Riyadh – Mubasher: The real estate office market in Riyadh has maintained good momentum in the first quarter (Q1) of 2024 despite macroeconomic challenges, according to a report by real estate company Savills.
The rise in Grade A offices is set to continue this year due to factors like Saudi Vision 2030's push for foreign investment and efforts to diversify income sources, the report said.
Riyadh is attracting foreign companies to establish their base, with 74% of inquiries to Savills coming from overseas, including 37% from US corporations.
The city's 30-year tax relief for regional headquarters (HQ), expanding market, and promising prospects are drawing international companies, cementing Riyadh's position as a key regional hub across industries.
The January-March 2024 period saw strong leasing activity, led by legal services, engineering, manufacturing, and information technology sectors.
Savills’ data showed that Riyadh faces limited prime office space, leading to a Grade A occupancy rate of 98%, with rents rising by 5% quarterly and 20% annually.
Business Parks and the King Abdullah Financial District are in high demand, with 75% of transactions involving relocations to these areas.
To address demand, Savills noted that 420,000 square metres of new Grade A office space is expected by the end of 2024.
Amjad Saif, Head of Transactional Services at Savills in KSA, said, “Despite healthy demand, a significant decrease in the number of office rent transactions was recorded in Q1, with Ejar data indicating a 27% drop in transactions quarter on quarter, due to the limited availability of office spaces.”
Ramzi Darwish, Head of Saudi Arabia at Savills Middle East, commented: “Riyadh is experiencing a remarkable surge in corporate interest, with over 180 foreign companies surpassing the initial target of 160 choosing to establish their regional headquarters in the city.”
“This growing confidence reflects the robust potential of the Saudi capital, fuelled by the country’s strategic economic diversification plan,” Darwish added.
