Riyadh leads Saudi Arabia’s commercial real estate growth with 23% rise in office rents

Riyadh leads Saudi Arabia’s commercial real estate growth with 23% rise in office rents
Strengthening the real estate sector is one of the key goals outlined in Saudi Arabia’s Vision 2030 agenda. Shutterstock
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Updated 30 June 2025
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Riyadh leads Saudi Arabia’s commercial real estate growth with 23% rise in office rents

Riyadh leads Saudi Arabia’s commercial real estate growth with 23% rise in office rents
  • Average rents for office spaces in Riyadh saw an annual rise of 23%
  • Jeddah’s total office stock is expected to rise 1.8 million sq. meters by 2027

RIYADH: Saudi Arabia’s commercial real estate sector is witnessing exponential growth, with rents for Grade A office spaces in the Kingdom’s capital reaching SR2,700 ($719.95) per sq. meter by the end of March, an analysis showed. 

In its latest report, global real estate consultancy Knight Frank said average rents for office spaces in Riyadh witnessed an annual rise of 23 percent by the end of the first quarter, driven by the success of government-led initiatives, including the ambitious regional headquarters program.

Strengthening the real estate sector is one of the key goals outlined in Saudi Arabia’s Vision 2030 agenda, as the nation aims to position itself as a leading business and tourism destination by the end of the decade. 

The Kingdom’s Real Estate General Authority expects the property market to reach $101.62 billion by 2029, with an anticipated compound annual growth rate of 8 percent from 2024.




Saudi Arabia’s regional headquarters program offers benefits to international firms, including a 30-year exemption from corporate income tax. File/SPA

“Saudi Arabia’s economic momentum continued to strengthen across key sectors in 2024, underpinned by rising private sector activity,” said Faisal Durrani, partner — head of research for the Middle East and North Africa at Knight Frank. 

According to the report, the Kingdom’s Grade A office rents witnessed an occupancy level of 98 percent by the end of March. 

Grade B rents grew by 24 percent year on year by the end of the first quarter, while the occupancy level of these spaces stood at 97 percent. 

Grade A office spaces command higher rents than the area average, thanks to their prime locations, modern infrastructure, and newer construction.

In contrast, Grade B office spaces are more affordable, offering a lower-cost alternative to Grade A units.




Average daily rate in Madinah reached SR891 by the end of the first quarter. File/SPA

The report further said that around 600 companies have announced plans to establish their regional headquarters by the end of February, significantly boosting demand for prime office spaces. 

Saudi Arabia’s regional headquarters program offers benefits to international firms, including a 30-year exemption from corporate income tax and withholding tax on headquarters activities, as well as discounts and support services. 

“A total of 14,303 foreign business investment licenses were issued during 2024, a 67 percent increase from 2023, marking the highest annual figure on record and underscoring the sustained appeal of Saudi Arabia to global corporates and investors,” said Durrani. 

The analysis added that Jeddah is also experiencing significant growth in the commercial real estate sector, with both Grade A and Grade B occupancies reaching 95 percent by the end of March. 

Knight Frank said Grade A office rents in Jeddah reached SR1,280 per sq. meter, marking a 4 percent year-on-year growth, while Grade B office rents grew by 6 percent to reach SR845 per sq. meter. 

Jeddah’s total office stock is expected to rise from 1.6 million sq. meters this year to 1.8 million sq. meters by 2027.

“As more companies expand their footprint across Saudi Arabia, Jeddah is attracting a growing number of regional and local firms. This rising interest is being supported by a healthy office development pipeline,” said James Hodgetts, partner — occupier strategy and solutions at Knight Frank.




The Saudi Real Estate General Authority expects the property market to reach $101.62 billion by 2029. Saudipedia

He added: “Upcoming projects include Jeddah Gate, which is expected to deliver 230,000 sq. meters between 2025 and 2028, and Jeddah Rose, a mixed-use development bringing 25,000 sq. meters of office space to the market by the end of 2025.” 

In May, Jeddah Municipality announced 29 new investment opportunities spanning over 1.4 million sq. meters, targeting sectors including commercial, industrial, residential, and recreational.

The package includes 13 commercial opportunities featuring the development and operation of retail shops and commercial complexes across various districts.

In April, a separate report released by credit rating agency S&P Global said that the Kingdom’s retail real estate market is poised for growth in the near term, driven by population growth, expanding tourism, and economic diversification efforts under the Vision 2030 initiative. 

