Saudi Arabia’s real estate market is demonstrating impressive growth, buoyed by strong performance in both the residential and hospitality sectors, according to the latest KSA Real Estate Market Dynamics Report by JLL.
In the first half of 2024, the residential sector made a notable impact, delivering 27,500 new units in Riyadh and Jeddah. This expansion has brought the total residential stock to 1.46 million units in Riyadh and 891,000 units in Jeddah.
Residential Market Trends
The increase in housing supply has been accompanied by a rise in residential sale prices. In Riyadh, sale prices surged by 10% year-on-year (YoY), while average rents saw a 9% annual increase. In Jeddah, the growth was slightly more moderate, with sale prices climbing 5% and rents rising by 4% YoY.
Hospitality Sector Expansion
The hospitality industry also experienced significant growth in the first half of 2024. With Saudi Arabia aiming to attract 150 million visitors by 2030, the sector’s performance has been robust. The average occupancy rate in hotels rose by one percentage point YoY, while the average daily rate (ADR) increased by 7%. These gains led to an 8% boost in revenue per available room (RevPAR).
In Makkah and Medina, key performance indicators (KPIs) have shown positive trends, with RevPARs climbing 4% and 15%, respectively. Riyadh’s ADR saw a substantial increase of 25% during the same period.
Looking ahead, the hospitality sector benefits from a positive outlook, supported by planned investments of $800 billion over the next decade and upcoming major events, including the Asian Cup 2027, Asian Winter Games 2029, Expo 2030, and the FIFA World Cup 2034.
Office Market Dynamics
The office market remains competitive, with landlords actively negotiating rents and new entrants entering the market. In Riyadh, approximately 52,000 square meters of office space was added, while Jeddah’s stock remained steady at 1.21 million square meters, contributing to a total supply of 5.2 million square meters for the first half of 2024.
Grade A office rents in Riyadh rose by 19% YoY, reaching SAR 2,090 per square meter per annum. In Jeddah, Grade A rents increased by 11% annually, reaching SAR 1,335 per square meter per annum, driven by heightened demand for high-quality institutional properties.
Retail Market Overview
The retail market exhibited stability despite some challenges. While no major new malls were completed in Riyadh, Jeddah expanded its retail space by 106,000 square meters at Souq 7, increasing the total supply to 2.16 million square meters.
In Jeddah, average rents for super-regional malls grew by 4% YoY, although regional mall rents declined by 4%. Riyadh’s retail space remained constant at 3.48 million square meters, with an additional 77,000 square meters expected to come online later in the year.
