Office sector leads Saudi real estate market
28 June 2023
Recovery and growth for GCC real estate
The office sector continues to lead Saudi Arabia’s real estate market, according to a report from global property consultancy Knight Frank.
There has been a significant surge in demand in the sector, particularly in the three primary cities – Riyadh, Jeddah and the Dammam Metropolitan Area.
In Riyadh, occupancy levels of 97 per cent for grade A and 85 per cent for grade B office spaces indicate a thriving office sector.
“The office sector remains the star of the market,” said Faisal Durrani, partner and head of Middle East research at Knight Frank.
“With businesses from all over the world flocking to the kingdom – the number of business licences issued rose by 54 per cent in 2022 – prime rents have experienced an increase of 19 per cent in Riyadh and around 9 per cent in Jeddah over the last year.”
The retail sector in the kingdom is pivoting towards a more experiential model, reflected in increasing footfall and dwell times in food and beverage and lifestyle retail establishments.
Knight Frank reports that the residential sector is facing increasing affordability pressures, however, resulting in a significant decrease in activity.
The number of residential transactions in the kingdom has fallen by 57 per cent in Riyadh and 67 per cent in Jeddah on an annualised basis as of the end of the first quarter, says Knight Frank. The decrease follows a significant increase in villa and apartment prices in 2022.
Knight Frank’s 2023 Saudi Report shows a reduced desire to buy residential property this year, from 84 per cent in 2022 to 40 per cent at present.
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