Saudi Arabia’s GDP Expands by 2.7%, Bolstering Real Estate Demand
Saudi Real Estate Dynamics in Q1 2025 showcased remarkable growth, with real estate transactions reaching $29 billion. This surge was largely driven by Saudi Arabia’s 2.7% rise in real GDP, fueled by the non-oil sector’s 4.2% expansion. This sustained economic growth continues to reinforce investor confidence in the country’s real estate market, setting the stage for rising demand across residential, office, retail, and hospitality sectors.
Real Estate Transactions Hit $29 Billion Amid Strong Sector Growth
Saudi Real Estate Dynamics in early 2025 were shaped by $29 billion in total transactions, reflecting heightened activity in Riyadh’s property market. According to a report by CBRE, residential, office, and hospitality assets gained momentum, fueled by government-backed initiatives designed to unlock land availability and control price inflation, strengthening market stability.
Office Rents Surge by 21% in Riyadh as Demand Outpaces Supply
Riyadh’s office market continued to attract businesses, with Grade A office rents increasing by 25%, and Prime office rents rising 17% year-over-year. With occupancy rates nearing 98%, premium office space remains scarce, prompting private developers to fast-track new projects to balance the supply-demand equation.
Residential Prices Rise 5.1%, Driven by Mortgage Growth & Land Appreciation
The residential sector saw a 5.1% uptick in real estate prices, with villa prices soaring 10.3% year-over-year. Strong mortgage growth, particularly a 28.3% increase in lending, underscores the rising demand for homeownership, aligning with Saudi Vision 2030's goal of 70% homeownership. Yet, affordability concerns persist, spurring regulatory interventions to stabilize housing costs.
Retail Sector Expands as Consumer Spending Reaches SAR 116 Billion
Retail markets thrived as point-of-sale (POS) transactions hit SAR 116 billion in Q1 2025, marking an 8% increase from the previous year. Major upcoming retail developments like Jawharat Riyadh (120,000 sqm) and Avenue Mall (370,000 sqm) underscore the sector’s rapid transformation, catering to evolving consumer preferences and digital retail trends.
Hospitality Sector Booms with 12.3% RevPAR Growth & Surging Tourism
Saudi Arabia’s hospitality sector recorded a 12.3% increase in revenue per available room (RevPAR), fueled by 30 million international visitors and SAR 153.61 billion in inbound tourism spending. As the country gears up for World Expo 2030 and FIFA World Cup 2034, luxury hotel developments and business accommodations are accelerating to meet demand.
Industrial Rents Climb 14% in Riyadh Amid Logistics Expansion
Saudi industrial real estate experienced solid growth, with Riyadh’s industrial rents climbing 14% due to rising demand for logistics hubs. Major industrial projects, including the $11 billion Aramco-Total Amiral Complex, are set to bolster the market’s expansion. Meanwhile, the National Industrial Strategy is attracting fresh investments, shaping the country’s manufacturing and logistics landscape.
Saudi Real Estate Dynamics in Q1 2025 highlight a market driven by policy reforms, economic expansion, and strategic investments, positioning Saudi Arabia as a leading destination for global capital inflows and real estate development.
Also Read: Saudi Real Estate: Mortgage Lending Jumps 28.3% in Early 2025
