Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector

Saudi Arabia’s commercial real estate sector is witnessing robust growth, driven by rising demand across key industries hospitality. Above, the lobby of the Ritz Carlton hotel in Riyadh. (AFP file photo)
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Updated 03 November 2024
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Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector

JEDDAH: Saudi Arabia’s commercial real estate sector is witnessing robust growth, driven by rising demand across key industries, including offices, hospitality, and data centers.

The sector is also evolving with a focus on smart technologies, sustainability, and specialized assets, reflecting the Kingdom’s broader economic transformation goals.

Strategic government initiatives, such as Vision 2030, and increased foreign investment are playing a crucial role in this expansion, as highlighted by the latest Knight Frank report.

The Kingdom’s major cities are becoming regional hubs for commercial activity, attracting international businesses and supporting Saudi Arabia’s economic diversification efforts.

As the Kingdom continues to implement its Vision 2030 strategies, the commercial real estate sector is poised to play a pivotal role in shaping the future of the country’s urban landscape and economic growth.

The capital city, Riyadh, remains at the center of this surge, attracting numerous regional and international companies, while other cities such as Jeddah show early signs of growth.

According to Knight Frank’s biannual review of key trends and the performance of the market in the Kingdom for summer 2024, this growth is driven by rising demand and supported by strategic government reform initiatives.

The report by the London-based global real estate consultancy firm showed that the office market in Riyadh is particularly dynamic, benefiting from the regional headquarters program initiative, which has attracted European companies and spurred demand for office space.

In 2023, Saudi Arabia’s non-oil revenue reached 50 percent of gross domestic product for the first time, amounting to $453 billion, according to the Ministry of Economy and Planning.

The report added that this economic growth has significantly boosted demand for commercial real estate across all sectors, with Riyadh’s office market seeing the most benefit as office space demand rises.

The commercial real estate sector remains strong, with office yields holding at 7.75 percent, supported by shrinking availability and fast-increasing rents.

Investor interest in Saudi Arabia is also surging, with the government granting a record 2,884 investment licenses in the last quarter of 2023, marking a 125 percent year-on-year increase.

Knight Frank further noted that in the first quarter of 2024, the Kingdom recorded 104,000 new business registrations, up 59 percent from the same period the year before, bringing the total to over 1.45 million registrations.

Speaking to Arab News, Elias Abou Samra, CEO at RAFAL Real Estate Development Co. highlighted the current trends shaping the commercial real estate market in Saudi Arabia which has seen Riyadh become a magnet for commercial real estate at a regional level.

“The capital has attracted more than 500 regional and international companies since the launch of the headquarters program by Royal Commission of Riyadh City in 2021. We are expecting a new supply of approximately 5 million sq. meters of office space by 2030, and we believe this will barely match the pent-up demand,” he said.

Abou Samra added that as for other major cities the demand remains local and growth is organic, pending the roll out of certain initiatives and incentives such as special economic zones in King Abdullah Economic City and Eastern Province.

The executive pointed out that Riyadh has absorbed 90 percent of the demand in recent years and is expected to continue to do so for the next four years. He also added that the coast city of Jeddah is witnessing early signs of growth as major master plans and infrastructure projects reach advanced design stages.

“Other cities continue to serve their local and regional markets with a healthy 5 percent growth per year that is sustained, yet no paradigm shifts are sensible yet,” he said.

The sector will continue to benefit from ongoing digital transformation efforts, with technology playing a crucial role in shaping smarter, more efficient spaces.

Mamdouh Al-Doubayan, managing director at Globant for Middle East and North Africa, said that government support coupled with a growing focus on sustainability and the implementation of smart technologies will drive the market’s expansion.

“Key factors such as foreign investment, the evolution of regulatory frameworks, and demand for innovative, flexible workspaces will also play a critical role in the sector’s growth, he said, adding that his company is well-positioned to support this transformation.




Mamdouh Al-Doubayan, managing director at Globant for Middle East and North Africa. (Supplied)

Regarding the future success drivers for Saudi Arabia’s sector, Abou Samra highlighted that they go beyond basic supply and demand, emphasizing the market’s shift toward mixed-use and transit-oriented developments, reflecting greater sophistication.

