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Arab News
4 days ago
- Business
- Arab News
Saudi Arabia, UAE lead global office quality fit-out investments: JLL
RIYADH: Saudi Arabia and the UAE are leading global investments in high-end office fit-outs, averaging over $2,400 per sq. meter, well above the global benchmark of $1,830, according to a new report. An analysis by real estate advisory firm JLL, based on data from 25 countries, found that companies in both Gulf countries are prioritizing workspace upgrades as part of broader return-to-office strategies. In the Middle East and Africa, corporate sentiment remains focused on targeted investments in design and functionality to support hybrid working models and enhance employee productivity. The report added that initiatives in Saudi Arabia such as the regional headquarters program are playing a crucial role in driving demand for Grade A office spaces in the Kingdom. It offers incentives such as a 30-year corporate income tax exemption and withholding tax relief, alongside regulatory support for multinationals operating in the Kingdom. Maroun Deeb, head of project and development services for Saudi Arabia and Bahrain at JLL, said: 'The general optimism toward investing in workspaces is likely to continue throughout 2025 as growth-oriented corporations invest in office fit-outs to support their hybrid workplace policies.' He added: 'Targeted investments to enhance employee experience will see an increased focus on workplace design, innovative technology solutions, and refurbishment opportunities amid growing interest in healthier, energy-efficient workspaces.' According to the analysis, companies in Saudi Arabia and the UAE are investing more on fit-outs to enhance workplace experience and employee performance. The report added that Saudi Arabia and the UAE are among the premium global markets for quality fit-out investments on par with London, New York and Sydney. JLL analyzed data from 25 countries and found that sustainability is a key driver in many relocation strategies and office fit-outs. Some 68 percent of organizations globally plan to increase investment in sustainability performance in the next five years. In the Middle East and Africa region, the sentiment is strongest in Saudi Arabia and the UAE, where 78 percent of corporate real estate leaders aim to enhance value through sustainability. The report, however, added that organizations in the region face challenges in meeting sustainability requirements due to limited suitable stock and high costs of upgrading older buildings. JLL added that early planning and integration of sustainability targets in relocation strategies and fit-out projects is crucial to address challenges. 'Offices that embrace innovative technologies and sustainable design principles and have higher levels of green certification command a premium, especially in Dubai,' said Gary Tracey, head of project and development services UAE at JLL. He added: 'Investments to improve sustainability will mitigate future operational expenses, remaining highly attractive to tenants seeking modern, efficient workplaces.' The report further said that supply chain disruptions in 2024 disproportionately affected the office market in the Middle East and North Africa, tightening project timeframes and escalating pricing. 'From environmental and smart building systems to adaptive workspaces and settings, supply chain engagement is critical in managing costs and allowing for innovation in future-focused workspaces,' said JLL. The report added that mechanical and electrical services now account for a higher proportion of office spend as stricter environmental and sustainability standards require more complex systems. With 39 percent spending on M&E services, Cairo ranks among the top cities globally for average proportion of costs per sq. meter for such services, followed by Dubai at 30 percent and Riyadh at 29 percent. In April, in a separate analysis, JLL said that the global office sector is rebounding as companies scale back hybrid employment options, increasing demand for workspaces. In that report, JLL revealed that 59 percent of organizations globally are increasing investments in design and fit-outs.
