Office Rents Increase as Demand Surges

Riyadh's commercial real estate market maintained strong momentum in Q2 2025, driven by robust economic fundamentals, increased foreign investment, and growing global company interest. Savills' report indicates Grade A office occupancy at 98%, with average rents rising 10% year-on-year. A significant shift towards larger office spaces is evident, with half of leasing inquiries seeking spaces over 1,000 sqm, a notable increase from the previous quarter.

The Banking, Financial Services, and Insurance (BFSI) sector dominated leasing activity, accounting for 50% of transactions. Legal services and pharmaceutical firms also contributed significantly. International interest is surging, with 46% of Q2 inquiries originating from US and UK companies. This growth is supported by a surge in foreign direct investment, reaching SAR 22.2 billion in Q1 2025, up from SAR 15.5 billion the previous year.

Infrastructure improvements are also contributing to market dynamics. The Riyadh Metro facilitated over 25 million passengers in Q1 2025, enhancing accessibility to key commercial areas. Rental growth is most pronounced in specific zones, with Zone C experiencing a 15% annual increase and Zone A nearly 11%.

While the market is currently robust, the introduction of over 900,000 sqm of new Grade A space by late 2026, through developments like Diriyah Gate and Misk City, may soften the upward trajectory. However, with strong business confidence, limited supply, and increasing multinational interest, Riyadh's office market is poised to remain a crucial component of Saudi Arabia's Vision 2030 strategy.