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Reshaping Riyadh: Office Market Finds Balance Amid Reform And Global Demand
(MENAFN- Mid-East Info) Riyadh's office market continued to demonstrate resilience and steady growth through the third quarter of 2025, supported by Saudi Arabia's robust economic outlook and ongoing diversification under Vision 2030, according to the latest Riyadh Office Market in Minutes Q3 2025 report from Savills Middle East.
Saudi Arabia's non-oil economy remains a major growth driver, with Oxford Economics forecasting overall GDP growth of 4.8% in 2026, led by a 5.2% expansion in the non-oil sector. The country's Purchasing Managers Index (PMI) rose to 57.8 in September, marking the 58th consecutive month above the neutral 50-point threshold, a clear sign of sustained business confidence and expanding employment opportunities across key sectors. Foreign direct investment (FDI) also continued to strengthen, rising by nearly 25% in the first half of 2025 compared with the same period last year. In Q2 alone, FDI inflows reached SAR 22.8 billion, up from SAR 19.9 billion in Q2 2024, highlighting growing international appetite and capital inflows into priority sectors. Recent policy reforms are shaping Riyadh's real estate landscape, enhancing transparency and promoting long-term stability. The five-year rent freeze, now implemented across both residential and commercial sectors, aims to maintain affordability while ensuring predictable conditions for investors. Complementary measures such as the Twazun platform, which offers land to Saudi nationals at SAR 1,500 per sqm, and the upcoming allowance for foreign nationals to directly own property from 2026, are expected to expand investment opportunities and support sustainable growth. Riyadh continues to attract multinational corporations establishing regional headquarters in the capital. As of September 2025, 660 multinational companies had secured licences, with 10 to 12 new licences issued each month. New entrants in Q3 included Lenovo, ORI Group, Plaza Premium Group, and Beyond One, underscoring the Kingdom's growing global profile. Savills reported that 60% of leasing enquiries during the quarter came from US and UK-based companies, reflecting robust international confidence. Ramzi Darwish, Head of Saudi Arabia at Savills Middle East, commented,“Riyadh continues to consolidate its role as a major global business hub. Government-led reforms, coupled with sustained occupier demand and long-term rental stability, are fostering a highly attractive environment for both local and international investors. As multinational interest grows, the city's evolving office landscape is positioning Riyadh as one of the most dynamic markets in the region.” Leasing activity remained steady during the quarter, led by the banking, financial services, and insurance (BFSI) and IT sectors, which together accounted for 57.1% of total transactions. The consulting and pharmaceuticals sectors each contributed 14%, with new market entries comprising 43% of completed deals. Demand for larger office space strengthened notably, with 80% of enquiries in Q3 targeting floorplates above 1,000 sqm, compared with 50% in Q2, a clear indicator of sustained appetite for prime, large-format offices. Grade A occupancy levels remained firm at 98%, with average rents increasing 1.75% quarter-on-quarter and 11% year-on-year. Zone A led annual rental growth at 16%, followed by Zone C at 14%. While rent growth shows early signs of moderation, the rent freeze policy provides predictability for occupiers, supporting long-term expansion planning and reinforcing confidence among global tenants. Looking ahead, strong occupier demand is expected to persist, while the rent freeze will help maintain price stability across both new and existing office buildings. Market momentum may moderate by late 2026 as approximately 900,000 sqm of Grade A space is delivered, led by landmark projects such as Diriyah Gate and the Prince Mohammed bin Salman Nonprofit City (Misk). With the introduction of foreign ownership rights in 2026, Riyadh's office market is set to become increasingly accessible to global investors, supporting greater liquidity and long-term growth potential. About Savills Middle East: Savills plc is a global real estate services provider listed on the London Stock Exchange. With a presence in the Middle East for over 40 years, Savills offers an extensive range of specialist advisory, management and transactional services across the United Arab Emirates, Oman, Bahrain, Egypt, and Saudi Arabia. Expertise includes property management, residential and commercial agency services, property and business assets valuation, and investment and development advisory. Originally founded in the UK in 1855, Savills has an international network of over 700 offices and associates employing over 40,000 people across the Americas, UK, Europe, Asia Pacific, Africa, and the Middle East.
