Saudi Arabia: Strong demand from global firms drives Riyadh office market boom: Report
Riyadh's office market continued its upward trajectory in 2024, supported by Saudi Arabia's ongoing economic diversification and strong demand for space from multinational companies, with new entrants in Q4 such as PMG, Snowflake, and CRU reinforcing the capital city's growing status as a global business hub, a report by Savills said.
Savills also reported a surge in inquiries during Q4, with nearly half originating from US and UK companies.
'Demand was focused on flexible office spaces under 1,000 sqm, reflecting an increasing preference for adaptable workplace solutions,' the latest research by Savills said.
The technology, media, and telecommunications (TMT) sector dominated leasing activity in Q4, contributing 37.5 per cent of completed transactions.
Other active industries included banking, financial services, and insurance (BFSI), consulting and legal services, and IT/IT-enabled services.
Notably, 62.5 per cent of transactions involved businesses entering the Riyadh market for the first time, Savills said.
Grade A occupancy rates reached an impressive 98 per cent in Q4 2024, driven by a shortage of prime office spaces and sustained business confidence.
Rental rates also continued to climb with year-on-year growth of 10 per cent, the report said.
Zones A, which contains developments such as Business Lane Project, Nawafeth, and Zone B, home to Riyadh Business Gate and Granada Business Park, saw even sharper increases of 21 per cent and 14 per cent, respectively, it added.
Savills said over 550,000 sqm of new Grade A office space is expected to be delivered by the end of 2025, with flagship developments such as Diriyah Gate and Prince Mohammed Bin Salman Nonprofit City set to broaden tenant options.
'While this increase in supply may moderate rental price growth, demand for high-quality, ESG-compliant spaces is expected to remain strong, reflecting the priorities of businesses seeking sustainable and premium workplaces,' it said.
Ramzi Darwish, Head of Savills Saudi Arabia, said Riyadh has firmly established itself as a key destination for global businesses looking to expand in the region.
'The combination of a proactive government approach, strategic investments, and a strong non-oil economy has created a vibrant and dynamic office market.
'With rising demand for Grade A spaces and new developments on the horizon, Riyadh is well-positioned to continue its impressive growth trajectory,' Darwish said.
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