S&P Global added that ongoing mega projects and the expansion of international brands are expected to propel further demand for retail space nationwide.

Hospitality overview

According to the study, the average daily rate in Saudi Arabia’s hospitality sector increased by 10.8 percent year on year by the end of March, while revenue per available room increased by 12.3 percent during the same period. 




Growth of the Kingdom’s hospitality sector was largely driven by gains in the nation’s holy cities and Riyadh. File/SPA

The report said the growth of the Kingdom’s hospitality sector was largely driven by gains in the nation’s holy cities and Riyadh. 

In the first quarter of 2025, ADR in Makkah rose by 28.9 percent year on year to SR859, while RevPAR was up by 35.7 percent to SR673.

Citing data from the Ministry of Hajj, Knight Frank said the surge in performance in Makkah reflected heightened demand linked to the rise in issued Umrah visas, which grew by 8.3 percent. 

With more than 8,500 rooms under construction across 12 hotel developments, Makkah’s total inventory is set to increase from 63,428 to 71,643 rooms by 2027, the report added. 

According to the analysis, ADR in Madinah reached SR891 by the end of the first quarter, representing an 11.8 percent year-on-year rise, while RevPAR rose by 15.1 percent to SR724. 

Madinah currently has 20,673 hotel rooms, and an additional 2,100 keys are expected to be delivered by 2027. Major international operators continue to expand their presence, including Hilton and Marriott, with planned openings totaling over 6,000 rooms.

Rua Al-Madinah, a new giga-project situated east of the Prophet’s Mosque, is also poised to reshape the hospitality landscape, with over 47,000 planned hotel rooms. 

“These latest figures point to resilient demand amid limited new supply and further highlight Madinah’s pricing strength,” said Amar Hussain, associate partner — research, Middle East at Knight Frank. 




Jeddah is also experiencing significant growth in the commercial real estate sector. File/SPA

He added: “Pilgrim arrivals in the city are expected to reach 30 million by 2030, up from 17.3 million in 2025, reflecting the city’s growing role as a global hub for religious tourism.” 

Data Centers

Knight Frank said Saudi Arabia is positioning itself as the Middle East’s leading data hub, with plans to grow its data center market from $1.78 billion in 2023 to $3.2 billion by 2029, representing a compound annual growth rate of 10.1 percent.

The report noted that Saudi Arabia’s total IT capacity is expected to increase from around 250-300 megawatts in 2024 to more than 1,000-MW by 2030, driven by strategic government initiatives and substantial investment in digital infrastructure. 

During the LEAP 2025 conference in February, Cathy Mauzaize, US-based software firm ServiceNow’s president for Europe, the Middle East and Africa, said that the company is set to launch data centers in the Kingdom in 2026. 

In the same month, Alfanar Global Development also announced a $1.4 billion investment plan to develop four world-class data centers in Saudi Arabia. 

Knight Frank added that all tier-one US cloud providers, including Microsoft, Amazon Web Services, Google Cloud, and Oracle, have either launched operations or announced further expansions in the Kingdom. 

Amazon Web Services alone has committed $5.3 billion to scale up its cloud services across key cities.

Chinese firms such as Alibaba Cloud and Huawei Cloud have also established a local presence.

“Saudi Arabia is now the fastest growing market for data centers as the country continues its drive toward national digitalization,” said Stephen Beard, global head of data centers at Knight Frank. 

He added: “The Kingdom’s development of data center infrastructure has been driven largely by adoption of public cloud and sustained public and private investment, transforming it into one of the top five global AI superpowers — evident in the recent launch of the $100 billion Transcendence AI Initiative.” 

Saudi Arabia launched Project Transcendence in November, a $100 billion AI initiative aimed at building data centers, supporting startups, and developing infrastructure. 

The initiative promises to bring together expertise, infrastructure, and innovation to position the Kingdom at the forefront of AI advancements.


Closing Bell: Saudi main index steady at 11,277; Nomu edges up

Closing Bell: Saudi main index steady at 11,277; Nomu edges up
Updated 17 sec ago
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Closing Bell: Saudi main index steady at 11,277; Nomu edges up

Closing Bell: Saudi main index steady at 11,277; Nomu edges up

RIYADH: Saudi Arabia’s Tadawul All Share Index was steady on Thursday, as it marginally declined by 0.01 percent, or 0.82 points, to close at 11,276.91. 

The total trading turnover of the benchmark index was SR4.96 billion ($1.32 billion), with 128 of the listed stocks advancing and 120 declining. 

