Saudi Office Rents Increase in 2023 Ahead of Quality Supply Boost
Saudi Arabia’s office market performance expanded in Q3 2023 as quality supply looms.
As of Q3 2023, Riyadh’s King Abdullah Financial District (KAFD) has recorded upwards of 60 per cent of its office space as leased.
For occupiable supply, this rate is substantially higher at 92.2 per cent.
Landmark transactions within KAFD included the acquisition of around 22,000 sq m of office space by two major management consulting firms.
While demand remains very much centred towards Riyadh, demand is trickling into Jeddah and the Dammam Metropolitan Area (DMA).
In terms of upcoming quality supply in the next two years, key additions in Riyadh’s office market include 166,100 sq m in KAFD, 200,000 sq m in EZDI Park, 60,000 sq m in STC Square and more than 60,000 sq m in phase two of Laysen Valley.
The aforementioned drive for office space in Riyadh, particularly for quality space in the likes of KAFD, has driven prime rents to record growth rates of 23.6 per cent in the year to Q3 2023, where rents currently stand at SR2,617 ($698) per square metre.
Grade A rents grew by 12.9 per cent over the same period, reaching an average of SR1,900 ($507) per square metre.
Grade B offices increased by 18.9 per cent in the 12 months to September 2023, settling at the average rent of SR1,529 ($408) per square metre.
Occupancy levels in Riyadh’s Grade A segment of the market have reached full occupancy as at Q3 2023.
During the same period, the average Grade B occupancy rate remained stable at 99.4 per cent and the average prime occupancy rate increased by 8.2 per cent to reach 92.2 per cent.
Dammam and Khobar’s office market recorded growth across all segments in Q3 2023.
