Riyadh Office Market Outlook to 2027
Driven by Rise in Demand for premium office space and upcoming completion of smart city and office projects
February 2024
80-100
About the Report
About the Report
Market Overview:
Riyadh is a major economic hub in the Middle East, and its office market is closely tied to the overall economic performance of the country. The Saudi government has been implementing various economic reforms and initiatives to diversify the economy. Monitoring the occupancy rates of existing office spaces can give an indication of the overall health of the market. High occupancy rates may suggest a robust demand for office spaces.
Changes in regulations related to business and real estate can impact the office market. Keeping track of any regulatory updates is crucial for understanding the market dynamics. The city has witnessed several real estate developments, including the construction of new office buildings and business districts. Understanding the pipeline of upcoming projects can provide insights into the future supply and demand dynamics.
Riyadh Office Market Analysis
- With the impending enforcement of the Regional Headquarters Program (RHQ), Riyadh is becoming the preferred location for numerous corporations aiming to establish their Middle East headquarters.
- Saudi Vision 2030's National Development Plan is at the forefront of transforming the infrastructure landscape of the Kingdom, with Riyadh taking center stage in this monumental shift.
- Confidence in Riyadh's capacity to host businesses stems from its role as the rapidly expanding G20 economy. Over 80 international companies have procured licenses to operate in the Kingdom, demonstrating a strong demand directed towards Riyadh's office spaces.
- Most of these businesses prioritize best-in-class offices. Notably, the King Abdullah Financial District (KAFD) and Laysen Valley are emerging as the most desired locations.
- This soaring demand has led to a 13% surge in office lease rates over the year concluding in June 2023. Prime office spaces have notably increased in lease rates.
Key Trends by Market Segment:
By Type of Office stock: In 2022, the Riyadh Office market is dominated by Premium Offices type of stock. While top-tier office spaces are in high demand, the Grade B+ office segment hasn't been left behind. Its rental rates have increased by 15% over the past year. Despite premium spaces being the primary choice, the surge in lease rates combined with limited availability has compelled several occupiers to consider secondary options in Riyadh.
By Rent: In 2022, Riyadh Office Market is segmented into Premium, Grade A, Grade B and Grade B+ by SAR/Annual/SQM. The market is dominated by Premium offices as the rent of premium offices is maximum but they provide better facilities and luxurious ambience. Most of the office spaces demands are for premium offices by rent standards.
By Region: In 2022, the Riyadh Office market is segmented into East, West, North and South region and is dominated by central region of Riyadh by demand of Offices. Central Region has occupier profile in Banking and Financial Services, Technology, Coworking, Media, Government Entities, Consulting, E-commerce. The north region has majorly category of Grade A and Premium offices.
Future Outlook:
- The Riyadh office market is anticipated to reach GLA 6.4 SQM by 2027, with a forecasted increase in market size driven by factors such as economic development, increased foreign investment, and a growing demand for office spaces.
- The future of the Riyadh office market is likely to be shaped by the adoption of smart office technologies.
- Companies are expected to invest in cutting-edge technologies to enhance productivity, improve energy efficiency, and provide a modern and flexible work environment.
- Despite positive growth prospects, the Riyadh office market may face challenges related to economic volatility or geopolitical factors. These uncertainties could influence the demand for office spaces and real estate investments.
Scope Of The Report
Scope of the Report
Riyadh Office Market Segmentation |
|
By Type of Office Stock |
· Premium · Grade-A · Grade-B+ · Grade-B |
By Rent |
· Premium · Grade-A · Grade-B+ · Grade-B |
Riyadh East |
· Eastern Ring Road · Khurais Road · Saeed Ibn Zaid Road · Khalid Bin Waleed Road · King Abdullah Road · Imam Saud bin Abdul Aziz Road · Prince Bandar Bin Abdulaziz |
Riyadh West |
· Western Ring Road · Taif Street · Medina Road · Prince Mashal Bin Abdul Aziz Road |
Riyadh North |
· King Fahd Road · Northern Ring Road · Prince Turki Ibn Abdul Aziz Alawwal Road · Imam Saud Bin Faisal Road · Anas bin Malik Road · King Abdul Aziz Road · Abu Bakr Siddique Road · Othman Bin Affan Road · Prince Muhammad Ibn Saad Ibn Abdulaziz Road · Olaya Road |
Riyadh South |
· Al-Aziziyah Road · Southern Ring Road · Al-Swaidi Al-Aam Road |
Riyadh Central |
· King Fahad Road · Alia Street · Prince Mohammad Bin Abdul Aziz Road (Tahlia Street) · Arabism Road · Al Takhasusi Road · King Abdul Aziz Road · King Abdullah Road · Mecca Road · Prince Sultan Street · Salah-Ud-Din Ayubi Road Malaz · Al Ahsa Road · Al Nahda Road |
Products
Products
Key Target Audience – Organizations and Entities Who Can Benefit by Subscribing This Report:
- Investors
- Providers & Distributors
- Property Owners
- Government Entity
