Saudi Arabia kicked off the year by offering multinational companies numerous strong incentives to set up their Middle Eastern headquarters in Riyadh. These include a 30-year exemption from corporate income tax, no withholding tax on headquarters activities, and various discounts and support services.

This strategy to make Riyadh a regional business hub is showing positive results. In the first quarter of 2024, over 120 foreign companies relocated their headquarters to the Saudi capital, which is a 447% increase compared to the same period last year.

The influx of international businesses is driving the office market in Riyadh. The city’s office market is growing by 3.4% year over year, according to Savills. 

Nearly 70% of inquiries received by Savills in the second quarter came from international companies, with the US and UK leading the charge. This growth in leasing activity was driven by sectors such as technology, media and telecommunications, consulting and engineering, manufacturing, and IT.

However, this rapid expansion has led to a critical shortage of prime office space, driving Grade A occupancy rates to a remarkable 98% and pushing rents up by 13% year over year. 

Some city areas have seen even steeper increases, with annual rent growth reaching 23%.

To address the growing demand, over 650,000 square meters of new Grade A office space is expected to come online by the end of 2025.