Saudi Office Real Estate

Executive Summary

After the global financial crisis, the trend in Saudi Arabian office real estate can be summed up by increased supply and moderate demand. The market focus lies mainly on the upgradation of grade B and C offices into premium grade A offices. Riyadh, Jeddah and Dammam are major commercial centers, with Riyadh having the major demand for office spaces in Saudi Arabia. King Abdullah Financial District (KAFD), MODON -Industrial city and Jeddah Convention center are some of the major office spaces under construction in the country. Riyadh is the major commercial with rental trends at SAR 800-900 per sq.m/ year for the grade B buildings, while it remained at SAR 1,250-1,400 per sq.m/ year for the grade- A buildings. The office stock in Riyadh is expected to increase by 50% in 2017 thus adding more than 1 million sq meters to the existing office space in Riyadh. Increase in office space supply is expected in other places like Jeddah and Eastern Province. The office market in Riyadh faces huge oversupply risk due to construction of King Abdullah Financial District and Information Technology and Communications Complex. The supply in Jeddah is also overshooting demand. The threat of oversupply and the declining oil prices are the major challenges confronting the growth of office space demand and rents in Saudi Arabia.

In this report, we have analysed the office real estate market across each of the GCC countries, focusing on the demand-supply dynamics, and rental trends, key drivers and challenges. The report elaborates on the factors that dictate the demand and supply. The major construction companies in KSA, namely,Dar Al-Arkan Real Estate (DAAR), Emaar Economic City, Saudi Real Estate Company and Taiba Holding Company are also analyzed.