The Middle East has become one of the most dynamic regions for commercial real estate. While Dubai has been at the forefront of flexible office space solutions, the Kingdom of Saudi Arabia, with nearly 10 times more new office developments in 2025, has surpassed the growth of its regional rival.
In 2024, Dubai, with a population of 3.8 million, completed just under 37,000 square metres of new office space. Riyadh, with 7 million residents, added 327,000 square metres of new office space, which is nearly 90 percent more than Dubai.
Even though Riyadh has delivered more office developments than any other city in the Middle East, it still faces a shortage of premium, Grade-A offices. The steady growth of office spaces in Riyadh is driven by Saudi Arabia’s economic diversification efforts and the influx of multinational companies or investors who want to expand their business in the Kingdom.
Why Riyadh’s Office Spaces Are in High Demand
The rent for offices in Riyadh rose by 11% to $609 per square metre in 2024. On the other hand, the rent for Grade B office spaces went up by 20% to $414 per square metre. These numbers and demand patterns were roughly in line with Dubai and slightly higher than Abu Dhabi.
The rise of office rents in the country can also be attributed to the Kingdom’s economic diversification efforts, particularly the continued growth of the private sector in Riyadh. Northern Riyadh is increasingly preferred by commercial tenants, primarily due to its superior accessibility, high-quality developments, efficient workspace solutions, and ample parking, which help mitigate rising traffic congestion.
The supply of office spaces in Saudi Arabia struggles to keep pace with the increasing demand. The office vacancy rate in Riyadh remains under 1.4%, while yields are steep at between 7.25% and 8%.
Another contributing factor to this surge in demand for office spaces in Riyadh is the growing preference for customisable, scalable, and flexible workspace solutions under 1,000 square meters. This trend is evident across key sectors, including Technology, Media, and Telecommunications (TMT), which accounted for 40% of the recent leasing activity.
Riyadh’s high occupancy rates and rising rents reveal its strong appeal to regional and international companies that want to take advantage of the Kingdom’s business-friendly environment and regulations.
Factors Boosting the Demand for Office Spaces in Riyadh
Below is an overview of factors that solidify Riyadh as a business hub, resulting in a high demand for offices in the city:
- Strategic initiatives under Vision 2030
- Regulatory improvements
- Attractive tax incentives
- Regional HQ mandate
- Increased foreign investment
- Growth of mega projects and public sector entities
- Improved business environment
- Limited supply of Grade A office space
- Urban transformation and mixed-use developments
“Riyadh’s office market is quickly emerging as a regional powerhouse for business growth, supported by rising demand for premium office spaces and a robust economic outlook,” says Paul Salnikow, Founder and Chairman of The Executive Centre, a pioneer in offering premium workspace solutions in the UAE and Saudi Arabia.
He added, “As businesses are expanding across borders, embracing the concept of the global village, the need for workspace solutions that uphold international standards and local sentiments is more important now than ever. With our established presence across Asia, the Middle East, and Australia, we’re uniquely positioned to support companies as they grow in dynamic markets like Riyadh and beyond”.
Foreign Investors Face Barriers in Riyadh’s Property Market
While the demand trends represent a healthy outlook for commercial real estate in Riyadh and Saudi Arabia as a whole, foreign investors continue to face challenges entering the local property market. This is primarily due to a shortage of Grade-A office spaces and intense competition from cash-funded local institutions, such as government entities or banks.
Despite continuous efforts to attract a diverse range of international investors, landlords of office spaces in Riyadh still tend to be predominantly Saudi nationals and largely institutional.
Looking Ahead
The demand for office spaces in Riyadh is expected to rise by an additional 889,000 square metres in 2025, nearly three times its growth in 2024, with more foreign and domestic businesses rapidly expanding their presence in the Saudi capital.
As of today, more than 600 companies have established their regional headquarters in Saudi Arabia in response to the government mandate.
Saudi Arabia’s regional headquarters policy (RHQ) programme, which took effect on January 1, 2024, is focused on attracting approximately 480 multinational corporations (MNCs) to relocate their headquarters to the country by 2030. This mandate is backed by many attractive benefits such as :
- Access to government contracts
- Stronger market presence
- Proximity to major projects
- Incentives and regulatory support (tax breaks, or fast-track licensing support)
- Improved talent attraction
- Enhanced regional oversight
- Competitive advantage in the local market
The key goal behind this initiative is to diversify Saudi Arabia’s economy and reduce its reliance on oil, also aligning with the objectives of Vision 2030.
In 2025, Saudi Arabia expects its non-oil economy to grow by 5 percent, with Riyadh likely to take the lion’s share of growth. There are also predictions that Saudi Arabia’s construction sector could be worth $182 billion by 2028, potentially making it the largest in the world.
Luxury Serviced Offices in Riyadh by TEC
As one of the leading providers of premium and flexible workspace solutions in the Middle East, we understand the evolving needs of modern businesses. We acknowledge that there is no one-size-fits-all approach to unique business requirements, so we offer customizable and scalable solutions for modern business needs.
Our private offices for rent in Riyadh, located at the heart of the King Abdullah Financial District (KAFD), are designed to offer a dynamic and strategic work environment that fosters innovation, collaboration, and overall productivity. Featuring top-tier ergonomics, connectivity, technology, infrastructure, and interior design. Ideal for businesses seeking a dynamic workspace. Supported by a dedicated property management team, TEC ensures businesses thrive in Riyadh’s fast-paced market.