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Saudi Arabia Real Estate Market Review Q3 2025
Major regulatory changes to have long-term impact on real estate landscape
October 21, 2025 10 Minute Read
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Key Takeaways
- Riyadh's office market remains tight (98% occupancy) despite increase in handovers during Q3, with continued support from the government’s RHQ program, driving a 15% y-o-y rental appreciation for Grade A spaces. Demand was primarily concentrated across the technology, financial, and healthcare sectors. Despite new Q3 supply, companies continue to face challenges securing space and in some cases must adopt earlier pre-leasing strategies to accommodate growth.
- The residential market shows strong underlying price growth (villas up 11.6% y-o-y in Riyadh), with a 17.9% quarter-over-quarter transaction volume increase. However, amidst long term rental growth, which has added cost of living pressure to residents, the government moved to impose a 5-year rent freeze on existing and new leases across Riyadh, as it aims to better manage affordability. Giga projects continue to launch new schemes, targeting both mass and luxury market segments.
- Retail rents in Riyadh remained stable despite stronger consumer spending, as the market starts to shift towards integrated, experiential led mixed-use projects like Diriyah Square. A significant supply wave of 800,000 sqm is scheduled over the next five years, which is expected to heighten competition and establish Northern Riyadh as a more dominant retail hub.
- The hospitality sector continues to deliver on its diversification mandate, with an average 10% increase in RevPAR across the country, supported by an 11% jump in occupancy, with over 32 million tourists recorded during the summer program (May to September 2025). At a wider level, the strategic focus on localising luxury rooms continues with PIF backed companies launching new Saudi hotel brands across projects like Qiddiya City.
- Saudi’s logistics sector continues to grow, fueled by strong non-oil industrial output growth (IPI up 7.1% y-o-y), driving substantial rental appreciation across Riyadh (up to 28% y-o-y in some submarkets), commanding the highest absolute rents in Jeddah. This growth underscores an urgent market need for modern, well-connected logistics facilities in prime areas of the country.
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