“As such, part of demand springs from upgrades within existing stock of office space, and conversion of old stock to alternative asset classes. Another driver is the modernization and openness of the regulatory environment and quasi-governmental entities that are jointly paving the way for innovative products,” the CEO said.

Abou Samra added that the Mukaab at Riyadh’s New Murabba mega project is a testament to the new frontiers of commercial real estate in Saudi Arabia.

Addressing the impact of Saudi Vision 2030 on the strategic direction of commercial real estate development, Rafal’s CEO noted that the Kingdom’s decade-end plan touches all sectors of the economy, enhancing existing industries and introducing new ones like mining, tourism, and cloud computing.

“As a result, we are migrating from a one-size-fits all commercial real estate market to specialized assets,” he said.

Abou Samra identified data centers as the leading new addition to the commercial real estate market, followed by logistics and biomedical sectors. He emphasizes that these developments are driven by Saudi Arabia’s Vision 2030, which aims to diversify the economy by fostering new industries and reducing dependence on oil.

Shedding light on the areas or sectors within commercial real estate that are currently attracting the most investment, Abou Samra noted that, in addition to mainstream commercial office space, the industrial and logistics sectors have experienced double-digit growth since 2021.

He also highlighted that major regional players are entering these markets, and foreign direct investments in these sectors continue to flow into the Kingdom.

On the other hand, technology has become essential to the success of every industry, and commercial real estate is no exception.

Globant’s Al-Doubayan said technological advancements, including smart building technologies and digital platforms, are shaping the commercial real estate industry in Saudi Arabia, emphasizing their transformative impact on the sector in the Kingdom.

“Smart building technologies, integrated with IoT, AI, and data analytics, are enabling the creation of more intelligent, efficient, and adaptive spaces,” he said, adding that his company focuses on enhancing connected experiences within smart venues, allowing building owners and operators to offer seamless experiences for tenants and visitors, while optimizing resource management.

He further said that digital platforms are also revolutionizing property management, making it possible to monitor and automate operations in real time. “This evolution is key to supporting the Kingdom’s broader vision of smart cities and sustainable urban growth.”

The Saudi government is prioritizing the real estate sector, enacting over 18 pieces of legislation, as of May, to drive its growth and significantly boost its GDP.

These include real estate systems, executive regulations, and regulatory rules, reflecting the government’s commitment to this sector as part of Vision 2030.

The sector’s role and contribution to the Kingdom’s GDP reached 5.9 percent in the fourth quarter of 2023.

Reflecting on the impact of recent regulatory and policy changes on the commercial real estate market, the Al-Doubayan stated that Saudi Arabia’s regulatory shifts, including the implementation of more transparent property laws and foreign investment incentives, have significantly increased the market’s attractiveness.

“These reforms are creating an environment conducive to international investment and collaboration, which aligns with Vision 2030’s goals of diversifying the economy, as more policies are introduced to attract global businesses,” he said.

Moreover, he anticipated that the real estate sector will see continued growth, especially in digital transformation projects that enhance operational efficiency and sustainability.

Al-Doubayan added that sustainability is central to the future of commercial real estate in Saudi Arabia.

He emphasized that the country is making strides toward green building practices, which are increasingly becoming a priority for developers and tenants alike.

“Certifications such as Leadership in Energy and Environmental Design, or LEED, are gaining traction, encouraging buildings to reduce energy consumption and carbon emissions,” he said.


Global Markets — stocks and dollar dip as Trump’s spending bill passes, trade deal deadline nears

Updated 04 July 2025
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Global Markets — stocks and dollar dip as Trump’s spending bill passes, trade deal deadline nears

LONDON: Stocks slipped on Friday as US President Donald Trump got his signature tax cut bill over the line and attention turned to his July 9 deadline for countries to secure trade deals with the world’s biggest economy.

The dollar also fell against major currencies with US markets already shut for the holiday-shortened week, as traders considered the impact of Trump’s sweeping spending bill which is expected to add an estimated $3.4 trillion to the national debt.

