The Saudi real estate market demonstrated remarkable resilience during the first quarter of 2026, supported by the momentum of government projects and ongoing economic diversification programs, while the logistics, hospitality, and retail sectors continued to post strong performance, and the residential sector entered a phase of rebalancing after years of rapid growth.<\/p>\n\n\n\n
and revealed \u00abJLL\u00bb <\/a><\/strong>In its report on the performance of Saudi Arabia's real estate market<\/strong> During the first quarter of 2026, the market successfully weathered the slowdown in activity caused by regional uncertainty, with clear resilience evident in a number of key sectors, confirming that government support under the Saudi Vision 2030 targets continues to underpin long-term growth prospects. The market is witnessing Real estate <\/a><\/strong>Saudi Arabia is undergoing a well-planned phase of development, supported by the industrial and logistics sectors, which are operating near full capacity\u2014a reflection of the Kingdom\u2019s status as a major hub in regional and global supply chains. Luxury offices remain strong<\/strong> In Jeddah, the vacancy rate for Class A office space reached approximately 6%, coinciding with a 3.8% decline in rents as tenants moved to newer properties, while rents for Class B offices rose by 2.5% as companies sought to strike a balance between quality and cost. In Dammam, occupancy rates for Class A and Class B offices improved, coinciding with rent increases of 9.2% and 8.7%, respectively, reflecting continued demand for lower-cost office space. The office construction sector also saw significant activity, with over 179,000 square meters of new space completed in Riyadh during the first quarter, and an additional 1.2 million square meters expected to be added by the end of this year.<\/p>\n\n\n\n Retail Outlets Face the New Supply Challenge<\/strong> In Jeddah, the vacancy rate in major shopping centers stood at approximately 7%, while vacancy rates in secondary malls rose, at a time when rents in major malls recorded year-over-year growth of 13%, reflecting the continued strength of prime retail assets. Despite this strong performance, the report noted that the market is preparing for a massive wave of new supply, as retail inventory in Riyadh rose to 4.7 million square meters, with an additional 896 thousand square meters expected to be added during the remainder of the year. The company predicted that this expansion would increase pressure on rents, particularly in secondary assets, as competition among landlords to attract tenants intensifies.<\/p>\n\n\n\n The hospitality sector relies on Umrah and domestic tourism<\/strong> In contrast, Jeddah posted stronger performance, with occupancy rising to 66.1% and revenue per available room increasing by 4.4%. As for Mecca and Medina, continued to benefit from religious tourism, with the two cities recording high occupancy rates of 78.6% and 81.3%, respectively, supported by demand linked to Umrah and religious visitors. Hotel supply also continued to grow, with the number of hotel rooms in Riyadh rising to approximately 49,400, while Makkah added about 1,700 new rooms during the first quarter.<\/p>\n\n\n\n A Price Correction in the Residential Sector<\/strong> Riyadh recorded more than 8,600 residential transactions, a decline of over 54% compared to the same period last year, while transactions in Jeddah fell by more than 51%, and in Dammam and Al-Khobar by 18.6% and 22.5%, respectively. The market has also begun to undergo a gradual shift from speculation-driven growth to a market more closely tied to actual demand and purchasing power.<\/p>\n\n\n\n In Riyadh, apartment prices fell by 10.8%, while villa prices rose by about 2.6%. In contrast, Jeddah recorded growth in apartment and villa prices of 4% and 3.8%, respectively, driven by coastal projects and tourism developments. Despite the current downturn, the company expects factors such as population growth, government housing programs, and investment in infrastructure to support a gradual recovery in market activity over the long term. Logistics Continues to Lead the Way<\/strong> The report noted that strong demand for high-quality logistics assets is driven by the expansion of e-commerce, improvements in supply chains, and increased activity among logistics service providers. The company emphasized that the Kingdom\u2019s strategic location and expanding port network, along with the National Industrial and Logistics Development Program, reinforce Saudi Arabia\u2019s position as a major hub for trade and supply chains in the region.<\/p>\n\n\n\n <\/p>","protected":false},"excerpt":{"rendered":" Reading time: <\/span> 4<\/span> Minutes<\/span><\/span>The Saudi real estate market demonstrated remarkable resilience during the first quarter of 2026, bolstered by the momentum of government projects and ongoing economic diversification programs, while the logistics, hospitality, and retail sectors continued to post strong performance, and the residential sector entered a phase of rebalancing after years of rapid growth. JLL revealed in its report on market performance \u2026 Read 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The cities of Makkah and Madinah continue to support the hospitality sector thanks to strong demand linked to the Umrah season, while the slowdown in the residential sector is viewed as a healthy phase for reorganizing the market and positioning it for more sustainable growth in the coming years.<\/p>\n\n\n\n
The office space sector demonstrated clear resilience despite regional pressures, supported by the continued growth of Saudi Arabia\u2019s role as a regional business hub. Demand for modern, serviced offices has risen, as companies increasingly seek high-quality spaces in strategic locations with integrated services.
In Riyadh, premium office spaces maintained strong performance levels amid limited supply and sustained high demand, with a vacancy rate of only about 3.2%, while the King Abdullah Financial District continued to top the list of the highest office rents in the capital.
Rents for premium office space in Riyadh recorded year-over-year growth of 5.5%, while rents for Class A offices rose by 2.1% and those for Class B offices by approximately 5.1%, driven by strong demand and a shortage of new supply.<\/p>\n\n\n\n
In the retail sector, shopping malls in Riyadh and Jeddah maintained strong performance during the first quarter, driven by population growth and rising consumer spending, along with a rapid shift in retailers\u2019 strategies toward entertainment, interactive experiences, and the expansion of the food and beverage sector.
Vacancy rates in major regional shopping centers in Riyadh remained low at 2.1%, while regional and local malls recorded relatively higher rates of 9.7% and 10.4%, respectively.<\/p>\n\n\n\n
The hospitality sector posted mixed results during the first quarter of 2026, affected by a decline in international visitor numbers due to geopolitical tensions; however, domestic demand and religious tourism provided significant support for hotel activity. The hotel occupancy rate across the Kingdom stood at approximately 66.3%, with average daily rates rising by 3% to over 805 riyals, while revenue per available room declined slightly.
Performance varied across cities, with Riyadh seeing occupancy rates decline to 52.2% and revenue per available room fall by approximately 9.5%, despite an increase in daily rates.<\/p>\n\n\n\n
The residential unit sector saw a sharp decline in transaction activity during the first quarter of this year, affected by economic uncertainty, regional tensions, and recent regulatory changes.<\/p>\n\n\n\n
She also noted the continued expansion of the housing supply, with the housing stock in Riyadh reaching approximately 2.19 million units, and more than 20,000 new units expected to be added this year.<\/p>\n\n\n\n
Conversely, the logistics and industrial sector continued to lead the Kingdom\u2019s real estate growth, with occupancy rates rising to over 90% in Riyadh and Jeddah, driven by strong demand for modern warehouses and facilities. Industrial rents in Riyadh recorded annual growth of 5.1%, while those in Jeddah rose by 5.3%, and rents in Dammam jumped by approximately 9.9%.<\/p>\n\n\n\n