Saudi Arabia’s real estate market is on the verge of a significant leap, driven by the ambitious Vision 2030 initiative and substantial investments in infrastructure and real estate sectors. According to insights shared by JLL during its annual roundtable in Riyadh, the market is poised for robust growth and positive expansion across most sectors by 2025. Currently valued at $70.33 billion, the Kingdom’s construction market is projected to soar to SAR342.6 billion ($91.36 billion) by 2029. With over $20 billion worth of projects already underway in the capital, Riyadh is firmly establishing itself as a leading investment hub in the region.
The buzz among industry leaders at JLL’s gathering underscores a remarkable trend: a predicted 30 percent increase in hotel investments. This surge is a direct reflection of the transformative impact of government initiatives on the real estate and construction landscape. Even though the overall value of awarded projects has seen a slowdown, many have shifted into the execution phase, paving the way for future expenditures and a more dynamic market.
Participants pointed out the strengths of the current market, notably the simplification of regulations and a necessary reassessment of the project pipeline. However, they also acknowledged a perceived cooling in the projects market, which has led to an increased availability of capacity. The government’s unwavering commitment to economic diversification is proving to be a game-changer, contributing to an optimistic outlook for ongoing growth in Saudi Arabia’s real estate sector.
Key megaprojects like Diriyah Gate, King Salman Park, and Expo 2030 are driving this economic diversification. Riyadh is not just a city; it’s emerging as a global investment hub, witnessing a surge in demand for Grade A office spaces, a robust residential market, and a thriving hospitality sector. Saud Alsulaimani, country head of KSA at JLL, highlighted that “2024 has been a pivotal year for the KSA real estate market,” emphasizing the focus on project evaluation and regulatory improvements designed to engage the private sector. This public-private synergy is not just a buzzword; it’s the backbone of transformative projects that underpin Vision 2030.
The hospitality sector is particularly vibrant, with a marked increase in investor confidence. The sector is expected to see a 30 percent rise in hotel investments by 2025, aligning with Saudi Arabia’s ambitious goal to welcome over 150 million visitors annually by 2030. Amr El Nady, managing director for Hotels & Hospitality, MEA, noted that “Riyadh’s booming tourism and business activity are transforming its hospitality landscape.” The focus is shifting toward sustainable practices and innovative experiences, catering to the evolving expectations of modern travelers.
On the residential front, Riyadh is thriving, driven by population growth and urbanization. This surge is translating into heightened demand for modern living spaces and a steady uptick in average sales prices. The office market is equally vibrant, with a 21 percent year-on-year increase in Grade A office rents, reflecting a strong demand for premium, hybrid-friendly work environments.
The roundtable discussions, led by JLL’s top brass, emphasized Riyadh’s critical role in advancing Vision 2030. Despite some project delays, the Kingdom’s long-term vision remains steadfast, with significant cash flow expected to peak by 2027. Enhanced collaboration among stakeholders is boosting efficiency, while the exploration of innovative construction techniques and technologies is set to elevate competitiveness and create a world-class built environment.
Sustainability is also taking center stage, with stakeholders prioritizing net-zero targets and government mandates on local content for labor and materials procurement. As Saudi Arabia prepares to host major events like the World Cup 2034 and Expo 2030, the focus on green credentials and circularity is becoming increasingly vital. These initiatives are not just about building infrastructure; they are about laying down a legacy that solidifies Saudi Arabia’s position on the global stage. The future of real estate in the Kingdom looks bright, with innovation and sustainability at its core.