JEDDAH: Riyadh’s prime office rents rose 3 percent to SR3,320 ($886.72) per sq. meter in the second quarter as limited supply and strong demand from international firms kept Grade A occupancy near full capacity, according to CBRE.
The capital’s office market remained the strongest-performing segment of Saudi Arabia’s property sector even as residential transactions slowed and hospitality demand came under pressure.
The strong office market comes as Saudi Arabia accelerates project execution under Vision 2030. The Al Rajhi Capital Saudi Construction Index climbed to a record 56.3 in June, while data from the Saudi Contractors Authority showed project awards exceeded SR29.5 billion during the month.
Government expenditure also rose 20 percent year on year, according to the Ministry of Finance, supporting capital spending across major development corridors, and the International Monetary Fund expects overall gross domestic product growth to stand at 1.7 percent in 2026.
In its latest report, CBRE stated: “In Riyadh, corporate occupiers continue to prioritize new Grade A office accommodation, intensifying competition for premium addresses within central business districts.”
It added: “This remains supported by the sustained influx of multinationals establishing operations under the RHQ mandate, with more than 780 international companies now understood to be holding licenses as part of the program.”
During the quarter, CBRE noted that Riyadh’s total office stock exceeded 6 million sq. meters of gross leasable area, with around one-third classified as Grade A. The delivery pipeline for 2026 is projected at 0.6 million sq. meters, including approximately 0.2 million sq. meters of Grade A office space.
“Sustained demand also kept broader Grade A occupancy rates elevated, with rents up 1 percent year on year at SR2,570 /sqm/annum. Major handovers during the quarter included the SR1 billion Boulevard Business Park, which added 60,000 sqm of Grade A space to the market,” the report added.
Residential sector
The residential market slowed sharply in the second quarter of 2026. Nationwide residential transaction values contracted 26.9 percent year on year in the second quarter to SR37.67 billion, while total deal volumes fell 14.2 percent.
Despite the decline in transaction volumes, capital values showed divergent trends. National land plot prices increased 6.3 percent, while apartment valuations rose 1.1 percent. Villa values, by contrast, declined 9.7 percent as buyer demand shifted toward smaller, more affordable options.
The Real Estate Development Fund launched its Alternative Financing Program, offering subsidized monthly installments to support first-time Saudi homebuyers and sustain demand amid the slowdown in residential transactions.
Other sectors
The retail sector continued to benefit from resilient food and beverage spending, alongside the operational rollout of Seven’s SR50 billion nationwide entertainment strategy.
Riyadh’s hospitality market remained under pressure, with regional instability and slowing government spending on giga-projects weighing on corporate travel and meetings, incentives, conferences and exhibitions, or MICE, demand.
The sector remained heavily reliant on domestic tourism to absorb ongoing room deliveries, with domestic tourism expenditure reaching SR34.7 billion in the first quarter of 2026.
Industrial and logistics property continued to face acute shortages of Grade A space as supply-chain realignments tightened availability across primary hubs. The resulting supply constraints supported rental growth along key trade corridors, including Riyadh East and Jeddah South.
Overall, CBRE said the Saudi real estate market continues to be supported by accelerating construction activity and resilient demand for prime office and logistics assets, even as residential transactions and the hospitality sector remain under pressure.
