Riyadh’s premium office space has achieved a near-full occupancy rate of 98 percent due to a wave of international companies establishing a presence in the city. This influx has driven rental prices up by 19 percent year-on-year, which solidifies Saudi Arabia’s capital as a key regional business hub, as reported by Savills.
Foreign firms establishing regional HQs
In 2024, over 120 foreign firms, including notable names like Goldman Sachs and Frost & Sullivan, have moved their regional headquarters to Riyadh, significantly increasing the demand for high-end office space, according to Savills’ Q3 market report. The technology, media, and telecommunications sectors have been particularly active, accounting for 40 percent of new leases, while consulting and consumer goods companies each represent 20 percent.
Supporting Vision 2030
Amjad Saif, head of transactional services at Savills Middle East, indicated that the transformation of Riyadh’s office market illustrates the city’s crucial role in supporting Vision 2030. He remarked that a diverse array of sectors is being attracted to Riyadh’s business landscape, resulting in heightened demand for quality office spaces.
Surge in FDI
This strong performance in the office market coincides with a remarkable 23.4 percent quarter-on-quarter increase in Saudi Arabia’s foreign direct investment, which reached SAR11.7 billion in Q2 2024. This surge reflects growing confidence among investors in the Kingdom’s efforts to diversify its economy.
The report noted that the non-oil sector in the city is expected to grow by 5 percent this year, contributing to an overall GDP increase of 1.4 percent, with inflation remaining stable at 1.7 percent.
Plans for future development
To accommodate the rising demand, it was reported that Riyadh plans to develop over 1.6 million square meters of Grade A office space by 2028. Key projects, such as Prince Mohammed Bin Salman Nonprofit City and Diriyah Gate, are set to transform the commercial real estate landscape. Ramzi Darwish, head of Saudi Arabia at Savills Middle East, mentioned that Riyadh’s office market is rapidly establishing itself as a regional powerhouse for business development.
Attractiveness to enterprises
The combination of high occupancy rates and rising rental values underscores Riyadh’s attractiveness to both regional and international enterprises. Additionally, there is a growing interest in flexible workspaces, with reports indicating that 48 percent of inquiries are focused on offices smaller than 250 square meters, highlighting a shift towards hybrid working models.
Incentives for foreign companies
Saudi Arabia’s Regional Headquarters program is attracting foreign companies through various incentives, including exemptions from Saudisation, tax advantages, and expedited visa processing. Furthermore, it has been announced that the Kingdom plans to revise its investment regulations in 2025 to reduce bureaucratic barriers and enhance protections for investors.
