Riyadh office market heats up: Rents rise 10% as global firms seek larger spaces

Dubai: Riyadh’s commercial real estate market continues to show remarkable resilience and momentum in Q2 2025, as strong economic fundamentals, rising foreign investment, and global company interest fuel demand for prime office space.

According to Savills’ latest Riyadh Office Market in Minutes report, Grade A occupancy stood at 98%, with average rents rising 10% year-on-year. The increase comes amid a growing shift towards larger office footprints, with 50% of leasing enquiries targeting spaces over 1,000 sqm—up from just 28% in Q1.

The Banking, Financial Services and Insurance (BFSI) sector dominated leasing activity, accounting for 50% of transactions. Legal services and pharmaceutical firms made up another 50% combined. Notably, 46% of Savills’ Q2 enquiries came from US and UK companies, underscoring Riyadh’s rising profile among international occupiers.

Saudi Arabia’s economic expansion continues to support the office market’s strength. Non-oil GDP rose 4.9%, with the Kingdom’s economy projected to grow 3.5% in 2025. The PMI hit 57.2 in June—its highest level since 2011—driven by hiring momentum and robust private sector activity.

Supporting this growth is increased foreign direct investment, which hit SAR 22.2 billion in Q1 2025, a sharp rise from SAR 15.5 billion a year earlier. Multinational companies are taking note—BNY Mellon, London Business School, ASPEN, and Globant all established regional headquarters in Riyadh during Q2.

Infrastructure upgrades are also playing a role. The Riyadh Metro recorded over 25 million passengers in Q1 2025, improving access to key commercial zones like KAFD and Olaya.

Rental growth remains sharpest in key locations: Zone C saw a 15% annual increase, with Zone A following at nearly 11%. However, this upward trajectory may soften by late 2026, as over 900,000 sqm of new Grade A space is set to enter the market through major developments such as Diriyah Gate and Misk City.

Still, with business confidence strong, supply tight, and multinational appetite growing, Riyadh’s office market looks set to remain a key pillar of Saudi Arabia’s Vision 2030 ambitions.