Saudi Arabia remains one of the world’s busiest real estate markets, with office towers, new communities and vast infrastructure projects continuing to reshape its cities despite geopolitical tensions and an uncertain global economy.
The scale is striking, but the more important question is changing. It is no longer simply how much the Kingdom intends to build, but how successfully those ambitions can be translated into occupied offices, functioning neighbourhoods and commercially sustainable destinations.
CBRE’s Saudi Arabia Real Estate Market Review for the second quarter of 2026 suggests that transition is already underway. The consultancy said non-oil economic activity expanded by 2.9 per cent year-on-year during the first quarter, helping overall gross domestic product grow by 3 per cent.
Government capital expenditure continues to support giga-projects, transport networks, tourism destinations and large mixed-use developments. Riyadh remains the principal centre of activity, although substantial investment is also moving through Makkah, Madinah, the Eastern Province and Aseer.
Government-backed organisations, including the National Housing Company, Diriyah Company, Expo 2030 Riyadh Company and Rua Al Madinah Holding, continued to award and advance major projects during the quarter. Their involvement has helped maintain confidence in the Kingdom’s long-term development programme, even as economic and political uncertainty affects investment elsewhere.
Riyadh’s Offices Are Running Out of Room
The office market remains among Saudi Arabia’s strongest real estate sectors, particularly in Riyadh, where demand for Grade A accommodation continues to exceed supply.
Multinational businesses are establishing regional headquarters under the Kingdom’s Regional Headquarters programme, while companies in technology, healthcare, finance and consultancy are expanding their operations.
Riyadh’s office stock has surpassed 6 million square metres of gross leasable area. Yet prime buildings remain close to full occupancy, creating fierce competition for the best addresses and supporting further rental growth.
New buildings are entering the market, but seemingly not quickly enough. The result is a capital city attempting to accommodate its rapid commercial transformation within a premium office market already stretched close to capacity.
Housing Sales Fall as Prices Rise
The residential picture is more complicated. Transaction volumes across apartments, villas and land plots declined by 14 per cent year-on-year to slightly more than 41,000 sales. Their combined value fell by 27 per cent to almost SR38 billion, or approximately $10.1 billion.
Yet national residential prices increased by 2.6 per cent over the same period. CBRE attributed the rise to sustained demand from owner-occupiers and the limited availability of land in important urban markets.
This divergence — fewer transactions but higher prices — suggests that affordability and supply constraints are beginning to shape buyer behaviour. Saudi Arabia is building extensively, but housing markets are never governed by headline construction figures alone. Location, completion dates, infrastructure and the price at which homes reach ordinary buyers remain decisive.
New regulations introduced under the Law on Non-Saudi Ownership of Real Estate could broaden international participation in designated areas. The reform is expected to create new investment opportunities while adding another source of demand to selected markets.
Housing supply is also expanding through large master-planned developments. More than 5,500 homes are expected to be delivered at the National Housing Company’s Murcia community in Riyadh by the end of 2026.
Retail and Warehousing Hold Firm
Saudi Arabia’s retail sector continued to benefit from resilient consumer spending and growing interest in entertainment and lifestyle-led destinations.
Point-of-sale expenditure increased from SR58.4 billion in April to SR63.1 billion in May, according to Saudi Central Bank data. May’s spending was generated through a record 1.1 billion transactions.
Around 400,000 square metres of additional retail accommodation is scheduled for completion before the end of the year. Even with that supply approaching, vacancy remained close to 6 per cent, while prime rents in leading super-regional shopping centres held at approximately SR3,275 per square metre.
The industrial and logistics market was similarly robust. Manufacturing localisation, e-commerce growth and investment in transport infrastructure continued to increase demand for modern warehouses. A shortage of high-quality space supported rental growth in Riyadh and Jeddah during the second quarter.
These are not the glamorous pieces of a national transformation, but they are among the most revealing. Warehouses, distribution networks and occupied shops demonstrate whether the machinery of a new economy is genuinely working.
Hotels Face a Softer Year
Hospitality performance weakened during the first half of 2026 as corporate travel slowed and regional uncertainty affected demand.
CBRE nevertheless retained a positive long-term outlook, supported by domestic tourism spending, ambitious international visitor targets and a substantial development pipeline.
Saudi Arabia’s hotel inventory reached approximately 177,000 rooms by the end of the second quarter. Further developments are progressing across Riyadh, Jeddah, Makkah, Madinah and the Red Sea coast.
CBRE said investment was increasingly becoming visible in completed infrastructure, commercial buildings, residential communities and tourism destinations. The expansion of the non-oil economy and the new framework for foreign property ownership were also strengthening Saudi Arabia’s appeal to international investors.
The Kingdom’s great real estate experiment is therefore entering a more demanding chapter. Monumental plans and dramatic renderings established the ambition. What matters now is execution: whether the offices fill, the homes remain attainable, the hotels attract guests and the new districts mature into places where people can build enduring lives.
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2 Comments
Announcing towers is the easy part — every ambitious country can do that. Actually handing over keys on schedule, at spec, for the price promised, is where most “megaproject eras” quietly go to die. Worth watching whether Saudi becomes the exception or just another case study.
Announcing ambitious projects attracts attention, but delivery is where credibility is earned. The lasting measure will be whether these developments are completed responsibly, remain financially viable and create places that continue to function well after the opening ceremony.
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