Savills: Riyadh Office Market holds firm as rents and occupier demand continue to rise

Riyadh’s office market continued to perform strongly in Q2 2025, underpinned by a stable economic outlook, high business confidence, and growing interest from international occupiers, according to the latest research from Savills.

The Kingdom’s economy is forecast to expand by 3.5% in 2025, driven by a 4.9% rise in the non-oil sector, a clear indicator of the ongoing success of Saudi Arabia’s diversification agenda. Business sentiment remained upbeat, with the Purchasing Managers Index (PMI) climbing to 57.2 in June, its highest reading since May 2011, signalling strong private sector activity and employment growth. Foreign direct investment also continued on an upward trajectory, reaching SAR 22.2 billion in Q1 2025, up from SAR 15.5 billion during the same period last year.

Within the office market, Grade A occupancy stood firm at 98%, reflecting sustained tenant demand amidst a limited supply pipeline. Average rents rose slightly by 0.75% on a quarterly basis but recorded a 10% increase year-on-year. Zone C, home to emerging hubs such as Riyadh Front. Digital City, and Laysen Valley, led annual rental growth at 15%, while Zone A, which includes prime locations such as Olaya, KAFD, and Kingdom Centre, followed closely with nearly 11%. This highlights the continued appeal for both well-established commercial districts and newer, strategically located developments.

Chris Chambers, Head of Transactional Services in KSA, commented:
“We’re seeing strong expansion-driven activity across sectors, particularly within banking, financial services and insurance (BFSI) accounting for 50% of transactions this quarter. Legal and pharmaceutical firms each contributed a further 25% underscoring the depth and diversity of demand. Notably, leasing interest is increasingly shifting towards larger spaces, with half of all enquiries targeting units above 1,000 sq m.”

Multinational interest in Riyadh remains high. By mid-2025, over 660 global companies had been licensed to establish regional headquarters in the city, already surpassing the Vision 2030 target of 500. Notable new entrants in Q2 include BNY Mellon, ASPEN, Globant, and London Business School. Enquiry data from Savills shows that 46% of leasing interest this quarter originated from the US and UK, reflecting strong global confidence in the Saudi capital. Sector-wise, the highest levels of leasing enquiries came from banking and financial services, technology, media and telecoms (TMT), and engineering and manufacturing, highlighting Riyadh’s broadening commercial base and appeal to knowledge-driven industries.

The capital’s infrastructure push also continues to support its commercial growth. The Riyadh Metro saw over 25 million passengers in Q1 2025, and the addition of new stations is expected to further enhance accessibility to key areas such as the King Abdullah Financial District (KAFD) and Olaya.

Looking ahead, while rental growth is likely to remain firm in the near term due to ongoing demand and limited supply, the pressure is expected to ease slightly towards the end of 2026, with more than 900,000 sq m of new Grade A stock scheduled to be delivered through major developments such as Diriyah Gate and Prince Mohammed bin Salman Nonprofit City (Misk).