Latest news with #SaudiArabiaIndustrialandLogisticsMarketReview
Arab News
29-04-2025
- Business
- Arab News
Warehouse occupancy in Saudi Arabia nearing saturation: Knight Frank
RIYADH: Saudi Arabia's industrial and logistics market is experiencing growth, with warehouse occupancy rates nearing saturation and rental prices in Riyadh increasing by 16 percent year-on-year, according to Knight Frank. The firm's latest 'Saudi Arabia Industrial and Logistics Market Review' highlighted a booming sector driven by e-commerce expansion, strategic government initiatives, and surging foreign investment. The Kingdom's logistics hubs — Riyadh, Jeddah, and the Dammam Metropolitan Area— are operating at near-full capacity. Riyadh leads with a 98 percent occupancy rate, while Jeddah and Dammam follow closely at 97 percent each. This momentum was also reflected in occupancy rates, with Abu Dhabi's industrial and logistics market maintaining near-full capacity, mirroring Dubai's tight supply. Key hubs like Khalifa Economic Zones Abu Dhabi and Abu Dhabi Airports Free Zone saw sustained demand, driven by strategic infrastructure projects and growing manufacturing activity, according to a separate report by Knight Frank. Riyadh's prime warehouse spaces now command rents exceeding SR250 ($66.6) per sq. meter, while city-wide averages hit SR208. 'Despite a slowdown in demand during the second half of the year, city-wide rental rates increased by 16 percent year-on-year,' the report said. Jeddah's lease rates for Grade B facilities rose to SR238 per sq. meter, with the high-end Asfan district maintaining 100 percent occupancy at SR387 per sq. meter. Dammam Metropolitan Area saw rents jump 14.8 percent to SR202 per sq. meter, fueled by a chronic shortage of quality logistics space. E-commerce and mega-projects fuel growth Rapid urbanization, a tech-savvy consumer base, and giga-projects like the Special Integrated Logistics Zone and Sino-Saudi Logistics Zone are reshaping demand. 'Demographic shifts including rapid urbanization, increased female workforce participation, and a tech-savvy Gen Z and millennial consumer base are accelerating the growth of the e-commerce sector,' the report stated. The 3-million-sq. meter Special Integrated Logistics Zone has attracted global players like SHEIN and Apple, while the 4-million-sq. meter Sino-Saudi zone aims to strengthen trade ties with China. Government initiatives and private investment The National Industrial Development and Logistics Program is a cornerstone of the Kingdom's industrial strategy, aiming to increase the transport and logistics sector's contribution to the gross domestic product to 10 percent by 2030, from 6 percent in 2021. Public-private partnerships are flourishing, with projects like the Tamer Logistics Park and Agility Logistics Park set to expand supply in key regions. 'Substantial investments to improve and expand connectivity and trade infrastructure, along with regulatory reforms are helping transform Saudi Arabia into a logistics powerhouse,' the report emphasized. Sustainability and digital transformation The sector is also pivoting toward sustainability and automation. Companies like Maersk and Agility are adopting solar-powered warehouses, while digital tools streamline operations. 'Sustainability has become a major market driver, with companies integrating renewable energy fields and LEED-certified buildings,' said Adam Wynne, partner at Knight Frank. With 36,000 factories projected by 2035 and FDI reforms attracting multinationals, Knight Frank predicts sustained growth. 'Saudi Arabia is on track to become a regional logistics powerhouse,' Wynne said, citing the Kingdom's integration of 'global expertise, modern infrastructure, and green initiatives.'
Arabian Business
29-04-2025
- Business
- Arabian Business
Saudi warehouses hit 98% occupancy amid industrial boom
Saudi Arabia's industrial and logistics property market is approaching full capacity, with warehouse occupancy reaching 98 per cent in Riyadh and 97 per cent in Jeddah, according to a new market review published by Knight Frank on Tuesday. The property consultancy's Saudi Arabia Industrial and Logistics Market Review shows the Kingdom's push towards becoming the Middle East's leading industrial hub is driving rapid growth in the sector, with 1,346 new industrial licences issued in 2024 and capital investment in newly licensed factories reaching SAR 50 billion. Warehouse space in Riyadh has seen the Kingdom's steepest rental growth, with average rates jumping 16 per cent year-on-year to SAR 208 per square metre, while prime properties now command over SAR 250 per square metre. Some districts, including Al Masani, Al Bariah, Al Faruq and Al Manakh, experienced even sharper increases exceeding 20 per cent. 'Leasing activity remains strong across most of Riyadh's submarkets, with demand continuing to outpace supply despite elevated rents,' said Faisal Durrani, Partner and Head of Research for MENA at Knight Frank. Jeddah's market showed similar trends, with average rents reaching SAR 238 per square metre and the Al Khomrah district maintaining its position as the city's dominant logistics hub, accounting for approximately 82 per cent of the port city's total warehouse stock. The report identifies several drivers behind the sector's growth, including government initiatives like the National Industrial Development and Logistics Program (NIDLP), which aims to increase the transport and logistics sector's contribution to GDP from 6 per cent in 2021 to 10 per cent by 2030. New Special Economic Zones (SEZs) and foreign direct investment reforms are also attracting international businesses, with significant deals struck in 2024 including partnerships between Saudi property developer Kaden and global logistics provider DB Schenker, as well as agreements involving GFH Financial Group, Panattoni Saudi Arabia, Arcapita Group Holdings, and Saudi firm Rikaz. 'Saudi Arabia remains a pivotal hub for global business expansion, with the Kingdom continuing to attract interest from around the world,' said Adam Wynne, Head of Commercial Agency at Knight Frank. According to the report, the number of licensed factories in Saudi Arabia is projected to increase from 12,895 to 36,000 by 2035, with sustainability emerging as a major market driver as companies like Maersk and Agility Logistics pioneer green infrastructure initiatives.