The Kingdom’s parallel market Nomu gained 31.28 points to close at 27,479.50.

The MSCI Tadawul Index marginally shed 0.02 points to 1,445.23. 

The best-performing stock on the main market was SHL Finance Co. The firm’s share price increased by 9.95 percent to SR19.33. 

The share price of Fawaz Abdulaziz Alhokair Co., also known as Cenomi Retail, rose by 5.8 percent to SR31.38. 

Sustained Infrastructure Holding Co. also saw its stock price rise by 4.24 percent to SR35.44. 

Conversely, the share price of Umm Al Qura for Development and Construction Co. declined by 6.14 percent to SR25.06. 

On the announcements front, Anmat Technology for Trading Co. said that it received a contract valued at SR50 million from Etihad Etisalat, also known as Mobily, to supply and install power generator systems and a fuel monitoring system. 

In a press statement, Anmat said that the contract is effective from June 26 and will last until May 17, 2028. 

The company added that the impact of the deal will be reflected in the firm’s financials from the second half of this year and will continue until the end of the contract duration. 

The share price of Anmat, which is listed in Nomu, increased by 10.19 percent to SR12.33. 

International Human Resources Co. said that it signed a framework agreement with the Arab National Bank to provide human resources services. 

According to a Tadawul statement, the contract is valid for 12 months and will be renewed for a similar period unless either party notifies the other at least 30 days prior to the expiry date. 

International Human Resources Co.’s share price rose by 2.83 percent to SR6.17. 


Saudi Tourism Development Fund rolls out programs to boost startup growth 

Saudi Tourism Development Fund rolls out programs to boost startup growth 
Updated 10 July 2025
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Saudi Tourism Development Fund rolls out programs to boost startup growth 

Saudi Tourism Development Fund rolls out programs to boost startup growth 

RIYADH: Tourism startups and entrepreneurs in Saudi Arabia stand to benefit from three newly launched support initiatives aimed at accelerating innovation, attracting investment, and strengthening the Kingdom’s growing travel economy. 

The Tourism Development Fund has introduced the Grow Tourism Incubator, Tourism Hackathons and Bootcamps, and the Grow Tourism Accelerator — a suite of initiatives designed to empower early-stage ventures through TDF Grow, its non-financial enablement arm, according to a press release. 

Developing a robust tourism landscape is a key pillar of Saudi Arabia’s Vision 2030 agenda, as the Kingdom works to diversify its economy and reduce its reliance on oil revenues. 

The National Tourism Strategy targets 150 million annual visitors by 2030, after surpassing the 100 million milestone ahead of schedule, with official data showing the Kingdom welcomed 116 million tourists in 2024 — exceeding its annual target for the second year in a row. 

Qusai bin Abdullah Al-Fakhri, CEO of TDF, said: “We remain committed to empowering entrepreneurs to transform their ideas into promising, impactful projects. We strive to provide a comprehensive support ecosystem that addresses the needs of businesses at every stage, helping them overcome challenges and accelerate their growth.”  

He added: “These three programs embody our dedication to practical enablement, offering guidance, support, and connections with key stakeholders, to build a sustainable tourism sector full of opportunity and aligned with the aspirations of Saudi Vision 2030.” 

The Grow Tourism Incubator Program, now in its first edition, will target early-stage tourism startups. Registration opened on June 24 and will remain open until July 17. 

The incubator offers a 10-month immersive environment, providing participants with access to shared workspaces, as well as legal, marketing, and logistical support, along with technical and administrative services. 

The program will also include workshops, specialized training sessions, and mentorship by leading industry experts, delivered both virtually and in person at TDF headquarters — ensuring accessibility for entrepreneurs across the Kingdom. 

The Tourism Hackathons and Bootcamps program aims to support innovators and early-stage tourism projects, with a focus on three key regions: Asir, Al-Ahsa, and Madinah. 

Running for five months, the program will allow participants to take part in hackathons followed by training bootcamps, helping them develop their ideas into actionable prototypes. 

Registrations opened on July 1 and will remain open until July 22. 

The Grow Tourism Accelerator builds on the success of previous cohorts, which have graduated 99 participants to date. 

This three-month program is designed to support startups and help them scale within the tourism sector. 

“The accelerator also attracts international companies, enriching the diversity of the investment landscape and elevating service quality across the industry. The program provides integrated mentorship, culminating in graduation and connections with potential investors,” the TDF release stated. 

