Office space in Saudi Arabia is growing in popularity and the demand is expected to double in 2017. In this article, you’ll learn about the costs and why is there a growing popularity. We’ll also talk about how to find a great office space for your business.
Rise in Demand
The market is becoming increasingly commercialized, and rental yields for prime office space are at their highest levels in five years. Demand for office space in Riyadh, Jeddah, and other major cities in Saudi Arabia is also rising, thanks to the return of businesses and increased economic activity due to high oil prices. But before investors jump in and purchase office space, there are some important facts they should keep in mind.
The economy in Saudi Arabia continues to expand, with its population estimated at eight million this year, and growing to 15 million in ten to fifteen years. This growth is largely driven by international firms. In fact, Saudi Arabia has mandated that foreign companies establish regional headquarters in the kingdom by 2024, making them highly competitive in government tenders. The kingdom also recently relaxed travel restrictions, allowing international firms to move into Saudi offices.
Increase in Supply
Riyadh office space market delivered 330,000 sq. m of GLA during the third quarter of 2016. The total supply in Riyadh is now at 4.8 million sq. m, with additional deliveries planned for Jeddah and northern Riyadh during the final quarter of 2016. The upcoming GLA primarily consists of Grade A floor space. The Saudi government is continuing its policy to increase the share of Saudi families owning their own homes.
Currently, the Saudi government is working to attract foreign investors to the country, as the kingdom is looking to diversify its economy beyond oil. It is also looking to attract global brands to its Eastern Province, and this will benefit the city’s economy. Already, Jaguar Land Rover, Dow Chemicals, Sinopec, and Vopak have announced plans to set up new manufacturing plants in Hamwah. But most companies prefer leasing land for their production plants. Moreover, Saudi Arabia has a high capital investment rate, so very few warehouse units are being built speculatively.
Expected Rise
Given the strong economic system, the capital of Saudi Arabia is under pressure as primary and secondary office rents fall. The establishment of an entertainment industry may also benefit the hospitality industry, which has traditionally been driven by corporate demand. This remains to be seen.
Cost
The rental rate for office space in Saudi Arabia varies depending on the region you choose. Renting office space in this region will give you access to functional infrastructure, including power, water, and connectivity for IT systems. Some warehouses even include cold storage facilities, which are vital for food and beverage companies and other industries that require cold storage. Whether you need a large space for your business or a small warehouse to expand your reach to other major markets, integrated business solutions in Saudi Arabia are a great option.
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