Saudi Arabia’s Non-oil GDP Boosts Property Market in Q2 2025, Allows Foreign Ownership

Saudi Arabia’s strong economic growth is resulting in strong performance across its property market, according to CBRE Middle East’s Q2 2025 Real Estate Market Review. Notably, this growth is being attributed to a 4.9% expansion in Saudi Arabia’s non-oil GDP.

Q2 2025, in particular, witnessed a dynamic and evolving real estate sector, propelled by a combination of regulatory changes and strategic efforts. Market dynamics were further influenced by the Real Estate Transaction Tax (RETT) and strategic realignments in the construction industry.

Significant investment was made in Saudi Arabia's Hail region, highlighting its strategic significance. In the meantime, a number of significant mixed-use projects (including the Dar Al Hijra project in Madinah, the Pulse Wadi District, and OSUS EYE in Riyadh) showed the Kingdom's dedication to urban expansion and economic diversification.

Below, CBRE Middle East examined the Saudi property market's major sub-sectors, including residential, office, retail, hospitality, and industrial.

Residential Real Estate Surge

In Q2 2025, Saudi Arabia’s residential real estate market — particularly in Riyadh — showed significant growth and investment.

• New project launches and investment funds fueled the real estate sector’s commitment to address the Kingdom’s housing goals
• Land sales led the way; transaction volumes were substantial and driven by strong demand
• Government support and initiatives promoted developments and attracted local and international investors to Saudi

Office Real Estate Thrives with Grade A Demand

In Q2 2025, Saudi Arabia’s office market thrived, with demand for Grade A office spaces in Riyadh leading to rising rental rates and remarkably high occupancy levels.

• The government’s Regional Headquarters Program (RHQ) continued to drive demand and attracted international companies to the Kingdom
• Flex Real Estate also made a notable impact

Despite minimal office supply in 2025, the Kingdom expects expanded supply in the next years, as well as excellent performance in Jeddah.

Retail Real Estate Driven by Retailtainment

Saudi Arabia’s retail sector displayed a dynamic performance in Q2 2025, which can be attributed to the sector’s rise of “Retailtainment”

• Notable key drivers include the increasing integration of entertainment into malls, alongside the Saudi Entertainment Ventures’ (SEVEN) remarkable investments
• The Retail sector navigated challenges like oversupply and e-commerce through innovative projects and strategic adaptations, despite a slight sales dip during the Eid holidays
• The addition of new developments alongside generally stable rents and occupancy rents contributed to the sector’s evolution

Hospitality Real Estate Powered by Tourism Boom

The hospitality real estate sector achieved remarkable growth in Q2 2025, solidifying the Kingdom as a leading global travel destination.

• The sector saw a 48% increase YoY in international visitors, driven by leisure, cultural, and religious tourism
• Upcoming mega events are expected to generate substantial demand for accommodation, such as major sporting tournaments and Expo 2030
• A growing pipeline of branded projects and new hotel projects, especially in Riyadh, enhances the sector's appeal and provides a solid foundation for long-term growth.

Industrial Real Estate Supported by Logistics, Manufacturing Growth

In Q2 2025, Saudi Arabia’s industrial and logistics sector saw developments that supported the Kingdom’s economic diversification efforts.

• Robust demand for warehousing continues, despite challenges in finding immediately available, high-quality facilities
• The major $7 billion investment for a cross-country rail corridor is expected to enhance logistic capabilities for Saudi
• Average warehouse rents continue to increase, which reflects strong demand for industrial properties
• The launch of the Advanced Manufacturing and Production Centre is expected to drive industrial transformation and innovation
• Collaborations such as the one between Saudi Aramco Technologies and BYD are expected to drive further transformations

Saudi Arabia Welcomes Foreign Ownership in January 2026

Following news of its robust economic growth, Saudi Arabia also recently announced that it will allow non-Saudis to own property in the kingdom beginning in January 2026. This new regulation of Saudi Arabia's property ownership for foreigners is a significant milestone in the Kingdom’s continuous endeavors to grow its real estate industry and draw in foreign investment.

The legislation, considered to be an additional step in Saudi Arabia's real estate reform in 2026, was hailed by Majed Al Hogail, Minister of Municipal and Rural Affairs and Housing and Chairman of the Real Estate General Authority, and approved by the Saudi Cabinet.

Foreign ownership of Riyadh and Jeddah real estate – among other locations – will be permitted under the updated law. Meanwhile, ownership of the holy towns of Mecca and Medina will be subject to further restrictions and governmental scrutiny.

Al Hogail commended the law, calling it “an extension of the Kingdom’s comprehensive real estate reform agenda.”

“The updated law aims to increase real estate supply, attract global investors and developers, and further stimulate foreign direct investment (FDI) in the Saudi market,” Al Hogail said. He stressed that the law was crafted with safeguards to protect the interests of Saudi citizens, including strict procedural controls and designated geographic zones.

Meanwhile, Matthew Green, CBRE’s Head of Research MENA, said, “This groundbreaking regulation marks a pivotal moment for Saudi Arabia’s real estate market. By welcoming foreign investment, we anticipate a transformative shift, driving substantial growth in inbound capital over the next five years.

“This will not only support the ambitious FDI targets but also stimulate private sector development, further diversify the non-oil economy, and generate wealth for landowners. Furthermore, it will foster long-term population growth and economic stability by enabling foreign residents to participate in homeownership, a significant social milestone.”

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