Arabian Business
31-03-2025
- Business
- Arabian Business
Saudi Arabia real estate sector set for robust expansion in 2025: Report
Saudi Arabia's real estate market is positioned for substantial growth in 2025, driven by Vision 2030 and strategic economic diversification, according to a comprehensive market review by JLL. The Kingdom's non-oil sector is projected to grow by 5.8 per cent in 2025, up from 4.5 per cent in 2024, underpinned by significant infrastructure investments and private sector engagement. 'Despite global economic headwinds, the resilience and strategic diversification efforts in Saudi Arabia driven by Vision 2030 are a significant catalyst for real estate development, attracting both domestic and international capital. The flight to quality, limited vacancy in prime assets, and ambitious tourism strategies are further bolstering sustained demand across key sectors, particularly in Riyadh and Jeddah, creating a compelling investment landscape for the long term,' Saud Alsulaimani, Country Head of JLL in Saudi Arabia said. Construction remains a robust sector, with Saudi Arabia accounting for $29.5 billion in project awards in 2024. Diversification fuels real estate The hospitality, mixed-use, and leisure segments demonstrated significant activity, with the residential sector securing $7.9 billion in awards. Riyadh's office market emerged as a standout performer, with Grade A buildings registering a mere 0.2 per cent vacancy and average rents reaching $609 per square metre in Q4 2024. The city anticipates an additional 888,600 sq m of office space in its pipeline for 2025. The residential sector continues to show strength, with villas comprising 53.3 per cent of total transactions in Riyadh. Jeddah's market sees apartments dominating, representing 82.8 per cent of anticipated units for 2025. Hospitality sectors in Riyadh and Jeddah are experiencing growth, driven by corporate tourism, global events, and religious tourism. Riyadh's Average Daily Rates surged 13.3 per cent to $239 in 2024, with 2,312 new hotel keys expected in 2025. Retail landscapes are transforming, with a shift towards experiential formats. Open-air boulevard-type retail is gaining popularity, while traditional mall concepts face challenges. Community malls showed a 5.5 per cent growth, contrasting with regional malls experiencing a 9.3 per cent annual decline. The industrial and logistics sectors demonstrate strong market activity, with upward rental rates in both Riyadh and Jeddah. This growth is fuelled by economic diversification and e-commerce expansion. 'Strategic projects that underpin Saudi Arabia's Vision 2030 will continue to attract substantial investments, creating new opportunities for market expansion. Significant cash flow is anticipated for major events like the FIFA World Cup 2030 and EXPO 2030, further boosting infrastructure development and positioning the real estate sector for robust performance and positive growth in 2025 and beyond,' Maroun Deeb, Head of Projects and Development Services for JLL in KSA added. The data centre landscape is also expanding, with Saudi Arabia ranking third in live colocation facilities and contributing 12.6 per cent of the region's operational IT load capacity by 2024's end. As the Kingdom prepares for major events from 2025 to 2028, it continues addressing challenges through localisation efforts, infrastructure investment, digital transformation, and a focus on sustainability.
Arab News
27-03-2025
- Business
- Arab News
Saudi Arabia's real estate market to reach $101.62bn by 2029
RIYADH: Saudi Arabia's real estate sector is expected to experience growth in 2025, fueled by the ongoing efforts of Vision 2030 to diversify the Kingdom's economy, according to a recent analysis. In its latest report, real estate services firm JLL highlighted that economic growth across the Gulf Cooperation Council is expected to remain strong in 2025, with Saudi Arabia leading the charge. The Kingdom's non-oil sector is projected to expand by 5.8 percent in 2025, an increase from 4.5 percent in 2024. JLL also noted that Saudi Arabia's construction sector continued to perform well in 2024, with project awards totaling $29.5 billion. A strong real estate market is critical for the Kingdom as it works to position itself as a global hub for tourism and business, reducing its long-standing dependence on oil revenues. The Real Estate General Authority of Saudi Arabia forecasts the property market to reach $101.62 billion by 2029, with a compound annual growth rate of 8 percent starting in 2024. Saud Al-Sulaimani, country head of JLL, Saudi Arabia, said: 'Despite global economic headwinds, the resilience and strategic diversification efforts in Saudi Arabia, driven by Vision 2030, are a significant catalyst for real estate development, attracting both domestic and international capital.' He added: 'The flight to quality, limited vacancy in prime assets, and ambitious tourism strategies are further bolstering sustained demand across key sectors, particularly in Riyadh and Jeddah, creating a compelling investment landscape for the long term.' According to the report, the hospitality, mixed-use, and leisure sectors saw substantial activity, while the residential sector also performed strongly, with $7.9 billion in awards in 2024. JLL pointed out several challenges faced by Saudi Arabia's real estate sector, including capacity constraints, rising costs, and geopolitical conflicts. The report emphasized that the Kingdom is tackling these challenges through increased localization efforts, ongoing infrastructure investment, and digital transformation. Additionally, regulatory reforms, improved stakeholder collaboration, and a focus on renewable energy and sustainability are key strategies to overcome these obstacles. 