A new CBRE report shows that Saudi Arabia’s office market performance further improved in the third quarter of 2023, as quality supply rapidly emerged across the kingdom.
As of Q3 2023, Riyadh’s King Abdullah Financial District (KAFD) has leased more than 60% of its office space. Meanwhile, for occupiable premises, this rate is substantially higher, at 92.2%.
Landmark transactions within KAFD included the acquisition of around 22,000 sq. m. of office space by two major management consulting firms. Whilst demand remains very much centered towards Riyadh, demand nonetheless trickles 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 over 60,000 sq. m. in phase two of Laysen Valley.
This 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% in the year to Q3 2023, where rents currently stand at SAR2,617 per sq. m.
Grade A rents grew by 12.9% over the same period, reaching an average of SAR1,900 per sq. m. Grade B offices increased by 18.9% in the 12 months to September 2023, settling at the average rent of SAR 1,529 per sq. m.
According to CBRE, the 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% and the average prime occupancy rate increased by 8.2% to reach 92.2%.