The pan-European STOXX 600 index fell 0.8 percent, driven in part by losses on spirits makers such as Pernod Ricard and Remy Cointreau after China said it would impose duties of up to 34.9 percent on brandy from the EU starting July 5.

US S&P 500 futures edged down 0.6 percent, following a 0.8 percent overnight advance for the cash index to a fresh all-time closing peak. Wall Street is closed on Friday for the Independence Day holiday.

Trump said Washington will start sending letters to countries on Friday specifying what tariff rates they will face on exports to the US, a clear shift from earlier pledges to strike scores of individual deals before a July 9 deadline when tariffs could rise sharply.

Investors are “now just waiting for July 9,” said Tony Sycamore, an analyst at IG, with the market’s lack of optimism for trade deals responsible for some of the equity weakness in export-reliant Asia, particularly Japan and South Korea.

At the same time, investors cheered the surprisingly robust jobs report on Thursday, sending all three of the main US equity indexes climbing in a shortened session.

“The US economy is holding together better than most people expected, which suggests to me that markets can easily continue to do better (from here),” Sycamore said.

Following the close, the House narrowly approved Trump’s signature, 869-page bill, which averts the near-term prospect of a US government default but adds trillions to the national debt to fuel spending on border security and the military.

Trade the key focus in Asia

Trump said he expected “a couple” more trade agreements after announcing a deal with Vietnam on Wednesday to add to framework agreements with China and Britain as the only successes so far.

US Treasury Secretary Scott Bessent said earlier this week that a deal with India is close. However, progress on agreements with Japan and South Korea, once touted by the White House as likely to be among the earliest to be announced, appears to have broken down.

The US dollar index had its worst first half since 1973 as Trump’s chaotic roll-out of sweeping tariffs heightened concerns about the US economy and the safety of Treasuries, but had rallied 0.4 percent on Thursday before retracing some of those gains on Friday.

As of 2:00 p.m. Saudi time it was down 0.1 percent at 96.96.

The euro added 0.2 percent to $1.1773, while sterling held steady at $1.3662.

The US Treasury bond market is closed on Friday for the holiday, but 10-year yields rose 4.7 basis points to 4.34 percent, while the two-year yield jumped 9.3 bps to 3.882 percent.

Gold firmed 0.4 percent to $3,336 per ounce, on track for a weekly gain as investors again sought refuge in safe-haven assets due to concerns over the US’s fiscal position and tariffs.

Brent crude futures fell 64 cents to $68.17 a barrel, while US West Texas Intermediate crude likewise dropped 64 cents to $66.35, as Iran reaffirmed its commitment to nuclear non-proliferation. 


World food prices tick higher in June, led by meat and vegetable oils

Updated 04 July 2025
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World food prices tick higher in June, led by meat and vegetable oils

PARIS: Global food commodity prices edged higher in June, supported by higher meat, vegetable oil and dairy prices, the UN Food and Agriculture Organization has said.

The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 128 points in June, up 0.5 percent from May. The index stood 5.8 percent higher than a year ago, but remained 20.1 percent below its record high in March 2022.

The cereal price index fell 1.5 percent to 107.4 points, now 6.8 percent below a year ago, as global maize prices dropped sharply for a second month. Larger harvests and more export competition from Argentina and Brazil weighed on maize, while barley and sorghum also declined.

Wheat prices, however, rose due to weather concerns in Russia, the EU, and the US.

The vegetable oil price index rose 2.3 percent from May to 155.7 points, now 18.2 percent above its June 2024 level, led by higher palm, rapeseed, and soy oil prices.

Palm oil climbed nearly 5 percent from May on strong import demand, while soy oil was supported by expectations of higher demand from the biofuel sector following announcements of supportive policy measures in Brazil and the US.

Sugar prices dropped 5.2 percent from May to 103.7 points, the lowest since April 2021, reflecting improved supply prospects in Brazil, India, and Thailand.

Meat prices rose to a record 126.0 points, now 6.7 percent above June 2024, with all categories rising except poultry. Bovine meat set a new peak, reflecting tighter supplies from Brazil and strong demand from the US. Poultry prices continued to fall due to abundant Brazilian supplies.

