Demand for office space from global and government entities remained robust in Riyadh in the second quarter of 2023, driven by higher occupancy levels, real estate consultancy CBRE said in a new report.

Average occupancy for Grade A and B office segments in the Saudi capital reached 99.9% and 99.4%, respectively.

In addition, Grade A office rent rose 12.2% year-on-year (YoY) in Q2 2023, while Grade B rates leaped by 14.4% YoY. 

Jeddah’s Grade A office segment recorded the highest rental growth rate at 20.7% YoY, the consultancy said in its "Real Estate Market Review Q2 2023".

In the residential segment, transaction numbers declined by 38.1% YoY in the three-month period ending June 30, 2023, while the value of the deals slumped 30.4% YoY to SAR 26.8 billion. 

In the 12 months to Q2 2023, average prices for apartments in Riyadh and Dammam rose by 22.9% and 2.4%, respectively, while Al Khobar and Jeddah saw price declines of 4.3% and 3.5%, respectively.

“In the second quarter of 2023, Saudi Arabia’s real estate market continued to see its positive momentum continue,” said Taimur Khan, Head of Research MENA at CBRE. 

Market segments such as the kingdom’s hospitality, industrial and office sectors have recorded strong growth rates on the back of an influx of demand or a lack of suitable supply, or in some cases both, he added.

(Editing by Seban Scaria seban.scaria@lseg.com)