Riyadh’s Office Market Thrives in Q2 2024
The office market in Riyadh is booming in the second quarter of 2024, thanks to government investment incentives that are luring international corporations to establish regional headquarters in the capital.
International Companies Flock to Riyadh
According to the latest Saudi commercial market report by Savills, over 120 international companies relocated their regional headquarters to Riyadh in the first quarter of this year, marking a 477 percent increase compared to the same period in 2023.
Government Incentives Drive Growth
The Saudi government’s benefits for companies setting up Middle East bases in Riyadh, including a 30-year exemption from corporate income tax, are attracting businesses from around the globe. These incentives have led to a surge in inquiries from international corporations, with a significant portion coming from the US and UK.
Strong Leasing Activity in Key Sectors
Sectors like technology, media, telecommunications, consulting, engineering, manufacturing, and IT are driving leasing activity in Riyadh, with 50 percent of transactions involving new entrants. This positive momentum is expected to continue throughout the year.
Rents on the Rise in Riyadh
Rent prices in North and North-East Riyadh have seen significant annual increases, supported by a 5.6 percent rise in foreign direct investment in the city. Grade A office space occupancy rates are at 98 percent, with rents steadily increasing quarter-over-quarter.
Riyadh Attracts Leading Businesses
Prominent companies like PayerMax, Ernst & Young, Northern Trust, Bechtel, PepsiCo, IHG Hotels & Resorts, PwC, and Deloitte have established their regional headquarters in Riyadh, solidifying the city’s position as a key hub for regional and global commerce.
Thriving Office Market in Riyadh
The limited prime office space in Riyadh has driven Grade A occupancy rates to 98 percent, with higher rents for modern facilities. A significant increase in Grade A office space supply is expected by the end of 2025, enhancing tenant options.
Non-Oil Sector Boosts Economy
Saudi Arabia’s non-oil sector is a key economic driver, expanding by 3.4 percent in the first quarter of 2024. The moderate inflation rate and steady growth in the Purchasing Managers’ Index signal a positive outlook for the country’s private sector.
Riyadh’s Future Growth Prospects
Riyadh is projected to be among the top 15 fastest-growing cities by 2033, with a 26 percent population increase and ongoing government infrastructure spending driving its growth. The establishment of free economic zones and the regional headquarters program are expected to further boost foreign direct investment in the Kingdom.