REAL ESTATE MARKET REVIEW

Saudi Arabia
Real Estate
Market Review
Q2 2024
Saudi Arabia s real estate
market records strong
activity, although this
activity continues to be
limited due to a lack of
supply.
CBRE RESEARCH
AUGUST 2024
 FIGURES | SAUDI
FIGURES ARABIAARABIA
| SAUDI REAL ESTATE
REALMARKET REVIEW
ESTATE AND OUTLOOK
MARKET | Q2 |2024
Q2 2024

Saudi Arabia s real estate market records

strong activity, although this activity
continues to be limited due to a lack of supply
1.5% 1.6% 7.6% 8.2% 11.5% 55.0
Growth in GDP Rate of inflation in Saudi Arabia s unemployment Increase in hotel RevPAR Growth in average Grade A office PMI reading in June 2024
in 2024 May 2024 Rate, which fell by 1.1% YoY in June 2024 rents in Riyadh in the year to
Q2 2024

MACROECONOMIC OVERVIEW FIGURE 1: Saudi Arabia, Gross Domestic Product

‒ In Q2 2024, Saudi Arabia s GDP has been adjusted to grow by 1.5%, following an initial
estimate of 2.0% growth in Q1 2024 for the year.
‒ For 2024, Oil GDP is forecast to decline by 5.0% year on year, whereas non-oil GDP is
estimated to expand by 4.2%.
‒ In 2025, GDP is projected to increase by 5.3%.
‒ Saudi Arabia unemployment rate dropped by 1.1% year-on-year reaching 7.6%.
Saudi Arabia s GDP growth forecasts for 2024 have been downgraded to 1.5% by Oxford
Economics, where a 5.0% decline in oil activities, underpinned by OPEC+ output cuts are
impacting headline growth. Non-oil activities on the other hand are expected to grow by 5.0% in
2024.

Looking ahead, in 2025, Oxford Economics GDP projections expect headline growth of 5.3%, on
the back of expected reversals in OPEC+ output cuts which is expected to drive a 7.6%
expansion in oil related GDP. Over this period, non-oil activity's GDP rate of growth is expected
to register at 5.7%. Source: CBRE Research/ Oxford Economics

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 FIGURES | SAUDI ARABIA REAL ESTATE MARKET REVIEW AND OUTLOOK | Q2 2024

OFFICES FIGURE 4: Saudi Arabia, Office Rents, YoY % Change to Q2 2024

In Q2 2024, strong demand for quality office space continued to remain elevated in the capital,
Riyadh, as more international and local occupiers moved to the city. Moreover, in Q2 2024,
Riyadh registered the highest volume of demand and enquiries across all major cities in Saudi
Arabia. The trend of repurposing of existing and upcoming real estate into office space in an
attempt to meet demand remained prevalent during the second quarter of 2024. A key example
has been the case of a prime retail space located on Prince Turki Ibn Abdulaziz Al Awwal Road
being repurposed into offices. In terms of upcoming supply, the most notable project scheduled
in the immediate future is Diriyah Gate s office components in Q4 2024 and Q1 2025.

In Riyadh, Prime offices saw average rental increases of 10.7% year-on-year to reach an average
of SAR 2,767 per square metre. Furthermore, Grade A grew by 11.5%, standing at an average of
SAR 2,050 per square metre. Grade B segment marked the highest increase on a yearly basis at
14.6%, with the average rent reaching SAR 1,686 per square metre. As for average occupancy Riyadh Jeddah Dammam Khobar
rates in Riyadh, Grade B office occupancy remained unchanged at 99.4%, Prime and Grade A
Source: CBRE Research
office occupancies saw respective upticks of 4.5 percentage points and 0.1 percentage points to
arrive at 94.7% and full occupancy respectively. FIGURE 5: Saudi Arabia, Office Occupancy, Q2 2024, %

In Jeddah, average rental rates improved for both Grade A and Grade B assets in the year to Q2
2024. In the Grade A segment, average rents rose by 8.1% to reach SAR 1,419 per square metre,
while Grade B offices witnessed an upswing of 13.1% standing to sit at SAR 800 per square
metre. For average occupancy, both Grade A and Grade B recorded gains of 0.6 percentage
points and 8.0 percentage points, resulting in average occupancy rates of 93.1% for Grade A and
88.0% for Grade B respectively.

