Saudi Arabia’s tourism-fuelled transformation is not only reshaping the Kingdom’s image abroad—it’s driving an extraordinary surge in real estate and hospitality development, particularly in key urban centres like Riyadh and Jeddah.
According to JLL’s latest Middle East and Africa Market Review and Outlook 2025, Vision 2030 is at the heart of this evolution. With the Kingdom’s non-oil economy forecast to grow by 5.8% in 2025, strategic investments in infrastructure, hospitality, retail and office space are converging to deliver not just economic diversification, but a national rebranding that firmly positions Saudi Arabia as a destination for both business and leisure travellers.
Hospitality as a pillar of Vision 2030
The hospitality sector in Riyadh is experiencing dynamic growth, fuelled by corporate tourism and international events. In 2024, Average Daily Rates (ADR) surged by 13.3%, reaching USD 239. With an additional 2,312 keys scheduled to come online in 2025, the capital is steadily establishing itself as a regional hub for high-level business travel and MICE activity.
Jeddah, meanwhile, remains a stronghold for both religious and leisure tourism. While key performance indicators dipped slightly in 2024, the city’s hotel market stands on solid footing, with growth underpinned by continued infrastructure development and alignment with national tourism goals.
Real estate development follows demand
Tourism and business travel are not driving hospitality growth in isolation—they’re shaping the entire urban landscape. The report notes that Riyadh’s office sector saw unprecedented demand in 2024, with Grade A buildings registering a vacancy rate of just 0.2%. With nearly 900,000 square metres of prime office space set to be delivered in 2025, the capital is actively responding to surging interest from multinationals and regional firms.
Jeddah is emerging as a highly attractive alternative, drawing international corporations with modern office spaces in its northwestern districts. Residential demand is similarly robust, with Riyadh’s villa market accounting for over 53% of transactions. In Jeddah, apartments dominated the scene in 2024, comprising nearly 83% of anticipated 2025 supply.
As Maroun Deeb, Head of Projects and Development Services at JLL in KSA, explains: “Strategic projects that underpin Saudi Arabia’s Vision 2030 will continue to attract substantial investments, creating new opportunities for market expansion. Major events such as EXPO 2030 and the FIFA World Cup are expected to generate strong cash flows and bolster infrastructure development.”
Retail and leisure go experiential
One of the most visible shifts is happening in retail, where Riyadh is leaning into “experiential formats”—boulevard-style open-air shopping and leisure zones that invite social gathering and interaction. While traditional closed malls are facing declines, super-regional and community malls are evolving their mix and design, posting modest leasing gains. Jeddah mirrors this transition, highlighting a national trend toward more dynamic and experience-oriented retail environments.
Logistics, data centres and digital infrastructure
As e-commerce accelerates and logistics demands expand, rental rates in the industrial sectors of Riyadh and Jeddah continue to rise. Meanwhile, Saudi Arabia is asserting its position as a digital infrastructure leader in the Middle East and Africa. With major 5G rollouts and AI adoption, the Kingdom contributed 12.6% of the region’s operational IT load capacity by end-2024, positioning Riyadh, Jeddah and Dammam as critical data centre hubs.
A market navigating complexity with resilience
While construction costs and geopolitical tensions present ongoing challenges, Saudi Arabia’s strategic localisation efforts, regulatory reforms and sustainability initiatives are helping mitigate risk. In 2024 alone, the Kingdom accounted for USD 29.5 billion in awarded construction projects—USD 7.9 billion of which was in the residential sector.
Saud Alsulaimani, Country Head KSA at JLL, puts it succinctly: “The resilience and strategic diversification efforts in Saudi Arabia driven by Vision 2030 are a significant catalyst for real estate development, attracting both domestic and international capital. The flight to quality, limited vacancy in prime assets, and ambitious tourism strategies are further bolstering sustained demand.”
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Image – top of page – Saud Alsulaimani, Country Head KSA, JLL. Image Courtesy: JLL
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