The office market in Saudi Arabia is witnessing remarkable expansion in the second half of 2025, driven by limited supply and high demand, resulting in notable spikes in rental rates—particularly in Riyadh and Jeddah.
Riyadh: A Superior Regional Business Hub
The capital Riyadh recorded one of the lowest vacancy rates in history, with Grade A office vacancies at just 0.5% in Q2 2025, while other categories ranged between 2.9% and 3.8%. This significant supply shortage pushed rents higher, with Grade A office rents increasing 7.3% year-on-year to SAR 3,630 per square meter annually, while prices in King Abdullah Financial District (KAFD) surpassed SAR 4,000 per square meter.
Riyadh’s expansion is not limited to central areas. Growing demand has pushed companies to the northern neighborhoods, with residential buildings being converted into office spaces. Healthcare, pharmaceuticals, and technology sectors have emerged as key drivers of this rising demand.
Jeddah: Steady but Gradual Rise
In Jeddah, rents continued to climb on the back of rising demand. Grade A offices grew 4.3% to SAR 1,393 per square meter annually, while Grade B offices rose 6.5% to SAR 933 per square meter. The city added more than 81,000 square meters of new office space in the first half of the year, bringing total supply to 2.97 million square meters, with over 42,000 additional square meters expected to enter the market in the second half.
Dammam: Oversupply but Continued Demand
Although Dammam and the Eastern Province still face high vacancy rates (over 17% for Grade A and 21% for Grade B), rents saw a significant 8.2% increase, reflecting continued demand from companies seeking strategic locations at lower costs compared to Riyadh and Jeddah.
The current boom in Saudi Arabia’s office market is not temporary. It reflects the Kingdom’s vision for economic diversification and its ambition to transform its major cities into regional business hubs. Riyadh, in particular, is solidifying its role as a key center for global companies thanks to the Regional Headquarters Program, while Jeddah and Dammam support investment diversification and the distribution of opportunities across the Kingdom.
