Saudi Arabia real estate market booms amidst strong residential and hospitality performance | Real Estate Asia
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Saudi Arabia real estate market booms amidst strong residential and hospitality performance

The residential sector delivered 27,500 units in Riyadh and Jeddah.

Saudi Arabia’s real estate market maintains its upward trajectory driven mostly by strong residential and hospitality sector, according to JLL’s t KSA Real Estate Market Dynamics Report.

The residential sector started strong in 2024 by delivering 27,500 units in Riyadh and Jeddah. This increased the total stock to 1.46 million units in the capital and 891,000 units in Jeddah.

As such, residential sale prices experienced a 10% year-on-year (YoY) increase in Riyadh whilst average rents grew by 9% annually. In Jeddah, the pace of growth was slightly slower, with sale prices rising by 5% and rents increasing by 4% YoY during the same period. 

The hospitality sector also witnessed growth in H1 2024 as the country prepares to welcome 150 million visitors in 2030.

Average occupancy rate increased by one percentage point YoY and average daily rate (ADR) increased by 7%, which resulted in its revenue per available room (RevPAR) increasing by 8%. 

In the Holy Cities of Makkah and Medina, key performance indicators (KPIs) have largely trended up YoY whereas RevPARs increased by 4% and 15%, respectively. Over the same period in Riyadh, ADR increased by 25%. 

Furthermore, the tourism industry has a positive outlook for the hospitality sector with planned investments of US$800b over the next decade and flagship events such as the Asian Cup 2027, Asian Winter Games 2029, Expo 2030, and FIFA World Cup 2034. 

Additionally, the office market remains competitive with landlords driving rental negotiations and new entrants. Approximately 52,000 sq. m of office space was added in the capital city whilst Jeddah maintained a stable stock of 1.21 million sq. m. resulting in a total supply of 5.2 million sq. m. in H1 2024. 

Average Grade A rents rose by 19% YoY to SAR 2,090 per sq. m. per annum in the capital whilst in Jeddah, an 11% annual increase saw average Grade A rents touch SAR 1,335 per sq. m. per annum driven by an increase in demand for quality institutional grade properties.

The retail market remained stable despite some pressures. Whilst no major malls were completed in Riyadh, Jeddah expanded its retail space by adding 106,000 sq. m. in Souq 7, bringing the total supply to 2.16 million sq. m. 

In Jeddah, average rents for super regional malls increased by 4% YoY, whilst regional malls saw a 4% decline. Although Riyadh's retail space remained stable at 3.48 million sq. m., an additional 77,000 sq. m. is expected later in the year.

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