'Strategic projects that underpin Saudi Arabia's Vision 2030 will continue to attract substantial investments, creating new opportunities for market expansion,' said Maroun Deeb, head of projects and developments for JLL in Saudi Arabia. He added: 'Significant cash flow is anticipated for major events like the FIFA World Cup 2030 and EXPO 2030, further boosting infrastructure development and positioning the real estate sector for robust performance and positive growth in 2025 and beyond.' In 2024, Riyadh's office sector witnessed strong demand, while limited supply saw Grade A buildings registering a mere 0.2 percent vacancy. The analysis added that average rents for Grade A office spaces stood at $609 per sq. meter by the end of the fourth quarter of 2024. Grade A office spaces command a premium due to their prime location, infrastructure, and modern amenities. JLL revealed that 326,000 sq. meters of gross leasable area was added to the market in 2024, while 888,600 sq. meters are awaiting in the pipeline in 2025. 'Jeddah is emerging as a compelling alternative, attracting regional and international corporations to its modern, high-quality office spaces in the northwestern region. Dammam's market remains stable, primarily driven by government entities,' added JLL. In Riyadh's residential sector, villas continued to dominate, accounting for 53.3 percent of the overall transactions. Even though 28,943 units are slated for 2025 in Riyadh, new supply lags will likely drive price and rental increases. According to JLL, Riyadh's hospitality industry witnessed significant growth in 2024, with average daily rates surging by 13.3 percent year on year to $239. The report added that Riyadh's growth as a key business and leisure hub will continue, with 2,312 keys expected in 2025. 'As Saudi Arabia progresses with its Vision 2030 objectives, Riyadh's hospitality market is likely to play a crucial role in supporting the Kingdom's broader economic goals and establishing itself as a key destination for both business and leisure travelers in the region,' said JLL. Jeddah's hospitality landscape, bolstered by religious and leisure tourism, also remained strong in 2024. The report added that upward rental rates in Riyadh and Jeddah's industrial and logistics sectors indicate strong market activity and robust demand for enhanced logistics and warehousing capabilities. Regarding the data center landscape, JLL said that 5G and artificial intelligence are driving the segment's growth. 'Saudi Arabia, particularly Riyadh, Dammam, and Jeddah, boasts a significant data center footprint. The Kingdom ranks third in live colocation data center facilities and contributed approximately 12.6 percent of the region's 1,050 MW operational IT load capacity by the end of 2024, positioning it well for further expansion,' concluded JLL.
Zawya
27-03-2025
- Business
- Zawya
Saudi Arabia's real estate market poised for continued growth in 2025 driven by Vision 2030: JLL
The outlook for Riyadh's office sector remains optimistic, fueled by persistent strong demand and limited short-term supply additions. As Saudi Arabia progresses with its Vision 2030 objectives, Riyadh's hospitality market is likely to play a crucial role in supporting the Kingdom's broader economic goals and establishing itself as a key destination for both business and leisure travellers in the region. 5G and AI are driving rapid growth in the MEA region's data centre landscape Riyadh, Saudi Arabia – Saudi Arabia's real estate market is set for substantial expansion in the year ahead, driven by Vision 2030 and strategic diversification, according to JLL's Middle East and Africa Market Review and Outlook 2025. The report highlights the Kingdom's transformative growth and unique opportunities, fuelled by its ambitious development agenda, even as the market navigates supply chain complexities and rising construction costs. Against the backdrop of global macroeconomic uncertainty and ongoing shifts in fiscal and trade policies, JLL maintains an optimistic outlook for economic growth across GCC economies, with Saudi Arabia leading the way. The non-oil sector in the Kingdom is projected to grow by 5.8% in 2025, up from 4.5% in 2024, fuelled by significant investment in infrastructure and private sector participation. Saud Alsulaimani, Country Head KSA, JLL, said: 'Despite global economic headwinds, the resilience