The office market in Dammam saw both market segments rental rates increase. Grade A
average rent reaching SAR 1,067 per square metre, increasing by 13.3% year-on-year. Grade B
segment also improved by 6.2% to register an average rent of SAR 567 per square metre. In
Khobar, the average rent for Grade A assets stood at SAR 1,145 per square metre after
expanding by 6.0% over the same period. The average occupancy levels in both cities recorded
increases, with Khobar s Grade A segment reaching 86.3% after seeing a 5.3 percentage points Riyadh Jeddah Dammam Khobar
annual increase. Whereas in Dammam, Grade A and Grade B leapt by 5.0 percentage points and
4.0 percentage points to reach 87.2% and 71.6%, respectively. Source: CBRE Research

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 FIGURES | SAUDI ARABIA REAL ESTATE MARKET REVIEW AND OUTLOOK | Q2 2024

RESIDENTIAL FIGURE 6: Saudi Arabia, Number of Residential Transactions

In Q2 2024, transactional activity across key tracked cities showed a second consecutive
quarter of annual growth. In Riyadh, the number of sales transactions rose by 51.6% in the year
to Q2 2024, totalling 18,500 with the value of these transactions reaching SAR 26.6 billion. In
Dammam, the total number of residential transactions grew annually by 22.4% to total of 2,390
transactions valued at SAR 2.4 billion. In Jeddah, the total number of residential transactions
reached 9,392, which highlighted a year-on-year expansion of 43.2% over the same quarter in
2023. the total value estimated for these residential transactions reached SAR 14.5 billion.

In terms of performance, in the apartment segment of the market, only Riyadh showed an
increase in prices across our key tracked cities, with average apartment prices increasing by
6.6% to stand at SAR 4,971 per square metre. In Khobar, average apartment prices remained
static at SAR 3,415 per square metre. In Jeddah and Dammam average apartment prices
declined by 0.9% and 0.6%, respectively. These declines resulted in average prices of
apartments of SAR 3,945 per square metre in Jeddah and SAR 2,833 per square metre in
Source: CBRE Research
Dammam.
FIGURE 7: Saudi Arabia, Residential, Prices, Villas & Apartments, YoY % Change to Q2 2024
In the 12 months to Q2 2024, in the villa segment, Riyadh and Jeddah registered annual
expansions in their average villa prices of 3.3% and 0.8%, respectively. These price expansions
translated to average villa prices in Riyadh and Jeddah of SAR 5,824 and SAR 5,707 per square
metre respectively. Over the same period, average villa prices in Dammam and Khobar
contracted by 0.4% and 1.2%, respectively, where the average price in Dammam stood at SAR
3,597 per square metre and in Khobar they reached SAR 3,636 per square metre.

Source: CBRE Research

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 FIGURES | SAUDI ARABIA REAL ESTATE MARKET REVIEW AND OUTLOOK | Q2 2024

HOSPITALITY FIGURE 8: Key Tourism Indicators in the Kingdom, Q2 2024

As at May 21st 2024, Saudi Arabia s General Authority of Civil Aviation (GACA) latest data
shows that so far in 2024, total passenger numbers have increased by 20.0%. This continued
growth follows a 26.0% growth rate seen in passenger numbers in 2023, where the number of
passenger totalled 111 million. Moreover, it was announced that the Kingdom s connectivity has
increased by 48% as a result of 148 new national and international destinations being added
over the course of 2023.

In comparison to the pre-pandemic baselines, in the year to date to June 2024 compared to the
111m
Total passenger numbers in 2023
48%
Increased connectivity with 148
same period in 2019, aside from Jeddah, the Key Performance Indicators (KPIs) of all major new destinations worldwide added in 2023
hospitality markets within Saudi Arabia now sit above their pre-pandemic baselines. For Saudi
Arabia as a whole over this period, the average occupancy rate and ADR sit 3.7 percentage
points and 35.6% higher and as a result, RevPARs have increased by 43.9%.

Year-on-year in the year to June 2024, all KPIs for Saudi Arabia as a whole showed growth. The Source: CBRE Research/ General Authority of Civil Aviation
Kingdom s average occupancy rate rose by 0.9 percentage points, its ADR climbed by 6.7% and
resultantly we have seen an 8.2% increase in RevPAR over this period. FIGURE 9: Saudi Arabia, Hospitality Market, KPIs, YoY % Change