The dairy price index edged up 0.5 percent from May to 154.4 points, marking a 20.7 percent annual increase.

In a separate report, the FAO forecast global cereal production in 2025 at a record 2.925 billion tonnes, 0.5 percent above its previous projection and 2.3 percent above the previous year.

The outlook could be affected by expected hot, dry conditions in parts of the Northern Hemisphere, particularly for maize with plantings almost complete. 


Saudi Arabia posts 4 years of VC growth despite global slowdown: report 

Updated 04 July 2025
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Saudi Arabia posts 4 years of VC growth despite global slowdown: report 

RIYADH: Saudi Arabia achieved four consecutive years of growth in venture capital relative to its economy, a feat unmatched among its peers, according to a new report.

Between 2020 and 2023, the Kingdom was the only large market in the sample to post uninterrupted annual gains in VC intensity, contrasting with the more episodic deal flow seen across Africa and parts of Southeast Asia, MAGNiTT’s recently published Macro Meets VC report stated. 

While 2024 saw a slight contraction in funding amid global tightening, Saudi Arabia’s multi-year upward trend signals a sustained commitment to innovation-led diversification.

The Kingdom is steadily consolidating its position as a model for policy-driven venture capital development in emerging markets as it seeks to diversify its economy in line with the Vision 2030 blueprint. 

“Saudi Arabia is becoming the model for long-term, policy-driven ecosystem building,” the report notes, highlighting that sovereign limited partners and local funds have been instrumental in buffering the Kingdom from some of the volatility that struck other emerging venture markets. 

Saudi Arabia’s policy momentum 

The MAGNiTT data revealed that Saudi Arabia recorded a five-year average VC-to-GDP ratio of 0.07 percent. 

Although this figure remains modest compared to more mature hubs like Singapore, its consistent upward movement underscores the growing depth of domestic capital formation. 

Beyond the headline ratios, the Kingdom’s strategic positioning has also come into sharper focus. Saudi Arabia, along with the UAE, is classified as a “Growth Market”— a designation that reflects not only a sizeable GDP and population but also the rising economic clout of local consumer and enterprise demand. 

With a GDP approaching $950 billion and a population exceeding 33 million, Saudi Arabia presents a significant scale advantage. 

According to MAGNiTT’s benchmarking, this size creates “natural expansion targets for startups moving beyond initial launch markets,” supporting both regional and international founders seeking to diversify beyond smaller ecosystems. 

MENA’s uneven progress 

Across the broader Middle East and North Africa region, venture capital activity has continued to evolve unevenly. 

The UAE has retained its reputation as a strategic innovation hub and one of the few “MEGA Markets” in the emerging world, boasting a five-year average VC-to-GDP ratio of 0.20 percent. 

This proportion — identical to Indonesia’s ratio — signifies robust venture activity relative to the economy’s size. 

Yet, while the UAE maintained this level, Saudi Arabia has seen more consistent growth in funding, a dynamic the report attributes to policy-led market development. 

In Egypt, VC has gained further traction over the period under review. Egypt achieved a 25 percent rise in total funding compared to the previous five-year average, lifting its VC-GDP ratio by 0.02 percentage points to 0.11 percent. 

Although Egypt’s overall economic constraints remain acute — GDP per capita still lags below $10,000 — the relative progress suggests improving investor confidence, particularly in fintech and e-commerce. 

However, the report cautions that deal flow in Egypt, much like in Nigeria, remains fragile and prone to episodic swings driven by a handful of large transactions. 

The macroeconomic context across MENA has also been influential. Elevated oil price volatility and the impact of the Israel–Iran conflict have created a challenging backdrop for policymakers. 

Brent crude surged more than 13 percent in a single day earlier in 2025, underscoring the region’s exposure to external shocks. 

Nevertheless, both Saudi Arabia and the UAE managed to maintain monetary policy stability in line with the US Federal Reserve’s cautious stance. 

Saudi Arabia kept its benchmark rate at 5.5 percent, supported by inflation trending around 2 percent, while the UAE held steady at 4.4 percent. 

These decisions reflected a delicate balance between containing price pressures and supporting economic diversification efforts. 

