Saudi Arabia: Offices, hospitality see record growth as global interest surges

Dubai: Saudi Arabia’s commercial real estate and tourism sectors are booming, with both office rents and hotel revenues hitting record highs in early 2025, according to global property consultancy Knight Frank.

Driven by rising foreign investor interest and a wave of global businesses setting up shop in the Kingdom, office rents in the capital Riyadh soared 23% year-on-year to reach SAR 2,700 per square metre, the highest ever recorded. Occupancy levels remain tight, with 98% of top-grade office space already taken.

This sharp demand is being powered by government-backed initiatives like the Regional Headquarters Programme, which offers major tax incentives — including 0% corporate income and withholding taxes for 30 years — to foreign firms establishing regional bases in the Kingdom.

Over 600 global companies have already announced regional HQ plans in Riyadh, while the number of foreign business licences issued surged 67% year-on-year in 2024 to a record 14,303, Knight Frank reported.

Meanwhile, Jeddah is emerging as Saudi’s next business hub, with office occupancy at 95% and large-scale developments like Jeddah Gate and Jeddah Rose adding to the supply pipeline over the next few years.

“Saudi Arabia’s economic momentum is building fast, with private sector activity and foreign interest rising across the board,” said Faisal Durrani, Head of Research for MENA at Knight Frank.

In 2024, Saudi Arabia welcomed a record 30 million international visitors, putting it firmly on the global travel map. The Kingdom aims to attract 70 million by 2030, in line with its Vision 2030 goals.

Hospitality metrics reflect this upward trend. In Makkah, hotel revenue per available room (RevPAR) surged 35.7%, while average daily rates (ADR) jumped nearly 29%, reaching SAR 859. This performance is tied to an increase in Umrah visas, which rose 8.3% over the past year.

Madinah also saw strong growth, with ADR rising 11.8% to SAR 891, the highest in the country, and RevPAR climbing 15.1%. The city is preparing for a projected 30 million pilgrims annually by 2030, with over 6,000 new hotel rooms from global brands like Hilton and Marriott in the pipeline.

Large-scale tourism projects like Rua Al Haram in Makkah and Rua Al Madinah are expanding capacity, improving access, and enhancing guest experience around key religious sites.

Beyond real estate and tourism, Saudi Arabia is positioning itself as the Middle East’s next big data hub, targeting a data centre market size of US$ 3.2 billion by 2029, up from US$ 1.78 billion in 2023.

Major US cloud providers — including AWS, Microsoft, Oracle and Google Cloud — are scaling up operations in the Kingdom. AWS alone has committed US$ 5.3 billion, while Chinese tech players like Alibaba and Huawei Cloud have also established a growing footprint.

Saudi Arabia’s IT capacity is expected to quadruple to over 1,000 megawatts by 2030, making it one of the world’s fastest-growing digital economies.

“Saudi is now among the top five global AI superpowers,” said Stephen Beard, Global Head of Data Centres at Knight Frank, citing the recent US$ 100 billion Transcendence AI initiative.