Saudi Arabia's non-oil economy remains a major growth driver, with Oxford Economics forecasting overall GDP growth of 4.8% in 2026, led by a 5.2% expansion in the non-oil sector. The country's Purchasing Managers Index (PMI) rose to 57.8 in September, marking the 58th consecutive month above the neutral 50-point threshold, a clear sign of sustained business confidence and expanding employment opportunities across key sectors. Foreign direct investment (FDI) also continued to strengthen, rising by nearly 25% in the first half of 2025 compared with the same period last year. In Q2 alone, FDI inflows reached SAR 22.8 billion, up from SAR 19.9 billion in Q2 2024, highlighting growing international appetite and capital inflows into priority sectors. Recent policy reforms are shaping Riyadh's real estate landscape, enhancing transparency and promoting long-term stability. The five-year rent freeze, now implemented across both residential and commercial sectors, aims to maintain affordability while ensuring predictable conditions for investors. Complementary measures such as the Twazun platform, which offers land to Saudi nationals at SAR 1,500 per sqm, and the upcoming allowance for foreign nationals to directly own property from 2026, are expected to expand investment opportunities and support sustainable growth. Riyadh continues to attract multinational corporations establishing regional headquarters in the capital. As of September 2025, 660 multinational companies had secured licences, with 10 to 12 new licences issued each month. New entrants in Q3 included Lenovo, ORI Group, Plaza Premium Group, and Beyond One, underscoring the Kingdom's growing global profile. Savills reported that 60% of leasing enquiries during the quarter came from US and UK-based companies, reflecting robust international confidence. Ramzi Darwish, Head of Saudi Arabia at Savills Middle East, commented,“Riyadh continues to consolidate its role as a major global business hub. Government-led reforms, coupled with sustained occupier demand and long-term rental stability, are fostering a highly attractive environment for both local and international investors. As multinational interest grows, the city's evolving office landscape is positioning Riyadh as one of the most dynamic markets in the region.” Leasing activity remained steady during the quarter, led by the banking, financial services, and insurance (BFSI) and IT sectors, which together accounted for 57.1% of total transactions. The consulting and pharmaceuticals sectors each contributed 14%, with new market entries comprising 43% of completed deals. Demand for larger office space strengthened notably, with 80% of enquiries in Q3 targeting floorplates above 1,000 sqm, compared with 50% in Q2, a clear indicator of sustained appetite for prime, large-format offices. Grade A occupancy levels remained firm at 98%, with average rents increasing 1.75% quarter-on-quarter and 11% year-on-year. Zone A led annual rental growth at 16%, followed by Zone C at 14%. While rent growth shows early signs of moderation, the rent freeze policy provides predictability for occupiers, supporting long-term expansion planning and reinforcing confidence among global tenants. Looking ahead, strong occupier demand is expected to persist, while the rent freeze will help maintain price stability across both new and existing office buildings. Market momentum may moderate by late 2026 as approximately 900,000 sqm of Grade A space is delivered, led by landmark projects such as Diriyah Gate and the Prince Mohammed bin Salman Nonprofit City (Misk). With the introduction of foreign ownership rights in 2026, Riyadh's office market is set to become increasingly accessible to global investors, supporting greater liquidity and long-term growth potential. About Savills Middle East: Savills plc is a global real estate services provider listed on the London Stock Exchange. With a presence in the Middle East for over 40 years, Savills offers an extensive range of specialist advisory, management and transactional services across the United Arab Emirates, Oman, Bahrain, Egypt, and Saudi Arabia. Expertise includes property management, residential and commercial agency services, property and business assets valuation, and investment and development advisory. Originally founded in the UK in 1855, Savills has an international network of over 700 offices and associates employing over 40,000 people across the Americas, UK, Europe, Asia Pacific, Africa, and the Middle East.
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