Saudi Arabia’s commercial real estate market continued to expand in the third quarter of 2025, though at a slower pace, according to the RICS Global Commercial Property Monitor. The findings indicate that while confidence remains positive, the sector is entering a period of consolidation following several years of strong growth.
The Commercial Property Sentiment Index (CPSI) for Saudi Arabia recorded a reading of +9 in Q3 2025, down from its 12-month average of +22. The data suggests that market activity is stabilising as new supply enters the market and investors adjust to recent regulatory changes.
Office demand remains the strongest driver of activity, with a net balance of +50 per cent, while industrial and retail demand grew by +23 per cent and +8 per cent, respectively. However, 60 per cent of respondents reported an increase in available leasable space, a sign that development activity and new regulations are beginning to ease supply constraints.
Rental growth expectations are moderating. Prime office rents are forecast to rise by around 3 per cent over the next year, while prime industrial and retail rents are expected to grow slightly above 1 per cent. Even so, investor sentiment remains resilient, with enquiries up across all three sectors and a net balance of +40 per cent reflecting continued confidence in Saudi assets.
The report notes that 50 per cent of respondents now view market pricing as above fair value, signalling increased caution around long-term affordability and price sustainability.
The introduction of a five-year rent cap for commercial and residential properties in Riyadh has also influenced market sentiment. The policy aims to stabilise tenant costs but is prompting investors to revise rental growth assumptions. Liquidity constraints remain a challenge in some regional markets, particularly outside the capital.
Despite these short-term adjustments, analysts expect Saudi Arabia’s property market to regain momentum in 2026 as Vision 2030 projects advance and regulatory frameworks become clearer.
Mohamed Moussa, Vice Chair of the RICS Saudi Arabia Board, said: “The Kingdom’s commercial property market continues to show underlying strength, but the data points to a natural stabilisation following a period of rapid expansion. This moderation is not indicative of a downturn, but rather a rebalancing as supply, regulation, and demand trends align.”
He added that the evolving regulatory environment supports “long-term market stability and sustainable diversification,” laying the foundations for greater institutional investment in the years ahead.