It added that the TDF Grow platform has supported 8,800 beneficiaries through its non-financial programs and initiatives, helping entrepreneurs and small and medium enterprises accelerate their projects and enhance the competitiveness of Saudi Arabia’s tourism sector.


OPEC says no peak to oil demand before 2050

OPEC says no peak to oil demand before 2050
Updated 10 July 2025
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OPEC says no peak to oil demand before 2050

OPEC says no peak to oil demand before 2050
  • OPEC sees oil demand rising by 18.6% to around 123 mbd in 2050
  • It expects demand to grow for longer than other forecasters

PARIS: The OPEC oil cartel said Thursday that demand for crude will continue to expand through at least 2050, calling efforts to rapidly shift away from fossil fuels an unworkable fantasy.

In its latest annual report on the outlook for oil demand, OPEC sees global oil demand rising by 18.6 percent from 103.7 million barrels per day in 2024 to around 123 mbd in 2050.

That rising demand will be “driven by expanding economic growth, rising populations, increasing urbanization, new energy-intensive industries like artificial intelligence, and the need to bring energy to the billions without it,” said OPEC Secretary General Haitham Al-Ghais in his foreword to the report.

“There is no peak oil demand on the horizon,” he said.

That forecast puts OPEC, which gathers together a number of the world’s leading oil exporting nations, at odds with the International Energy Agency, whose member states include many oil-consuming nations.

The IEA said last month that it expects global oil demand to begin to decline in 2030, driven by the rise of electric cars and the shift away from crude to produce power.

The IEA even sees oil demand dropping in Saudi Arabia as it replaces crude with gas and renewable energy to produce power.

Ghais said that OPEC sees growth in oil demand being primarily driven by developing nations, and that fossil fuels still account for around 80 percent of the global fuel mix, little changed from when the cartel was founded in 1960.

.”..it has become increasingly clear to many policymakers in recent years that the narrative of swiftly phasing out oil and gas has been seen for what it is: unworkable, and a fantasy,” he said.

The OPEC chief blasted many timelines to reach net-zero carbon emissions as having “little regard for energy security, affordability or feasibility.”

Experts say a rapid phase-out of fossil fuels is necessary if global warming is be kept to 1.5 degrees Celsius above preindustrial levels.


UAE and Azerbaijan sign CEPA to expand trade and investment across key sectors 

UAE and Azerbaijan sign CEPA to expand trade and investment across key sectors 
Updated 10 July 2025
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UAE and Azerbaijan sign CEPA to expand trade and investment across key sectors 

UAE and Azerbaijan sign CEPA to expand trade and investment across key sectors 

RIYADH: The UAE and Azerbaijan have signed a Comprehensive Economic Partnership Agreement to strengthen bilateral trade, enhance investments, and deepen cooperation in renewable energy, logistics, tourism, and construction. 

The deal is expected to contribute $680 million to the UAE’s gross domestic product and $300 million to Azerbaijan’s economy by 2031, according to the Emirates News Agency, also known as WAM. 

Signed in the presence of UAE President Mohamed bin Zayed Al-Nahyan and Azerbaijani President Ilham Aliyev, the CEPA aims to enhance private sector collaboration, strengthen supply chain resilience, and promote the global expansion of small and medium-sized enterprises. 

It builds on a growing trade relationship between the two countries, with non-oil trade rising 43 percent year on year to reach $2.4 billion in 2024. 

The UAE is also Azerbaijan’s leading Arab investor, with cumulative investments exceeding $1 billion. 

Speaking after the signing, UAE Minister of Foreign Trade Thani Al-Zeyoudi described Azerbaijan as “a hugely valuable trade and investment partner for the UAE,” citing its strategic location and continued economic growth. 

“Our bilateral non-oil trade mirrors this growth, climbing 36.2 percent last year to reach $2.24 billion, which represents 50 percent of Azerbaijan’s trade with the GCC,” he said, according to WAM. 

Al-Zeyoudi said the CEPA would unlock new opportunities across manufacturing, agriculture, and automotive, as well as logistics and financial services. 

He also noted plans to expand UAE investments in energy and renewables through national companies such as ADNOC and Masdar, with the goal of building a joint logistics infrastructure to enhance access to broader regional and global markets. 

Azerbaijan’s agreement adds to the UAE’s expanding CEPA program, a key pillar of its foreign trade agenda that targets $1.1 trillion in non-oil trade by 2031. 

In 2024, the initiative contributed to a record $816 billion in non-oil trade, representing a 14.6 percent increase over the previous year. 