Overall, MENA’s five-year aggregate venture funding reached $12.52 billion. Although this total remains well below the levels seen in more mature regions, it represents a meaningful share of emerging markets capital. 

MENA also posted the highest deal count relative to its peers in Southeast Asia and Africa over the period, indicating a broader base of early-stage transactions even as late-stage funding remains more limited. 

The report emphasizes that expanding geographic and sectoral reach within MENA will be critical to boosting efficiency metrics. 

“VC remains heavily concentrated in a few sectors and cities,” the report observes, warning that without broader inclusion, capital intensity will struggle to match potential. 

Southeast Asia’s VC benchmark 

Beyond MENA, Southeast Asia’s ecosystem stands out as the most mature among emerging venture markets, driven primarily by Singapore’s exceptional performance. 

Over the 2020–2024 period, Singapore achieved a 5-year average VC-to-GDP ratio of 1.3 percent, surpassing not only all emerging markets but also developed economies such as the US, which registered 0.79 percent, and the UK, with 0.73 percent. 

Even with a 5.4 percent decline in total funding compared to the prior five years and a 0.19 percentage point drop in VC-GDP ratio, Singapore maintained unmatched capital efficiency. 

The report describes the city-state as “a benchmark for capital efficiency in venture ecosystems,” attributing this strength to strong regulatory frameworks, institutional capital participation, and a deep bench of experienced founders and investors. 

Indonesia, Southeast Asia’s largest economy, recorded total VC funding volumes nearly twice as large as Singapore’s over five years, but its relative VC-GDP ratio remained lower at 0.2 percent. 

This dynamic illustrates one of the report’s core findings: venture capital inflows correlate more strongly with GDP per capita than total GDP. 

In Indonesia’s case, while its GDP surpassed $1.2 trillion, GDP per capita hovered around $4,000, constraining purchasing power and, by extension, startup revenue potential. 

Thailand, meanwhile, reported funding gains due mainly to a single mega deal rather than systematic improvements in ecosystem depth. 

In Africa, Nigeria emerged as an unexpected bright spot in 2024, as a single major transaction lifted its VC-GDP ratio to 0.15 percent — the highest in the region for that year. 

However, this outlier result also revealed the episodic nature of capital deployment in developing markets. 

Kenya registered a relatively high five-year VC-GDP ratio of 0.3 percent, even as absolute funding volumes remained modest. 

The report notes that in low-GDP contexts, this ratio can overstate ecosystem maturity. 

South Africa and Egypt showed more modest growth trajectories, weighed down by persistent inflation, structural constraints, and capital scarcity. 

In aggregate, African economies continued to lag both Southeast Asia and MENA in total venture funding and deal velocity. 

Global challenges ahead 

Globally, the five years covered by the report were marked by intensifying volatility. 

High interest rates, trade tensions, and geopolitical uncertainty weighed on capital flows. 

The US Federal Reserve held its policy rate between 4.25 percent and 4.5 percent through mid-2025, citing “meaningful” inflation risks. 

The European Central Bank moved to lower its deposit rate to 2 percent, reflecting cooling inflation but acknowledging sluggish growth. 

The World Bank cut its global GDP forecast for 2025 to 2.3 percent, the weakest pace since the 2008 crisis, excluding recessions. 

These headwinds contributed to the decline in venture capital across most emerging markets in 2024. 

In response, sovereign capital and strategic investors have become increasingly important backstops. 

The report highlights that domestic capital formation in MENA has partially offset declining global risk appetite. 

However, these funds tend to be slower moving, more sector-concentrated, and less risk-tolerant than international investors. 

“Without renewed foreign inflows or regional exit pathways, deal velocity may remain muted into the second half of 2025,” the report warns. 

This environment is likely to force startups to extend runway and compel general partners to adopt more selective deployment strategies. 

Despite the challenges, the outlook for Saudi Arabia and other growth markets remains constructive over the medium term. 

The Kingdom’s policy clarity, deepening institutional capital pools, and Vision 2030 commitments create a foundation for continued expansion. 

As the report concludes: “High GDP markets like KSA and Indonesia trail in VC efficiency — suggesting capital underutilization.” 

