Savills' latest report highlights that over 120 international companies relocated their regional headquarters to Riyadh in the first quarter of 2024, representing a significant 477% increase from the same period last year. This influx is largely attributed to the Kingdom's strategic efforts to position Riyadh as a central business hub in the region, offering various investment incentives and a stable economic environment.
Leasing activity has been particularly strong, with sectors such as legal, technology, telecommunications, media, and engineering dominating the market. Legal firms alone accounted for 40% of the completed transactions tracked by Savills in Q4 2023, while technology and telecommunications firms each made up 20%. Additionally, inquiries from the pharmaceutical, IT/ITES, and banking, financial services, and insurance (BFSI) sectors comprised 57% of total occupier interest.
The Kingdom’s economic diversification efforts are paying off, with the non-oil sector showing a robust performance. Riyadh's office market has not only remained resilient but has also become a magnet for international players across various industries. This trend is expected to continue as the government maintains its focus on economic reforms and infrastructure development.
Despite a slight projected dip in GDP to -0.5% in 2023 due to strategic oil adjustments, the non-oil sector grew by 4.1%, driving the overall economic growth forecast to 5% in 2024 as oil production normalizes. This growth is further supported by a surge in office rent transactions, which increased by 31% in 2023 compared to the previous year, according to Ejar data.
Riyadh’s strategic initiatives have also included developing key infrastructure and providing an investor-friendly environment, making it an attractive destination for multinational corporations. The city's ability to offer competitive leasing rates, state-of-the-art office spaces, and a supportive regulatory framework has been crucial in drawing these businesses.
Overall, Riyadh's office market is set to continue its upward trajectory, supported by sustained economic growth, government incentives, and a strategic vision aimed at positioning the city as a leading global business hub. The continued interest from international companies underscores the confidence in Riyadh's market potential and its role in driving the Kingdom's economic ambitions.