Riyadh leads Saudi Arabia's industrial rental growth with 9.3% jump in Q2

15/09/2025 04:03 AST

Riyadh's industrial and logistics sector recorded an annual rental growth of 9.3 percent in the second quarter of 2025, reinforcing the Saudi capital's role as a regional industrial hub, according to a JLL report.

The analysis by the real estate advisory firm showed that annual rental growth rates in Riyadh ranged from 4.7 percent to 25 percent across warehouses in all industrial submarkets, reflecting broad-based demand fundamentals as the city benefits from ongoing economic diversification initiatives.

Strengthening the industrial sector is one of the key pillars of Saudi Arabia's Vision 2030 agenda, with the Kingdom steadily reducing its reliance on crude oil revenues.

The growth in rental rates across the industrial and logistics segment also underscores the expansion of Saudi Arabia's real estate market, as the Kingdom strengthens its position as a business hub in the region.

The Kingdom's Real Estate General Authority forecasts the property market will reach $101.62 billion by 2029, with a compound annual growth rate of 8 percent from 2024.

Taimur Khan, head of research at JLL Middle East and Africa, said: "The overall healthy rental growth across Saudi Arabia's industrial markets reflects the impact of ongoing industrial development and logistics infrastructure improvements, driven by Vision 2030's ambitious agenda."

He added: "Well-positioned submarkets, located along major transportation corridors, are primed for stronger performance in the months ahead. As industrial occupiers continue to focus on modern facilities and strategic locations, this will further shape the market's trajectory and drive demand, supporting the Kingdom's economic transformation goals."

Industrial Gate City in Riyadh retained its premium position with rental rates amounting to SR300 ($79.97) per sq. meter per annum, followed closely by Tharawat Logistics at SR285 per sq. meter per annum.

Taybah emerged as the city's standout performer with a 25 percent annual rental increase, while Al Fawzan Industrial City recorded a 17.8 percent rise.

In Jeddah, the industrial markets posted a healthy 4.5 percent rental growth in the second quarter. Jeddah Islamic Port maintained its status as Saudi Arabia's most premium industrial location, commanding SR450 per sq. meter per annum with a 7.1 percent annual increase.

"Rental levels in this (Jeddah Islamic Port) top-tier location significantly outpaced both Riyadh and Dammam, reinforcing its strategic value for trade-dependent operations. Despite rental increases in the majority of Jeddah's submarkets, growth rates were more moderate than in the Saudi capital," JLL said.

The Dammam Metropolitan Area saw headline rents increase by 10.8 percent in the second quarter, although submarkets experienced a fragmented performance.

Al Khalidiyah Shamaliyah posted the highest rates at SR235 per sq. meter per annum with 9.3 percent growth. Indus-Comm was an exceptional outlier, delivering the strongest rental growth at 32.4 percent.

King Abdulaziz Road demonstrated strong momentum with 20 percent annual growth despite offering the most affordable rates at SR180 per sq. meter per annum.

Al Taawun was the only submarket across all three major cities to record a rental decline, with a 6.3 percent annual drop.