Closing this gap between potential and realized funding will be the defining challenge for emerging ecosystems as they navigate a turbulent global landscape.


Oil Updates — crude falls as Iran affirms commitment to nuclear treaty

Updated 04 July 2025
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Oil Updates — crude falls as Iran affirms commitment to nuclear treaty

LONDON: Oil futures fell slightly on Friday after Iran reaffirmed its commitment to nuclear non-proliferation, while major producers from the OPEC+ group are set to agree to raise their output this weekend.

Brent crude futures were down 49 cents, or 0.71 percent, to $68.31 a barrel by 11:31 a.m. Saudi time, while US West Texas Intermediate crude fell 41 cents, or 0.61 percent, to $66.59.

Trade was thinned by the US Independence Day holiday.

US news website Axios reported on Thursday that the US was planning to meet with Iran next week to restart nuclear talks, while Iran Foreign Minister Abbas Araqchi said Tehran remained committed to the nuclear Non-Proliferation Treaty.

The US imposed fresh sanctions targeting Iran’s oil trade on Thursday.

Trump also said on Thursday that he would meet with representatives of Iran “if necessary.”

“Thursday’s news that the US is preparing to resume nuclear talks with Iran, and Araqchi’s clarification that cooperation with the UN atomic agency has not been halted considerably eases the threat of a fresh outbreak of hostilities,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Araqchi made the comments a day after Tehran enacted a law suspending cooperation with the UN nuclear watchdog, the International Atomic Energy Agency.

OPEC+, the world’s largest group of oil producers, is set to announce an increase of 411,000 bpd in production for August as it looks to regain market share, four delegates from the group told Reuters.

Meanwhile, uncertainty over US tariff policies resurfaced as the end of a 90-day pause on higher levy rates approaches.

Washington will start sending letters to countries on Friday specifying what tariff rates they will face on goods sent to the US, a clear shift from earlier pledges to strike scores of individual trade deals.

President Trump told reporters before departing for Iowa on Thursday that the letters would be sent to 10 countries at a time, laying out tariff rates of 20 percent to 30 percent.

Trump’s 90-day pause on higher US tariffs ends on July 9, and several large trading partners have yet to clinch trade deals, including the EU and Japan.

Separately, Barclays said it raised its Brent oil price forecast by $6 to $72 per barrel for 2025 and by $10 to $70 a barrel for 2026 on an improved outlook for demand. 


EV maker Lucid’s quarterly deliveries rise but miss estimates

Updated 03 July 2025
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EV maker Lucid’s quarterly deliveries rise but miss estimates

  • Lucid delivered 3,309 vehicles in the quarter ended June 30

LONDON: Electric automaker Lucid on Wednesday reported a 38 percent rise in second-quarter deliveries, which, however, missed Wall Street expectations amid economic uncertainty.

Demand for Lucid’s pricier luxury EVs have been softer as consumers, pressured by high interest rates, shift toward cheaper hybrid and gasoline-powered cars.

Lucid delivered 3,309 vehicles in the quarter ended June 30, compared with estimates of 3,611 vehicles, according to seven analysts polled by Visible Alpha. It had delivered 2,394 vehicles in the same period last year.

Saudi Arabia-backed Lucid produced 3,863 vehicles in the quarter, missing estimates of 4,305 units, but above the 2,110 vehicles made a year ago.

The company stuck to its annual production target in May, allaying investor worries about manufacturing at a time when several automakers pulled their forecasts due to an uncertain outlook.

US President Donald Trump’s tariff policy has led to a rise in vehicle prices as manufacturers struggle with high material costs, forcing them to reorganize supply chains and produce domestically.

Lucid’s interim CEO, Marc Winterhoff, had said in May that the company was expecting a rise of 8 percent to 15 percent in overall costs due to new tariffs.

The company’s fortunes rest heavily on the success of its newly launched Gravity SUV and the upcoming mid-size car, which targets a $50,000 price point, as it looks to expand its vehicle line and take a larger share of the market.

Deliveries at EV maker Tesla dropped 13.5 percent in the second quarter, dragged down by CEO Elon Musk’s right-wing political stances and an aging vehicle line-up that has turned off some buyers.