Capacity constraints are expected to be a challenge between 2025 and 2028 as Saudi Arabia gears up for major events, with rising costs and geopolitical tensions adding further pressure, according to a senior executive from global consultancy JLL.

The Kingdom maintains its 2024 tender price inflation (TPI) trajectory at 6% for 2025, said Country Head KSA Saud Alsulaimani.

He added that these challenges are being addressed through intensified localisation efforts, infrastructure investment, digital transformation, regulatory reforms, enhanced stakeholder collaboration, and a focus on renewable energy and sustainability.

Alsulaimani said that despite global economic headwinds, the resilience and strategic diversification efforts in Saudi Arabia driven by Vision 2030 are a significant catalyst for real estate development, attracting domestic and international capital.

"The flight to quality, limited vacancy in prime assets, and ambitious tourism strategies are further bolstering sustained demand across key sectors, particularly in Riyadh and Jeddah," he added.

Maroun Deeb, Head of Projects and Development Services for JLL in KSA, said strategic projects supporting Saudi Arabia’s Vision 2030 will continue to attract substantial investments, creating new opportunities for market expansion.

Major events such as the FIFA World Cup 2030 and Expo 2030 are expected to generate significant cash flow, further boosting infrastructure development and positioning the real estate sector for robust performance and positive growth in 2025 and beyond, he said.

Although the Middle East and Africa region’s construction market slowed in 2024, Saudi Arabia remained robust, accounting for $29.5 billion of the total construction project awards.

The hospitality, mixed-use, and leisure segments were highly active, with the residential sector performing strongly with $7.9 billion in awards.

Meanwhile, Riyadh’s hospitality sector is thriving, driven by corporate tourism and global events, with average daily rates (ADR) surging 13.3% to $239 in 2024.

Deeb noted that the city’s growth as a key business and leisure hub will continue, with 2,312 keys expected in 2025.

(Editing by Brinda Darasha; brinda.darasha@lseg.com)