KSA real estate rent review

• Record demand has pushed occupancy levels to all-time-highs and as per latest estimates, most corporate office space in cities such as Riyadh are operating near full capacity while in Jeddah, the occupancy levels hover around 95% on average.
• The supply and demand imbalance has pushed Grade A rents to an all-time high growing by 23% y/y to an average SAR 2,700 /sqm in Riyadh, while in Jeddah Grade A rents have touched SAR 1,280 sqm in 2025.
• A similar imbalance in supply and demand across residential real estate has pushed rents and capital values higher with apartment and villa capital values increasing by an average 9%-11% in Riyadh and circa 1%-2% in Jeddah. This is feeding into the overall inflationary pressures.
• Sources of property demand are likely to expand as the kingdom pushes ahead with its long-term diversification objectives. Foreign participation in the sector is likely to increase on the back of the recently announced law to make real estate accessible to non-Saudi nationals.
• A 5% Real Estate Transaction Tax (RETT) was also approved in April 2025, replacing the 15% VAT on property transactions (including land, residential and commercial).
• All residential and commercial lease contracts (existing and new) within Riyadh’s urban boundaries are subject to a five-year suspension on annual rental value increases.
• The provisions governing the regulation of annual rental value increases may be applied, in whole or in part, to other cities, governorates, and centers (when needed), pursuant to a decision issued by REGA’s Board of Directors and following the approval of the Council of Economic and Development Affairs (CEDA).
• By capping speculative rental growth, the regulation discourages short-term price increases and aims to prioritize long-term, value-driven development.

Please reach out to your relationship manager for a copy of the report.