Riyadh Retail Space Set to Increase by 28% to 4.6M Sq M by 2026

According to Knight Frank's Summer 2024 Saudi Arabia Retail Market Overview, Riyadh currently boasts a total retail supply of 3.6 million square meters, with an additional 27,050 square meters of retail space entering the market in Q1 2024. The consultancy forecasts a robust 28% growth in Riyadh's retail stock to reach 4.6 million square meters by 2026.

Over the past year, average rental rates in Riyadh's regional and super regional malls have risen by 3% to SR2,725 ($727) per square meter, while occupancy rates have increased by 5 percentage points to 90%. In contrast, Jeddah and the Dammam Metropolitan Area (DMA) experienced subdued growth, with occupancy rates dropping slightly to 84% and 89%, respectively, and rental rates adjusting accordingly.

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Faisal Durrani, Partner and Head of Research for Mena at Knight Frank, highlighted Riyadh's pivotal role in Saudi Arabia's economic diversification efforts, particularly in the retail and entertainment sectors. The city is witnessing rapid development in cinemas, concert halls, theme parks, and sports complexes, contributing significantly to non-oil GDP growth.

Looking ahead, Riyadh is expected to see an additional 100,000 square meters of retail space completed this year, emphasizing the need for mall operators and retailers to focus on experiential offerings to remain competitive.

Jonathan Pagett, Partner at Knight Frank, emphasized the importance of data-driven strategies for new retail entrants, focusing on consumer preferences and market dynamics to optimize footfall and profitability. This approach is crucial amidst evolving consumer demands for unique and immersive retail experiences, particularly in food and beverage and lifestyle sectors.

Knight Frank also highlighted the rapid growth of Saudi Arabia's e-commerce market, which expanded by 28% to SR157 billion ($41.8 billion) in 2023. This growth is fueled by increasing internet penetration, smartphone usage, and government support for digital retail infrastructure. Retailers are increasingly adopting omnichannel strategies to integrate online and offline operations, enhancing the overall consumer experience and meeting evolving preferences.

In conclusion, Knight Frank underscores the importance of informed decision-making and strategic investment in the evolving Saudi retail landscape, driven by data insights and responsive to dynamic market shifts.

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