Riyadh Office Market Outlook to 2027

Riyadh is a major economic hub in the Middle East, and its office market is closely tied to the overall economic performance of the country

Riyadh is a major economic hub in the Middle East, and its office market is closely tied to the overall economic performance of the country. The Saudi government has been implementing various economic reforms and initiatives to diversify the economy. Monitoring the occupancy rates of existing office spaces can give an indication of the overall health of the market. High occupancy rates may suggest a robust demand for office spaces.

Riyadh Office Market

Changes in regulations related to business and real estate can impact the office market. Keeping track of any regulatory updates is crucial for understanding the market dynamics. The city has witnessed several real estate developments, including the construction of new office buildings and business districts. Understanding the pipeline of upcoming projects can provide insights into the future supply and demand dynamics.

Riyadh Office Market Analysis

With the impending enforcement of the Regional Headquarters Program (RHQ), Riyadh is becoming the preferred location for numerous corporations aiming to establish their Middle East headquarters.

Saudi Vision 2030's National Development Plan is at the forefront of transforming the infrastructure landscape of the Kingdom, with Riyadh taking center stage in this monumental shift.

Confidence in Riyadh's capacity to host businesses stems from its role as the rapidly expanding G20 economy. Over 80 international companies have procured licenses to operate in the Kingdom, demonstrating a strong demand directed towards Riyadh's office spaces.

Most of these businesses prioritize best-in-class offices. Notably, the King Abdullah Financial District (KAFD) and Laysen Valley are emerging as the most desired locations.

This soaring demand has led to a 13% surge in office lease rates over the year concluding in June 2023. Prime office spaces have notably increased in lease rates.

Key Trends by Market Segment

By Type of Office stock: In 2022, the Riyadh Office market is dominated by Premium Offices type of stock. While top-tier office spaces are in high demand, the Grade B+ office segment hasn't been left behind. Its rental rates have increased by 15% over the past year. Despite premium spaces being the primary choice, the surge in lease rates combined with limited availability has compelled several occupiers to consider secondary options in Riyadh.

Riyadh Office Market share

By Rent: In 2022, Riyadh Office Market is segmented into Premium, Grade A, Grade B and Grade B+ by SAR/Annual/SQM. The market is dominated by Premium offices as the rent of premium offices is maximum but they provide better facilities and luxurious ambience. Most of the office spaces demands are for premium offices by rent standards.

Riyadh Office Market size

By Region: In 2022, the Riyadh Office market is segmented into East, West, North and South region and is dominated by central region of Riyadh by demand of Offices. Central Region has occupier profile in Banking and Financial Services, Technology, Coworking, Media, Government Entities, Consulting, E-commerce. The north region has majorly category of Grade A and Premium offices.

Future Outlook

The Riyadh office market is anticipated to reach GLA 6.4 SQM by 2027, with a forecasted increase in market size driven by factors such as economic development, increased foreign investment, and a growing demand for office spaces.

The future of the Riyadh office market is likely to be shaped by the adoption of smart office technologies.

Companies are expected to invest in cutting-edge technologies to enhance productivity, improve energy efficiency, and provide a modern and flexible work environment.

Despite positive growth prospects, the Riyadh office market may face challenges related to economic volatility or geopolitical factors. These uncertainties could influence the demand for office spaces and real estate investments.