Rents jump
Riyadh's vacancy rates remain at low levels, with class A office rents registering a 23% annualized rise in Q1 2025 to reach SAR 2,700 per square meter, an all-time high. Class B rents rose by 24 % over the same period, as companies compete for limited space.
The report predicts that Class B rents will improve in Q1 2025 to reach SAR 2,700 per square meter, an all-time high. The report expects supply to improve over the next two years with the completion of 2.7 million square meters of new office space across the Kingdom, which could partially alleviate price pressures.
In Jeddah, data showed that Class B rents rose by 24 % over the same period, as companies competed for limited space. In Jeddah, data showed improving occupancy levels and rising rents supported by continued private sector investment, with Class A rents rising by 4 % and Class B rents by 6 % year-on-year.
In Jeddah, data showed improving occupancy levels and rising rents supported by continued private sector investment, with Class A rents rising by 4 % and Class B rents by 6 % year-on-year.
Mixed performance of the hotel sector
Riyadh's hospitality sector saw a slowdown in Q1 2025 compared to the strong momentum in previous quarters, but the capital remains an attractive destination for business and leisure travelers. Demand is expected to receive a further boost as the city hosts major events later this year, most notably Cityscape Global, Food Expo and HORECA. <Riyadh currently has 24.74k hotel rooms, with plans to add 3,510 rooms by the end of 2025, reaching a projected 30.3k rooms in 2027. There is a clear focus on luxury hotels, with the category accounting for around 74% of existing rooms.
Performance-wise, Riyadh's hotel stock has declined. <In terms of performance, Riyadh's average daily room rate (ADR) declined to SR890 (-8 %) and revenue per available room (RevPAR) fell to SR537 (-17 %) with an occupancy rate of around 60 %. In contrast, Makkah and Madinah indices jumped thanks to a revival in religious tourism, with occupancy exceeding 78 % and 81 %, respectively.
<Knight Frank notes that the upward trajectory of office demand in Riyadh will continue in the medium term, supported by government initiatives to transform the capital into a regional business center, while the hotel sector is expected to regain momentum as major international events approach and luxury supply continues to expand.
