Riyadh’s office market continued to deliver solid performance in the second quarter of 2025, driven by strong business confidence, economic stability, and increasing interest from international companies, according to the latest research from real estate consultancy Savills.
The kingdom’s broader economic landscape remained a key driver of market performance. Saudi Arabia’s GDP is projected to grow by 3.5 percent in 2025, supported by a 4.9 percent increase in the non-oil sector — highlighting the kingdom’s progress in diversifying its economy in line with Vision 2030.
Business sentiment remained positive, as reflected in the Purchasing Managers Index (PMI), which reached 57.2 in June — its highest level since May 2011 — signaling strong private sector expansion and robust job creation.
Foreign direct investment (FDI) trends further underscored the positive economic climate. In Q1 2025, FDI reached SAR 22.2 billion, up from SAR 15.5 billion during the same period last year, marking continued international confidence in the Saudi market.
Read: Saudi Arabia real estate index jumps 4.3 percent in Q1 on 5.1 percent residential surge
Office demand remains high, vacancy tight
Riyadh’s Grade A office market saw occupancy remain steady at 98 percent, reflecting persistent demand amidst a constrained supply pipeline. Average office rents rose 0.75 percent quarter-on-quarter and recorded a significant 10 percent year-on-year increase.
Zone C — which includes fast-developing hubs such as Riyadh Front, Digital City, and Laysen Valley — led annual rental growth with a 15 percent increase. Zone A, home to established business districts like Olaya, the King Abdullah Financial District (KAFD), and Kingdom Centre, followed with nearly 11 percent annual rental growth, underlining the broad appeal of both new and traditional commercial areas.
Surge in international tenants and new entrants
Riyadh continues to attract global corporates. As of mid-2025, more than 660 international firms had been licensed to set up regional headquarters in the city, already exceeding the Vision 2030 target of 500. Notable new market entrants in Q2 2025 included BNY Mellon, ASPEN, Globant, and London Business School.
Savills reported that 46 percent of leasing enquiries in Q2 came from companies based in the US and UK, a strong indicator of Riyadh’s international attractiveness.
The most active sectors in terms of leasing interest were banking and financial services, technology, media and telecoms (TMT), as well as engineering and manufacturing — highlighting the capital’s growing reputation as a center for innovation and knowledge-based industries.
Chris Chambers, Head of Transactional Services in KSA, commented: “We’re seeing strong expansion-driven activity across sectors, particularly within banking, financial services and insurance (BFSI) accounting for 50 percent of transactions this quarter. Legal and pharmaceutical firms each contributed a further 25 percent underscoring the depth and diversity of demand. Notably, leasing interest is increasingly shifting towards larger spaces, with half of all enquiries targeting units above 1,000 square meters.”
Infrastructure growth supporting market expansion
The city’s expanding infrastructure continues to boost its commercial real estate appeal. The Riyadh Metro carried over 25 million passengers in Q1 2025, and upcoming stations are expected to improve access to high-demand business districts such as KAFD and Olaya.
Outlook: Short-term strength, long-term supply pipeline
While rental growth is projected to remain resilient in the near term due to strong demand and limited supply, market pressures are expected to ease slightly toward the end of 2026.
Over 900,000 square meters of new Grade A office space is slated for delivery through major projects including Diriyah Gate and Prince Mohammed bin Salman Nonprofit City (Misk), which will help meet rising demand and support Riyadh’s continued transformation into a global business hub.
