Saudi Arabia's commercial property market reaches new heights

Saudi Arabia’s commercial property sector continues to rank as one of the world’s strongest, according to the latest data from the Royal Institution of Chartered Surveyors (RICS) Global Construction Monitor for Q3 2024.

The Kingdom’s commercial real estate market recorded a substantial boost in overall occupier demand, reflected in a net aggregate growth of 56% across various commercial property sectors.

This growth is especially evident in the office segment, which experienced a remarkable 76% increase, underscoring the strong interest in office spaces within the Kingdom.

The Kingdom’s appeal is not limited to local interest; international investor demand for Saudi commercial properties is at an all-time high, especially in the office sector, which posted an unprecedented 88% growth in interest from overseas investors.

This figure represents a record-breaking level of demand since RICS began tracking this data in Q4 2018, indicating that Saudi Arabia’s commercial market remains highly attractive even amid broader regional uncertainties.

Despite geopolitical challenges affecting parts of the Middle East, Saudi Arabia’s commercial property sector has shown resilience, maintaining positive expectations for rental and capital value growth over the next three and twelve months.

Experts attribute this robust market performance to the ambitious goals of Vision 2030, which continue to drive the Kingdom’s appeal as a global commercial property investment destination.

According to Abdullah Akaish, Senior Public Affairs Officer at RICS, “Saudi Arabia’s commercial property market is attracting unprecedented investor interest, with Q3 2024 data indicating a six-year high in office sector demand and record-breaking international investment sentiment.”

Akaish highlighted the office, retail, and industrial sectors as key drivers of growth in the Saudi market. He suggested that introducing incentives for green building practices, particularly in the high-demand office sector, could enhance Saudi Arabia’s long-term investment appeal by aligning it with global sustainability trends.

Other potential strategies include expanding urban planning flexibility, streamlining permitting processes, and offering tax incentives for sustainable and mixed-use developments.

These steps, he noted, would further strengthen Saudi Arabia’s market by meeting investor demand for eco-conscious, modern spaces.

Looking ahead, Saudi Arabia’s commercial property market is well-positioned for continued growth and resilience, making it an increasingly attractive option for investors amid regional volatility.

With expectations for robust rental and capital growth, the Kingdom stands out as a leader in commercial real estate and remains on track to support innovation and sustainable development aligned with Vision 2030.