Commercial Real Estate - Saudi Arabia

Saudi Arabia is projected to witness a significant growth in its Commercial Real Estate market market.
By 2024, the value of this market in Saudi Arabia is estimated to reach US$657.40bn.
Furthermore, it is expected to display a compound annual growth rate (CAGR) of 1.89% from 2024 to 2029, leading to a market volume of US$722.10bn by the end of the forecast period.
When compared globally, the United States is predicted to generate the highest value in the Real Estate sector, with an estimated worth of US$25.3tn in 2024.
Saudi Arabia's commercial real estate market is experiencing a surge in demand due to increased foreign investment and government initiatives to diversify the economy.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Saudi Arabia has been experiencing significant development and growth in recent years.

Customer preferences: Customers in the Commercial Real Estate market in Saudi Arabia have been increasingly seeking modern and high-quality properties. There is a growing demand for commercial spaces that offer state-of-the-art facilities, advanced technology infrastructure, and sustainable design. Additionally, customers are looking for convenient locations that provide easy access to transportation, amenities, and a thriving business environment.

Trends in the market: One of the key trends in the Commercial Real Estate market in Saudi Arabia is the rise of mixed-use developments. These developments combine residential, commercial, and retail spaces in a single project, creating vibrant and self-contained communities. This trend is driven by the desire for convenience and the need to optimize land use. Mixed-use developments also offer a diverse range of amenities and services, making them attractive to both businesses and residents. Another trend in the market is the increasing focus on sustainability and energy efficiency. With growing awareness of environmental issues, customers are demanding buildings that are environmentally friendly and energy-efficient. Developers are incorporating green building practices, such as the use of renewable energy sources, efficient insulation, and water-saving technologies, to meet these demands.

Local special circumstances: Saudi Arabia's Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil, has had a significant impact on the Commercial Real Estate market. The government's commitment to economic reforms and the development of various sectors, such as tourism and entertainment, has created new opportunities for commercial real estate development. The opening of the country to international tourists has also increased the demand for hotels, resorts, and other hospitality-related properties.

Underlying macroeconomic factors: The Commercial Real Estate market in Saudi Arabia is also influenced by several macroeconomic factors. The country's strong economic growth, driven by government investments and reforms, has contributed to increased business activity and the demand for commercial spaces. Additionally, low interest rates and favorable financing conditions have made it easier for developers and investors to access capital for real estate projects. In conclusion, the Commercial Real Estate market in Saudi Arabia is experiencing significant development and growth due to customer preferences for modern and high-quality properties, the rise of mixed-use developments, the focus on sustainability and energy efficiency, the impact of Saudi Arabia's Vision 2030 initiative, and favorable macroeconomic factors. These factors are driving the demand for commercial real estate and creating new opportunities for developers and investors in the market.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.