Vision 2030 playing a key role in Saudi Arabia's real estate growth in 2025: Report

Report attributes Vision 2030 a key in Saudi Arabia's real estate growth in 2025 

Saudi Arabia’s real estate market is poised for significant growth in 2025, driven by the ongoing impact of Vision 2030 and the Kingdom’s strategic diversification efforts. Despite navigating challenges such as supply chain disruptions and rising construction costs, the Kingdom is set to experience transformative development and exciting new opportunities.

According to JLL’s Middle East and Africa Market Review and Outlook 2025, Saudi Arabia's non-oil sector is expected to grow by 5.8% in 2025, up from 4.5% in 2024, spurred by substantial investments in infrastructure and greater private sector involvement.

 

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“Despite global economic challenges, Saudi Arabia’s resilience and Vision 2030-driven diversification are key factors fueling real estate growth. The demand for high-quality assets, the limited vacancy of prime properties, and ambitious tourism projects are strengthening sustained demand in key markets like Riyadh and Jeddah, creating a long-term investment opportunity,” said Saud Alsulaimani, Country Head of KSA at JLL.

Residential Sector Fuels Construction Growth

While the broader Middle East and Africa region experienced a slowdown in construction activity in 2024, Saudi Arabia’s construction sector remained robust, contributing $29.5 billion to total project awards. Key segments, including hospitality, mixed-use developments, and leisure projects, showed significant activity, with the residential sector performing particularly well, recording $7.9 billion in project awards.

"Strategic initiatives tied to Vision 2030 will continue to attract significant investments, creating new opportunities for market growth. Major events such as FIFA World Cup 2030 and EXPO 2030 are expected to generate substantial cash flow, further stimulating infrastructure development and positioning the real estate sector for growth in 2025 and beyond," stated Maroun Deeb, Head of Projects and Development Services for JLL in KSA.

 

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Riyadh Office Sector Sees Strong Demand

Riyadh’s office market had an outstanding 2024, with strong demand and limited supply driving Grade A office buildings to a near-zero vacancy rate of just 0.2%. Rents also surged, with average prices reaching $609 per square meter in Q4 2024. Although 326,600 square meters of Gross Leasable Area (GLA) were added, an additional 888,600 square meters in the pipeline ensures continued growth in 2025.

Meanwhile, Jeddah is positioning itself as an attractive alternative for regional and international corporations, offering modern, high-quality office spaces. Dammam’s office market remains stable, primarily driven by government demand.

Supply Shortages Fuel Price Increases

The demand for residential properties in Riyadh remains high, particularly for villas, which make up 53.3% of transactions. With only 28,943 new units expected in 2025, the supply shortfall is likely to lead to price and rental increases. In Jeddah, apartments dominated transactions in 2024 and will comprise 82.8% of the new supply expected in 2025. However, the limited availability of units is expected to drive similar upward price pressure.

 

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Riyadh's hospitality sector is also thriving, fueled by corporate tourism and global events. Average Daily Rates (ADR) surged 13.3% to $239 in 2024, and the city is set to see the addition of 2,312 hotel rooms in 2025. Jeddah’s hospitality market, bolstered by religious and leisure tourism, continues to grow despite a slight dip in key performance indicators (KPIs), aligning with Saudi Arabia’s broader tourism goals.

Industrial and Logistics Sectors Show Strong Growth

Both Riyadh and Jeddah are seeing upward trends in rental rates in the industrial and logistics sectors, reflecting a strong market driven by economic diversification and e-commerce growth. Enhanced logistics and warehousing capabilities are in high demand, further strengthening these sectors' role in the Kingdom’s development.

Source: Economy Middle East