The UAE has now concluded 27 CEPAs with global markets representing more than one-quarter of the world’s population. 

The deal is part of the country’s broader strategy to advance economic diversification through strategic international partnerships, the WAM statement said.

Kuwait and Jordan strengthen ties

Kuwait and Jordan held the fifth session of their Joint Higher Committee in Kuwait City this week. 

Co-chaired by Kuwaiti Foreign Minister Abdullah Al-Yahya and Jordanian Deputy Prime Minister and Minister of Foreign Affairs Ayman Safadi, the session resulted in six cooperation agreements and an executive program spanning the economic, investment, cultural, and tourism sectors, according to Kuwait News Agency.


Saudi money supply surges to $824bn as savers embrace high-interest deposits

Saudi money supply surges to $824bn as savers embrace high-interest deposits
Updated 10 July 2025
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Saudi money supply surges to $824bn as savers embrace high-interest deposits

Saudi money supply surges to $824bn as savers embrace high-interest deposits
  • Time and savings deposits accounted for 35.16%
  • Rate relief expected to continue into 2025

RIYADH: Saudi banks’ money supply M3 reached SR3.09 trillion ($824.3 billion) in May, rising about 9.39 percent from the same period last year. 

According to data by the Saudi Central Bank, also known as SAMA, time and savings deposits accounted for 35.16 percent of the total, slightly below the 16-year peak of 35.2 percent recorded in March, but still representing the highest share since 2009. 

The expansion has been driven by a marked shift in deposits. Savers are increasingly locking their money into term deposits to take advantage of higher interest rates. 

These interest-bearing accounts have grown at the fastest pace among all money categories, reflecting depositors’ preference for higher returns amid a high-rate environment. Term deposits offer better interest in exchange for keeping funds for a fixed period, and therefore tend to gain popularity when interest rates are elevated. 

Despite this shift, demand deposits — funds in checking accounts that can be withdrawn on demand — remain the single largest component of the money supply, at around SR1.5 trillion, or roughly 48.6 percent of M3. 

That share has edged down from over 49 percent a year ago as more savers move into interest-yielding options. Meanwhile, other quasi-money deposits, such as foreign currency accounts and certain short-term instruments, represent roughly 8 percent or SR250 billion of the total, and physical currency in circulation outside banks adds about SR246 billion, according to SAMA data. 

As the US Federal Reserve embarked on aggressive rate hikes over the past two years to curb inflation, SAMA mirrored those moves to maintain the currency peg. This pushed Saudi interest rates to multi-year highs, peaking around 6 percent late last year. 

With inflation pressures subsequently easing, the US Fed began to loosen policy, implementing rate cuts totaling 100 basis points by the end of 2024. 

The rate relief was expected to continue into 2025. Indeed, by January, signs emerged that the deposit mix was starting to rebalance, as demand deposits began regaining ground once benchmark rates had come off their peak, according to SAMA data. 

Any further rate cuts were abruptly put on hold amid renewed global inflation concerns. Speaking earlier this month at the European Central Bank’s annual forum in Sintra, Portugal, Federal Reserve Chair Jerome Powell said the Fed would probably be in a position to begin cutting rates were it not for the inflationary impact of President Donald Trump’s new tariffs, according to Bloomberg. 

Central bankers expect Trump’s import tariffs to lift inflation, so they have adopted a cautious “wait-and-see” stance before resuming any rate reductions. 

As a result, the Fed has kept rates steady in recent months, after having trimmed about 100 basis points late last year, with the risk of inflationary pressure from tariffs delaying further easing. 

Given that SAMA typically mirrors Fed decisions to defend the riyal’s dollar peg, this pause in US rate cuts has likewise led the Saudi central bank to hold its rates, keeping domestic borrowing costs elevated. 

Banks, in turn, have been competing for deposits by offering better returns on time accounts, a strategy to shore up liquidity while credit demand stays strong. 

Looking ahead, officials and analysts foresee an eventual turning point in the interest rate cycle. Goldman Sachs, for example, now projects that the Fed will begin cutting rates later in 2025, delivering three quarter-point rate cuts by the end of the year, up from two cuts in its earlier forecast, according to a July article by Bloomberg. 

Until that pivot materializes in interest rates, Saudi banks and their customers are capitalizing on the elevated returns offered by term deposits — a trend that has pushed savings deposits to record highs and fundamentally altered the composition of the Kingdom’s money supply.