Knight Frank: Riyadh retail market sees 3% rise in rents

Riyadh city

The total existing retail supply in Riyadh stands at 3.6 million sqm, with around 27,050 sqma of retail space entering the market in Q1 2024. The capital’s retail stock will grow by 28% to 4.6 million sqm by 2026, according to global property consultancy Knight Frank’s Summer 2024 Saudi Arabia Retail Market Overview.

Average rental rates across Riyadh’s retail market have increased marginally by 3% to SAR 2,725 psm for both regional and super regional malls in the last 12 months, while occupancy rates across the retail market increased by 5 percentage points to 90%, the report added.

In contrast to the capital, Jeddah and the Dammam Metropolitan Area (DMA) have experienced subdued retail market growth in the last 12 months with occupancy rates dropping by 1 percentage point in both cities, to 84% and 89%, respectively, says Knight Frank. Lease rates have responded, with average rents in Jeddah dropping by 7% to SAR 2,465 psm, while DMA regional and super regional malls rental rates have, on average, witnessed a decline of 1.3% to SAR 2,275 psm.

"What we are witnessing today in Saudi’s retail scene is a newly defined retail destinations and recent consumer demands evolving around ‘feels’ where purchases have become a by-product of shopping mall visitation with consumers continue to seek unique immersive experiences. With a particular focus on food and beverage and lifestyle retail developments, Saudi Arabia is undergoing an exciting transformation as it pivots towards steady adaptation to evolving consumer preferences and market dynamics," said Knight Frank.