Reforms and Economic Momentum Drive Saudi Arabia’s Real Estate Boom: CBRE

Riyadh, Saudi Arabia: Saudi Arabia’s real estate market is entering a new era of growth and transformation, driven by bold reforms, accelerating economic diversification, and record levels of development activity, according to CBRE Middle East’s Q3 2025 Saudi Arabia Real Estate Market Review.

A Resilient Economy Fuels Sector Expansion

Saudi Arabia’s real GDP grew 3.9% year-on-year in Q2 2025, prompting an upward revision of forecasts to 4.2% growth for the year, with the non-oil sector now contributing 56% of GDP. This diversification push continues to strengthen demand across residential, office, retail, hospitality, and industrial markets.

The report highlights over USD 440 billion in committed projects and USD 1.55 trillion in long-term potential investments, reinforcing the Kingdom’s emergence as one of the world’s fastest-developing real estate markets.

Key Policy Reforms Reshaping the Market

Three landmark policy shifts introduced in Q3 2025 are set to reshape Saudi Arabia’s real estate trajectory:

• Foreign Ownership Law: Effective January 2026, the new law allows non-Saudis to own property across key regions. This reform supports Saudi Arabia’s goal to attract USD 100 billion in annual FDI by 2030, opening vast opportunities for global investors.

Read more: Saudi Arabia Opens Real Estate Market to Foreigners in Landmark Reform

• Expanded White Land Tax (WLT): Updated in August 2025, the WLT introduces a tiered rate structure targeting over 411 million sq m of undeveloped land, encouraging development and reducing speculation.

Read more: Saudi Arabia Raises White Land Tax to 10%

• Five-Year Rent Freeze in Riyadh: Implemented in September, the freeze aims to stabilize rental costs for residents and businesses, reinforcing Riyadh’s position as a competitive global hub.

Read more: Saudi Arabia studies five-year rent freeze expansion across all regions

Office Sector Leads Performance

The office market continues to outperform expectations. Grade A office rents surged 15% year-on-year, with occupancy rates averaging 98%, reflecting near-zero vacancy across prime assets.

The Regional Headquarters (RHQ) Program remains a major growth driver, with 34 new licenses issued in Q2, bringing the total to 634. The King Abdullah Financial District (KAFD) anchors this momentum, supported by plans to double its capacity and accommodate 40,000 daily visitors.

Infrastructure enhancements, including the reactivation of the 3.6 km monorail, are helping KAFD evolve into a “10-minute city,” offering an efficient, sustainable business ecosystem.

Residential Market Sustains Strong Demand

Residential transaction volumes rose 17.9% quarter-on-quarter, totalling USD 2.05 billion (SAR 7.7 billion) in value. Apartment prices in Riyadh climbed 6.3%, while villa prices rose 11.6% year-on-year. The government’s five-year rent freeze in the capital aims to ensure affordability and maintain long-term stability, reflecting proactive intervention to balance supply and demand.

Retail Sector Expands Amid Shifting Consumer Trends

Retail activity remains robust, supported by stronger consumer spending and growing tourism. Sales volumes are projected to grow at a 4.4% CAGR through 2027. However, rental growth has remained modest, reflecting a balanced market. A landmark partnership between Majid Al Futtaim and Diriyah Company will anchor Diriyah Square with VOX Cinemas and seven global brands, reinforcing the evolution of mixed-use, pedestrian-friendly destinations.

The retail pipeline continues to grow, with 800,000 sq m of new space under development — including Westfield Riyadh (formerly Jawharat Riyadh), Bellevue Riyadh, and Avenues Mall, all slated for delivery between 2026 and 2027.

Tourism and Hospitality on the Rise

Saudi Arabia’s hospitality sector recorded a 10% year-on-year increase in RevPAR as occupancy rose 11% nationwide. Riyadh posted a 2.7% gain, while Jeddah saw a 7.3% decline, reflecting competitive adjustments in pricing. PIF-backed Adeera Hospitality launched three new homegrown hotel brands — Alia, Sama, and Noor — to operate across Qiddiya City, further localizing the sector.

Tourism surged with 32 million summer visitors and USD 14.2 billion (SAR 53.2 billion) in spending, a 15% annual increase, underscoring tourism’s growing role in the non-oil economy.

Industrial Sector Sees Sustained Growth

Saudi Arabia’s Industrial Production Index rose 7.1% year-on-year, with manufacturing up 5.6%. Logistics rents in Riyadh continued to rise, particularly in Al Faisaliyah and Al Mashael, reaching USD 80 per sq m annually (SAR 299). Jeddah’s Asfan submarket recorded the highest national rent at USD 94 per sq m annually (SAR 350), supported by USD 116 billion in construction-related investment and new factory openings across the Kingdom.

Market Outlook

Matthew Green, Head of Research, MENA at CBRE, said:

“Saudi Arabia’s real estate market is currently moving through a major transformation phase, amidst significant regulatory reforms and sustained strategic investments, creating a dynamic environment for investors, developers, and occupiers alike.”

With a combination of strong policy support, economic diversification, and a vast project pipeline, Saudi Arabia’s real estate sector is set to remain one of the most compelling growth stories in the global property market.