Program HQ Increases Demand for Prime Office Space in Riyadh

Photo : Reuters

Riyadh’s office market is growing fast, mainly because of a plan called ‘Program HQ.’ This plan is causing more companies to want office space in Riyadh. A global property company, Knight Frank, says that Riyadh will get 1 million square meters more of office space, which will bring the total to 6.3 million square meters by 2026. This is happening because many companies are choosing to open their main offices in Saudi Arabia, which is already more than the goal set for 2030.

Right now, 517 companies have decided to set up their main offices in Saudi Arabia, far more than the target of 480 by 2030. This is creating a big need for office spaces, so office prices are going up. In the last year, Riyadh has had the biggest increase in office rent in Saudi Arabia. The rent for Grade A office spaces has gone up by 31%, reaching about SAR 2,604 per square meter. Other cities like Jeddah and Dammam have also seen rent increases, with Jeddah’s rent going up by 2.9% and Dammam’s rent going up by 2.2%.

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Faisal Durrani, an expert from Knight Frank, said that Saudi Arabia’s Vision 2030 plan is changing the economy and society. The plan’s goal is to turn Riyadh into a major city for business, finance, tourism, and entertainment. Almost half of the new jobs in Saudi Arabia in the last five years have been in Riyadh. This is adding more pressure to rent prices. Many important office areas in Riyadh are already rented out, and there are waiting lists for people who want to rent. This is causing rents to go higher.

Because there isn’t enough office space, rents for Grade B office spaces in Riyadh have also gone up by 27% in the last year. In Dammam, the rent for Grade A offices has gone up by 2.2% since the third quarter of 2023, mostly because of high demand from the government. Jeddah has also seen growth, with Grade A office rents going up by 2.9% to SAR 1,235 per square meter. Rent for Grade B offices in Jeddah has gone up by 3.8% to SAR 810 per square meter.

In Riyadh, the number of people renting Grade A offices dropped a little, by 1%, but the rate is still at 94%. The number of people renting Grade B offices in Riyadh went up by 2%, reaching 90%.

For the last 20 years, Saudi Arabia has been growing its data center market. This is happening because of Vision 2030, which is focused on making the country more digital. Riyadh currently has 263.61 MW of data center capacity. Jeddah has 121.48 MW, and Dammam has the biggest market, with 392.38 MW of capacity.

Stephen Beard, another expert from Knight Frank, said that Saudi Arabia’s data center market is a great opportunity for investment. There is a gap between the supply and demand for data centers, and the government is supporting the growth of this market. The Vision 2030 plan, new economic zones, and laws like the Personal Data Protection Law make Saudi Arabia a good place to build data centers. Cities like Riyadh, Dammam, and Jeddah are great places for growth in this area.

Beard also said that investors should focus on building large, energy-efficient data centers that can meet the needs of cloud services and AI technology. It will be important to work with local partners to understand the rules and make the most of government support. Building sustainable and reliable data centers that follow local rules will help ensure long-term success in this growing market.