Saudi Arabia’s real estate market in Q1 2025 continues its rapid ascent, fueled by 2.7% GDP growth, bold government initiatives, and rising foreign investment. The non-oil sector’s 4.2% expansion is reshaping urban landscapes, with Riyadh leading in office demand, pushing rents up 21% year-on-year. Mortgage lending surged 28.3%, driven by apartment financing. Hospitality is booming, with 30 million visitors, and industrial rents climbed 14%, propelled by logistics growth. In this article, we break down Saudi Real Estate Analytics–key trends driving market growth in the first quarter of 2025.
Riyadh’s Office Market Sees 21% Surge Amid High Occupancy
A shortage of premium office space in Riyadh is reshaping the corporate real estate landscape, sending Prime and Grade A rental rates up by 21% year-on-year in Q1 2025. This surge is more than just an adjustment—it reflects a deepening demand from multinational firms setting up regional headquarters and local enterprises expanding their footprints.
With Grade A office occupancy at 98%, businesses are competing for high-quality addresses while rental costs climb across all categories. Even Grade B properties, traditionally an alternative for firms priced out of premium locations, have seen rental growth of 19% over the past year. While large-scale office developments tied to Vision 2030—such as Diriyah Square and King Salman Park Headquarters—are expected to ease pressure, these projects won’t materialize until late 2026, leaving the near-term rental market firmly tilted toward landlords.
Mortgage Lending Jumps 28.3% as Homeownership Gains Momentum
Housing finance is booming, with Saudi banks issuing SAR 8.91 billion in new mortgage loans through February 2025—a staggering 28.3% increase from the previous year. Much of this demand is being channeled into apartment purchases, marking a shift from traditional stand-alone homes that have long dominated the lending landscape.
As Riyadh leads the charge with a 10.7% rise in property prices, affordability concerns linger. Villa prices alone have jumped 10.3% year-on-year, reflecting strong demand for family housing amid limited supply. To counter rising costs, the Real Estate General Authority (REGA) is exploring rental caps, alongside initiatives to unlock vast land reserves for new developments.
Also Read: Saudi Arabia Reimagined: Are You Ready? The CEO Guide to KSA
Retail Sales Expand to SAR 116 Billion, Fueling Market Growth
Saudi Arabia’s retail sector is shifting gears, with point-of-sale (POS) transactions reaching SAR 116 billion in the first two months of 2025, up 8% from the same period in 2024. A thriving tourism industry, evolving consumer habits, and population growth are fueling this surge, while developers race to meet demand.
Riyadh is undergoing a retail transformation with projects like Jawharat Riyadh (120,000 sqm) and Avenue Mall (370,000 sqm). These destinations promise to redefine the capital’s shopping experience, though concerns around long-term oversupply linger, particularly as secondary locations rapidly expand retail inventory.
Hospitality Market Sees Record SAR 153.61 Billion in Spending
Tourism is reshaping the Kingdom’s economy, with inbound expenditure reaching SAR 153.61 billion ($40.95 billion) in 2024, marking a 13.82% annual increase. The number of international visitors climbed 9.5% to 30 million, with non-religious tourism now accounting for the majority of arrivals.
With global events like World Expo 2030 and FIFA World Cup 2034 on the horizon, hotel development is accelerating. Saudi Arabia aims to add over 426,000 new rooms, catering to luxury travelers and budget-conscious guests alike. International hotel chains are rapidly expanding their footprint, betting on the Kingdom’s long-term hospitality potential.
Industrial Sector Rents Rise 14% as Logistics Demand Grows
A surge in industrial activity is reshaping Saudi Arabia’s logistics market, with petrochemical firms forecasting 11% higher net profits in 2025. This growth is driving up industrial lease rates, with Riyadh seeing a 14% year-on-year jump to SAR 206 per square meter annually.
Infrastructure investments continue to bolster the sector, with major projects such as NEOM’s Octagon Hub and a SAR 4 billion logistics facility near Riyadh signaling long-term expansion. Government-backed initiatives under Vision 2030 are further accelerating industrial development, positioning Saudi Arabia as a dominant force in the global supply chain.
Conclusion
Saudi Real Estate Analytics underscores the Kingdom’s evolving market, shaped by rising demand across offices, residential, retail, hospitality, and industrial sectors. With a 28.3% surge in mortgage lending, Riyadh’s 21% office rent growth, SAR 116 billion in retail sales, and 30 million visitors fueling hospitality, Saudi Arabia is cementing itself as a global investment hub. As Vision 2030 accelerates infrastructure expansion, sustained growth and market stability will define the real estate landscape in the years ahead.
Also Read: E-Commerce & Tourism Will Drive Saudi’s $408.7B Retail Market