and strategic diversification efforts in Saudi Arabia driven by Vision 2030 are a significant catalyst for real estate development, attracting both domestic and international capital. The flight to quality, limited vacancy in prime assets, and ambitious tourism strategies are further bolstering sustained demand across key sectors, particularly in Riyadh and Jeddah, creating a compelling investment landscape for the long term.' Although the MEA region's construction project market slowed in 2024, Saudi Arabia's construction sector remained robust, accounting for US$29.5 billion of the total construction project awards. The hospitality, mixed-use, and leisure segments saw significant activity, with the residential sector performing strongly with US$7.9 billion in awards. As Saudi Arabia prepares for major events, it anticipates capacity constraints from 2025 to 2028 alongside challenges from rising costs and geopolitical conflicts. Maintaining its 2024 tender price inflation (TPI) trajectory of 6% for this year, the Kingdom is addressing these challenges through intensified localisation efforts, sustained infrastructure investment, digital transformation, regulatory reforms, enhanced stakeholder collaboration, and a focus on renewable energy and sustainability. Maroun Deeb, Head of Projects and Development Services for JLL in KSA, said: 'Strategic projects that underpin Saudi Arabia's Vision 2030 will continue to attract substantial investments, creating new opportunities for market expansion. Significant cash flow is anticipated for major events like the FIFA World Cup 2030 and EXPO 2030, further boosting infrastructure development and positioning the real estate sector for robust performance and positive growth in 2025 and beyond.' 2024 was an exceptional year for Riyadh's office sector as robust demand and limited supply saw Grade A buildings registering a mere 0.2% vacancy and average rents reaching US$609 per square metre in Q4 2024. While 326,600 sq m of Gross Leasable Area (GLA) were added to the market, a substantial 888,600 sq m pipeline promises continued growth in 2025. Jeddah is emerging as a compelling alternative, attracting regional and international corporations to its modern, high-quality office spaces in the northwestern region. Dammam's market remains stable, primarily driven by government entities. Strong demand continues to fuel growth in Riyadh's residential sector, with villas remaining highly sought after (53.3% of total transactions). Although 28,943 units are slated for 2025, new supply lags will likely drive price and rental increases. In Jeddah, apartments dominated transactions in 2024, comprising 82.8% of the anticipated units for 2025, but limited supply will similarly accelerate price and rental growth. The hospitality sector in Riyadh is thriving, driven by corporate tourism and global events, with Average Daily Rates (ADR) surging 13.3% to US$239 in 2024. The city's growth as a key business and leisure hub will continue, with 2,312 keys expected in 2025. Jeddah's hospitality landscape, bolstered by religious and leisure tourism, remains strong despite a slight dip in KPIs. Its solid foundation positions it for future growth, aligning with the Kingdom's ambitious tourism goals. Riyadh's retail landscape is shifting towards 'experiential formats' favouring leisure activities and events. Open-air boulevard-type retail is gaining popularity, while traditional mall concepts face declining occupancy rates due to their standard 'closed mall' designs and generalised retail offerings. While super-regional malls demonstrated resilience, with average leasing rates increasing by 1.8% year-on-year in Q4 2024, community malls showed more robust growth marked by a 5.5% growth. Conversely, regional malls faced challenges, experiencing a 9.3% annual decline in average rates. Jeddah mirrors these trends, demanding innovation in retail design and tenant mix. Developers must prioritise diverse, experience-driven environments to meet evolving consumer expectations. Upward rental rates in the industrial and logistics sectors in both Riyadh and Jeddah indicate strong market activity and robust demand for enhanced logistics and warehousing capabilities. The growth is also driven by economic diversification and e-commerce growth. 5G and AI are driving rapid growth in the MEA region's data centre landscape. Saudi Arabia, particularly Riyadh, Dammam, and Jeddah, boasts a significant data centre footprint. The Kingdom ranks third in live colocation data centre facilities and contributed approximately 12.6% of the region's 1,050 MW operational IT load capacity by the end of 2024, positioning it well for further expansion. About JLL For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500 company with annual revenue of $23.4 billion and operations in over 80 countries around the world, our more than 112,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. About JLL MEA Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 2000 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Cape Town, Johannesburg and Nairobi.
