Riyadh’s Retail Area Set to Expand by 28% to 4.6 Million Sq. M. by 2026
In a thrilling development, Riyadh is gearing up for a major retail revolution with shopping malls and lifestyle spaces expansions poised to increase the city’s retail area by a whopping 28 percent to 4.6 million sq. m. by 2026, according to a new analysis by global real estate consultancy Knight Frank.
Boosting Saudi Arabia’s Tourism Hub Ambitions
Knight Frank’s latest report highlights that the total existing retail supply in Riyadh currently stands at 3.6 million sq. m., with an additional 27,050 sq. m. of space entering the market in the first half of this year. This growth is a crucial step towards Saudi Arabia’s ambition to establish itself as a global tourism hub, with the retail sector making a significant 23 percent contribution to the non-oil economy, aiming to exceed SR460 billion ($122.65 billion) by 2024.
The Rise of Experiential Retail
Faisal Durrani, head of research for the Middle East and North Africa at Knight Frank, emphasized the importance of experiential retail offerings in the evolving market. With an estimated 100,000 sq. m. of space set to be completed in Riyadh this year, Durrani stressed the need for mall operators, developers, and retailers to innovate and stay relevant in the ever-changing landscape.
Saudi Arabia’s Phenomenal Retail Sector Growth
Describing Saudi Arabia’s retail sector development as “phenomenal,” Durrani highlighted its pivotal role in boosting the Kingdom’s non-oil GDP growth. The rapid evolution of the retail and food and beverage scene in Saudi Arabia, particularly in Riyadh, is driving economic diversification efforts and reshaping the retail landscape.
Retail Market Trends in Riyadh, Jeddah, and Dammam
The report revealed that average rental rates in Riyadh’s retail market saw a 3 percent increase to SR2,725 per sq. m. in the last 12 months, with occupancy rates soaring by 5 percentage points to 90 percent, fueled by the growth of tourism. In contrast, Jeddah and the Dammam Metropolitan Area experienced subdued retail market growth, with occupancy rates dropping by 1 percentage point in both cities.
Average rents in Jeddah plummeted by 7 percent to SR2,465 per sq. m., while Dammam saw a decline to SR2,275 per sq. m., painting a complex picture of the retail landscape across the Kingdom.