Deloitte, the leading global professional services firm, has released its annual KSA real estate market review, highlighting another strong year for the Kingdom across all sectors. According to the report, Saudi Arabia's real estate market is set to experience robust growth through 2025, fuelled by the Kingdom's Vision 2030 reform agenda and commitment to economic diversification.

Key developments, including major events like EXPO 2030 and the FIFA World Cup 2034™, alongside giga-projects such as NEOM, the Red Sea, and Qiddiya, are expected to drive the creation of new urban hubs and tourism destinations.

The outlook remains optimistic with the National Investment Strategy projecting FDI inflows to reach SAR 388 billion (USD 103.4 billion) by 2030, reflecting a compound annual growth rate (CAGR) of 22% from the 2023 figure of SAR 95.9 billion (USD 25.5 billion).

Oliver Morgan, Partner and Head of Real Estate at Deloitte Middle East, commented: “Saudi Arabia's real estate sector is experiencing robust growth, driven by strategic government initiatives, strong economic fundamentals, substantial infrastructure investments and expanding international trade. These diverse growth drivers position Saudi Arabia as one of the region's most dynamic and promising real estate markets. Sustainable and smart developments, increasing demand for luxury and mixed-use properties, and a growing focus on affordable housing to serve the Kingdom's expanding population have caused residential transactions to rise steadily. Riyadh continues to solidify its position as the primary business hub, attracting significant foreign investment.”

Market performance overview

Residential

Fuelled by Saudi Arabia's economic expansion and population growth, transaction volume and value across Riyadh, Jeddah and Dammam Metropolitan Area (DMA) for residential real estate increased steadily by approximately 50% between 2023 and 2024, growing with residential supply. This reflects the increasing market maturity and the planned phasing approach adopted by developers.

According to the Deloitte report, the total number of residential transactions across Riyadh, Jeddah and DMA reached 102,522 in 2024, with a total value of SAR 118 billion (USD 32 billion). Sales rates in Riyadh increased by 5% for apartments and 12% for villas, while apartments in Jeddah and DMA experienced growth of approximately 1% over the past 12 months.

In Riyadh, approximately 69% of apartments sold in the last 12 months were priced between SAR 250,000 and SAR 1 million, (USD 66,000 to USD 266,000), primarily targeting the low to mid-income segments.

Office market

With Saudi Arabia’s GDP reaching SAR 3 trillion (USD 786 billion) in 2024 and forecasted to grow to SAR 3.7 trillion (USD 981 billion) by 2030 – a CAGR of 3.4% over the same period – demand for office space remains strong.  Grade A office-focused sectors, such as financial and business services, experienced a growth of 5.3% between 2023 and 2024. Office supply in Riyadh, Jeddah and DMA stood at 6.4 million sqm, 2.2 million sqm, and 1.5 million sqm, respectively at the end of 2024.

Notable developments include Laysen Valley, STC Square Phase 1, and the New East project in Riyadh, added a total gross leasable area (GLA) of 145,000 sqm. A significant portion of the King Abdullah Financial District (KAFD) office supply was also successfully delivered, reflecting high pre-leasing and leasing rates. In Jeddah, an additional 150,000 sqm GLA was delivered encompassing projects like JCDC and Darb Al Haramain. The Regional Headquarters Program, launched in Q1 2024, resulted in 571 companies relocating to Riyadh by the end of the year. The Saudi government also introduced tax breaks, streamlined regulations, and broke ground on several large-scale projects, including New Murabba and Diriyah Gate, expected to offer extensive office space upon completion.

Hospitality

Saudi Arabia’s hospitality sector continues to thrive, with the Average Daily Rate (ADR) increasing to SAR 716 in 2024, up from SAR 702 in 2023. This was boosted by the Kingdom surpassing the Vision 2030 goal of 100 million tourists a year, seven years ahead of schedule.

Riyadh, specifically, has outperformed global cities like Hong Kong, Madrid and Dubai, with ADR climbing to SAR 895 in 2024. This surge has been attributed to the ongoing strength of corporate and leisure demand and the successful Riyadh Seasons event, which stimulated domestic and international tourist inflows. Jeddah’s market remains a critical tourism gateway. The coastal city's ADR stood at SAR 680, and new developments along the waterfront are expected to strengthen market performance as tourism initiatives ramp up ahead of global events like Expo 2030 and FIFA World Cup 2034.

Saudi Arabia’s hospitality sector’s growth is further fuelled by cultural and entertainment investments, including efforts to revitalize Saudi Arabia’s heritage landmarks and introduce new attractions such as AlUla and the New Murabba project. Giga-projects like NEOM and Amaala promise to elevate the hospitality market.

Retail

Oxford Economics estimates that total retail sales volume in KSA will experience continued growth at a CAGR of 4.4% between 2025 and 2027.

The development of retail assets which offer integrated entertainment and immersive experiences continues to be a key focus for retail operators throughout the Kingdom, as customer preferences continue to evolve, moving away from traditional standalone retail developments.

Throughout 2024, retail rents in Saudi Arabia increased marginally due to a high volume of supply and relatively stable demand. Older retail developments are struggling as newer developments with more diverse offerings are capturing market share.

The Deloitte report also highlights the growing trend of pop-up stores – temporary retail spaces that create a unique customer experience and drive brand awareness. In KSA, this trend is gaining traction in major retail malls, offering a dynamic addition to the traditional retail landscape.

Industrial & Logistics

The growth in demand in the warehousing and logistics sector is primarily attributed to various initiatives and incentives deployed as part of the 2030 Vision, including the National Industrial Development and Logistics program, Special Economic Zones such as Riyadh Integrated Logistics Zone, Saudi Port Authority initiatives enhancing port infrastructure in Jeddah & DMA, and the Vision 2030 logistics master plan.

Demand for warehousing and logistics will continue growing due to the enhancement of the aviation infrastructure and increase in air cargo. Based on statistics from the Saudi Port Authority, cargo throughout increased by 14% in 2024 compared to 2023.

The report features also an analysis on the development approaches to successfully deliver major sports assets, the current KSA tax context with a Real Estate focus, and how the mortgage market has evolved in KSA.