- Environmental Advocates
- Real Estate Professionals
Time Period Captured in the Report:
- Study Period: 2022-2027
Table of Contents
Table of Contents
1. Executive Summary
2. Research Methodology
2.1. Market Definitions
2.2. Abbreviations
2.3. Market Sizing and Modeling
2.4 Consolidated Research Approach
3. Riyadh Office Market Overview
3.1. Riyadh City Overview
3.2. Mega Construction and Infrastructure Projects
3.3. Dynamism in the Market
3.4. Government’s Impetus Towards Commercial Sector
3.5. Economic Performance
3.6. Higher Women Participation
3.7. Tenant Preferences
4. Factors Influencing Riyadh Office Market
4.1. Strong Government Initiatives
4.2. Emergence Of International Companies
4.3 Positive Economic Development
4.4 Increase in Women Workforce
4.5 Expat Exodus from the KSA
4.6 Location Factor
4.7 Physical Conditions of the Office Premises
5. Supply and Demand Assessment of Office Market in Riyadh, 2022-2027
5.1. Current and Future Market Demand, 2022-2027
5.2. Current and Future Market Supply, 2022-2027
5.3. Oversupply of Offices In Riyadh
6. Riyadh Office Market Insight and Performance
6.1. Performance of Premium and Grade A Offices
6.2. Performance of Grade B and B+ Offices
6.3 Average Rental Rates of Offices in Riyadh
6.4 Average Occupancy Rates of Offices in Riyadh
7. Market Future Outlook, Opportunities and Development Trends
7.1 Government Initiatives
7.2 Future Upcoming Trends
7.3 Changing Tenant Preferences
7.4 Shift in the Approach
7.5 Recommendations for Riyadh Office Market
7.6 What Gaps Exist in Riyadh Office Market?
8. Riyadh Office Market Future Outlook (Is Investment Profitable or Not?)
8.1 Is Investment Profitable or Not?
8.2 Investment Opportunities – by Stock Type
8.3 Investment Opportunities – by Location
8.4 Difference between Return of Investment (ROI) – New Property Construction vs Renovation Other Commercial Activities
8.5 Key Features and Characteristics of Offices in Saudi Arabia
8.6 Key Expected Upcoming Office Projects in Riyadh City
9. Case Studies of Major Office Complexes in Riyadh
9.1 Granada Business Park
9.2 King Abdullah Financial District
9.3 Tamkeen Tower
9.4 Al Faisaliah Tower
9.5 Business Gate
9.6 Business Front
9.7 Al-Raidah Digital City
10. Competitive Analysis of Case Studies
10.1 Cross Comparison within Major Office Properties in Riyadh
10.2 Heat Map Analysis for Riyadh Office Complexes
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Research Methodology
Research Methodology
Step 1: Hypothesis Creation: The research team had first framed a hypothesis about the market through analysis of existing industry factors, obtained from company reports magazines, journals, online articles, ministries, government associations and data from various industry sources and articles. We have used both public and proprietary databases to define each market and collect data points about the same.
Step 2: Hypothesis Testing: The research team has then conducted computer assisted telephonic interviews (CATIs) with top real estate companies operating in the retail real estate market in Riyadh to understand various office space categories, movement in average rental rates, occupancy and vacancy rates and future projects in the pipeline. Office space supply and rental rates obtained through various industry reports was cross verified from real estate consultants. In addition, the research team also reached out to different building management services to understand variability in rental rates across different regions in Riyadh.
The report also encompasses case studies for which our team has conducted multiple CATIs with the management and leasing managers of Granada Business Park, King Abdullah Financial District, Tamkeen Tower, Al Faisaliah Tower, Business Gate, Business Front, Al-Raidah Digital City.
Step 3: Sanity Checking and Decision Tree Analysis: General consensus on data collected from primary research and public and proprietary databases has been reached by conducting in-house decision tree analysis of the data points available. The research team has reached out to select office space developers as potential clients/ tenant to obtain market insights on leasing term, rental rates, occupancy and vacancy rate, peak demand season and other qualitative information.
Step 4: Future Forecasting via Poll Opinions and Statistical Tools: Forecasting for retail supply was done based on the expected gross leasing area of future office space development projects in the pipeline. Future retail demand was estimated based on expected occupancy rate in the coming years.
Step 5: Interpretation and Proofreading: The final analysis was then interpreted in the research report by our expert team well versed with the Real Estate Market in Saudi Arabia.
Frequently Asked Questions
Frequently Asked Questions
How big is Riyadh Office Market?
The Riyadh Office Market was valued at GLA 5.0 SQM in 2022.
What are the Key Factors Driving the Riyadh Office Market?
Rising demand for premium office spaces and better facilities are likely to fuel the growth in the Riyadh Market.
What is the future of Riyadh Office Market?
Riyadh Office market is expected to reach GLA 6.4 SQM in 2027.
What is the Future Growth Rate of the Qatar Lubricant Market?
The Riyadh Office Market is expected to grow with CAGR of 4.9% during 2022-2027.
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