Looking at the major cities, in the year-on-year in the year to June 2024, average occupancy in Year to Date - June 2024 vs June 2019 Year to Date - June 2024 vs June 2023
Riyadh fell by 1.5 percentage points, however as the capital s ADR increased by 25.5% this led to
a 22.4% expansion in RevPAR. Makkah s key performance indicators demonstrated positive RevPAR % RevPAR %
Occ PP Change ADR % Change Occ PP Change ADR % Change
readings, starting with a 1.6 percentage point increase in average occupancy, which was Change Change
accompanied by a growth of 1.1% in ADR that culminated in a 3.6% expansion in RevPAR. In
Saudi Arabia 3.7% 35.6% 43.9% 0.9% 6.7% 8.2%
Madinah, although the city has seen its average occupancy rate weaken by 1.0 percentage
points, ADR increased by 16.1%, which facilitated for a RevPAR growth of 14.5%. Khobar s Khobar - - - -1.7% -1.5% -4.1%
hospitality indicators regressed, with average occupancy softening by 1.7 percentage points and Dammam - - - 8.4% -1.1% 14.5%
ADR contracting by 1.5%, resulting in the average RevPAR for Khobar declining by 4.1%. For
Jeddah 11.3% -20.0% -4.1% 4.1% -9.9% -4.2%
Dammam, the average occupancy grew by 8.4 percentage points and although ADR decreased
by 1.1%, RevPAR observed an upturn of 14.5%. Finally, looking at Jeddah, the average occupancy Makkah 0.1% 40.9% 41.2% 1.6% 1.1% 3.6%
registered a growth of 4.1 percentage points, which was contrasted by a fall of 9.9% in ADR Madinah 13.0% 105.5% 148.5% -1.0% 16.1% 14.5%
generating a decline in RevPAR of 4.2%.
Riyadh 3.3% 53.6% 62.5% -1.5% 25.5% 22.4%

Source: CBRE Research/ STR Global

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 FIGURES | SAUDI ARABIA REAL ESTATE MARKET REVIEW AND OUTLOOK | Q2 2024

INDUSTRIAL FIGURE 10: Riyadh, Industrial Rents Q2 2024, SAR per Square Metre

In Q2 2024, the total area designated for logistical services within MODON rose to 4.8 million
square metre as part of the National Industrial Development and Logistics Program NIDLP
efforts to attract both local and foreign investments and increase the local content participation
in the industrial sector. In the food industry, MODON signed six key agreements valued over
SAR 290 million which allocate around 110,000 square metres towards food industry ventures
across its industrial cities with 67,000 square metres in Jeddah, 11,000 square metres in
Dammam and 30,000 square metres in Jazan. These agreements increased the total for
investments in the food industry upwards of SAR 50.0 billion. In the year to Q1 2024, MODON
attracted 280 new investments estimated to be over SAR 4.0 billion and creating 14,000 job
opportunities in the process.

As for rental performance, in the 12 months to Q2 2024, average industrial and logistics rent in
Riyadh improved by 2.8% year-on-year reaching SAR 203 per square metre. Central Riyadh
remained the least costly location in the capital with average rents of SAR 119 per square metre.
Source: CBRE Research
Riyadh s eastern region commanded the highest rental rate at SAR 320 per square metre.
FIGURE 11: Saudi Arabia, Industrial Rents Q2 2024, SAR per Square Metre
Khobar s average industrial and logistics rent soften by 2.6% arriving at SAR 232 per square
metre in the second quarter of 2024. Similarly, Dammam s average rent stood at SAR 221 per
square metre as it witnessed an annual drop of 0.7% over the same period.

In the year to Q2 2024, Jeddah s average industrial and logistics rent rose to SAR 185 per
square metre highlighting a yearly increase of 2.3%. Jeddah s northern region showcases higher
average rents which stand at SAR 241 per square metre compared to the southern region, where
average rents are SAR 128 per square metre.

Source: CBRE Research

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 Contacts
Middle East Global Research
Taimur Khan Daniel McCulloch Scott Keaney Richard Barkham
Head of Research Head of Valuation Head of Project Management Global Chief Economist, Head of Global
+971 52 281 6953 +971 50 656 8325 +971 52 640 9525 Research & Head of Americas Research
[email protected] [email protected] [email protected] [email protected]

Hattan Alsharif, Ph.D. Lindsay McQuillan Harish Nair Henry Chin, Ph.D.
Senior Research Manager Head of Property Management Head of MENA Consulting Global Head of Investor Thought
+966 50 029 6969 +971 52 640 9532 +966 11 254 9777 Leadership & Head of Research, Asia Pacific
[email protected] [email protected] [email protected] [email protected]

Pedro Ribeiro Ali Manzoor Inci Gecekusu Abhinav Joshi

General Manager, Saudi Arabia Head of Hotels & Tourism Head of Marketing & Communications Head of Research, India, Middle East &
+966 55 269 0736 +971 58 149 2583 +971 52 1005 122 North Africa
[email protected] [email protected] [email protected] [email protected]

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