Despite persistent supply shortages and rising rents, Riyadh's office market is poised for a significant shift with a new wave of projects expected to boost the total office space supply by approximately 741 TP3T within two years, according to an analysis by Knight Frank. The office supply in Riyadh stood at 6.10 million square meters in the second quarter of 2026, and Knight Frank anticipates that the announced projects will increase the total supply to around 10.60 million square meters by 2028, representing an increase of approximately 741 TP3T.
Currently, Class A office rents in Riyadh have increased by 3.41 TP3T year-on-year to SAR 2,810 per square meter, with an occupancy rate of 971 TP3T. Class B office rents have also increased by 2.31 TP3T to SAR 1,690 per square meter, with an occupancy rate of 951 TP3T, bringing the overall citywide occupancy rate to 961 TP3T.
The Jeddah office market also saw rental growth, with Class A rents rising by 3.11 TP3T annually and Class B rents increasing by 6.21 TP3T. Occupancy reached 951 TP3T in Class A and 891 TP3T in Class B. Ammar Husain, Associate Partner in Middle East and North Africa Research at Knight Frank, noted that the high occupancy rates in Riyadh do not necessarily mean that tenants' decisions have been unaffected by the broader environment.
With the anticipated increase in supply, companies may have more options, particularly in Riyadh. However, project delivery timing will remain a critical factor given rising construction costs and uncertainty in the operating environment. Meanwhile, the report's data shows that 9,018 foreign investment licenses were issued in the second quarter, a year-on-year increase of 2,521 TP3T. While these licenses do not directly translate into demand for office space, Knight Frank believes that continued international business activity and the regional headquarters program are important factors for Riyadh's long-term business prospects.
Susan Al-Amawi, partner and general manager in Saudi Arabia at Knight Frank, said that the quality, location, and timing of office space availability will become more important for companies, given the anticipated supply and increased regional uncertainty.
