Saudi ArabiaSaudi Arabia Special
Riyadh Office Rents Rise 10% as Global Firms Seek Larger Spaces
Riyadh’s commercial real estate market is experiencing significant growth in Q2 2025, driven by strong economic fundamentals, rising foreign investment, and increasing interest from global companies for prime office spaces.
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Key Insights
Rising Rents and Occupancy
- Grade A Occupancy: Stands at an impressive 98%.
- Average Rent Increase: Rents have surged 10% year-on-year, reflecting robust demand.
Shift Towards Larger Spaces
- Leasing Trends: There is a notable shift towards larger office footprints, with 50% of leasing inquiries targeting spaces over 1,000 sqm, up from 28% in Q1.
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Sector Activity
- Dominant Sectors:
- The Banking, Financial Services and Insurance (BFSI) sector dominated leasing, accounting for 50% of transactions.
- Legal services and pharmaceutical firms combined made up the remaining 50%.
- A significant 46% of inquiries came from US and UK companies, highlighting Riyadh’s growing appeal to international firms.
Economic Context
- GDP Growth: Saudi Arabia’s non-oil GDP rose 4.9%, with a projected overall economic growth of 3.5% in 2025.
- PMI: The Purchasing Managers’ Index hit 57.2 in June, the highest since 2011, driven by hiring momentum and strong private sector activity.
Foreign Investments
- Direct Investment Surge: Foreign direct investment reached SAR 22.2 billion in Q1 2025, up from SAR 15.5 billion a year earlier.
- Notable multinational entries include BNY Mellon, London Business School, ASPEN, and Globant, all establishing regional headquarters in Riyadh during Q2.
Infrastructure Developments
- Metro Impact: The Riyadh Metro recorded over 25 million passengers in Q1 2025, enhancing access to key commercial areas like KAFD and Olaya.
Future Projections
- Rental Growth: The sharpest growth is seen in key locations:
- Zone C: 15% annual increase.
- Zone A: Nearly 11% increase.
- However, the upward trend may soften by late 2026 with over 900,000 sqm of new Grade A office space expected from developments like Diriyah Gate and Misk City.
With strong business confidence, tight supply, and increasing multinational interest, Riyadh’s office market is poised to remain a vital component of Saudi Arabia’s Vision 2030 ambitions.
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