Riyadh Office Market Sustains Growth Momentum in Q2 2025 as Rents and Occupier Demand Climb: Savills
Riyadh's office real estate market maintained its strong performance in the second quarter of 2025, bolstered by a stable macroeconomic outlook, resilient private sector activity, and increasing interest from international tenants, according to new research from global real estate advisor Savills.
Driven by Saudi Arabia’s Vision 2030 diversification agenda, the Kingdom’s economy is projected to grow by 3.5% this year, with the non-oil sector expanding by 4.9%. Reflecting this robust outlook, the Purchasing Managers Index (PMI) rose to 57.2 in June, marking the highest level since May 2011, indicating strong private sector momentum and employment expansion.
Foreign direct investment (FDI) also reflected a positive trend, reaching SAR 22.2 billion in Q1 2025, a sharp increase from SAR 15.5 billion during the same period last year.
High Occupancy and Rental Growth
Riyadh’s Grade A office occupancy remained at a strong 98%, underlining continued tenant demand amid limited new supply. Average rents increased 0.75% quarter-on-quarter and posted a 10% annual rise.
Emerging commercial zones such as Zone C – which includes Riyadh Front, Digital City, and Laysen Valley – led with 15% year-on-year rental growth, while Zone A – covering established hubs like Olaya, Kingdom Centre, and the King Abdullah Financial District (KAFD) – recorded an 11% annual increase, reflecting healthy demand across both new and prime locations.
Sectoral Activity and Occupier Trends
According to Chris Chambers, Head of Transactional Services at Savills KSA, expansion-driven demand remains strong across sectors. “Banking, financial services and insurance (BFSI) accounted for 50% of office transactions in Q2, with legal and pharmaceutical firms contributing another 25%. We’re also seeing a significant uptick in demand for larger spaces, with 50% of enquiries focused on units exceeding 1,000 square meters.”
The report highlights that Riyadh's growing appeal to global firms continues to strengthen. By mid-2025, over 660 international companies had obtained licenses to establish regional headquarters in the city, surpassing the Vision 2030 target of 500. BNY Mellon, ASPEN, Globant, and London Business School were among the latest additions in Q2.
Savills data revealed that 46% of leasing interest originated from the US and UK, with the highest levels of demand coming from banking and financial services, technology, media and telecoms (TMT), and engineering and manufacturing sectors. These figures underscore Riyadh’s emergence as a hub for knowledge-based industries.
Infrastructure Developments Fuel Accessibility
Commercial growth in Riyadh is being further supported by major infrastructure upgrades. The Riyadh Metro, which served over 25 million passengers in Q1 2025, is set to improve accessibility further with the opening of new stations serving key business districts, including KAFD and Olaya.
Outlook
While rental growth is expected to remain firm in the short term due to persistent demand and limited new supply, Savills anticipates a slight easing of pressure by late 2026, when over 900,000 sq m of new Grade A space is expected to enter the market. Key upcoming developments include Diriyah Gate and the Prince Mohammed bin Salman Nonprofit City (Misk), both of which are poised to reshape the commercial real estate landscape.
