Saudi Arabia.

“Riyadh’s sustained performance, driven by a flight to quality and the Regional Headquarters Program, solidifies its position as a key business hub,” he added.

The regional headquarters program offers international firms a 30-year exemption from corporate income and withholding taxes, along with discounts and support services.

In March, the Saudi Press Agency reported that nearly 600 global companies, including Northern Trust, IHG Hotels & Resorts, and Deloitte, have established bases in the Kingdom since 2021.

“With a diversifying occupier base and expanding flexible workspace options, we are witnessing a dynamic and maturing market where landlords are strategically adapting to meet evolving tenant needs for enhanced amenities and services,” said Al-Sulaimani.

In Riyadh’s King Abdullah Financial District, prime rents now average SR4,000 per sq. meter, underscoring surging demand for high-quality spaces.

Jeddah also recorded healthy growth, with Grade A rents rising 4.3 percent to SR1,393 per sq. meter and Grade B rents climbing 6.5 percent to SR933.

Riyadh’s prime office spaces registered a low 0.5 percent vacancy rate in the second quarter, highlighting demand for such spaces in the Kingdom’s capital city.

Grade A and B segments in Riyadh also maintained constrained vacancy rates of 3.8 percent and 2.9 percent, respectively.

In Jeddah, Grade A and B vacancy rates stood at 3.3 percent and 2.2 percent, respectively.

Riyadh’s total office stock reached 8.1 million sq. meters in the second quarter of the year, with an additional 0.66 million sq. meters expected by year-end.

“The high demand has seen residential assets being converted to office space across the city (Riyadh), and new occupiers relocate to the less congested northern parts,” said global real estate services company JLL.

“The capital’s occupier base is also diversifying, with notable leasing activity over the last quarter from non-traditional sectors such as health care, pharmaceuticals, and technology,” it added.