Saudi Arabia's Lifestyle Retail Space Expansion Driven by Tourism Ambitions
Riyadh and Jeddah to Add 600,000 sq. meters to Their Lifestyle Retail Spaces by 2027
RIYADH: Saudi Arabia is set to see its lifestyle retail space in Riyadh and Jeddah expand by nearly 600,000 square meters to 1.31 million square meters by 2027, underscoring the Kingdom's ambitions to become a global shopping destination.
The shift in consumer preferences towards mixed-use destinations blending shopping with entertainment, dining, and cultural experiences is driving this growth, according to real estate consultancy Knight Frank.
This expansion coincides with Saudi Arabia's plan to attract 150 million tourists annually by 2030, up from an earlier target of 100 million, which is spurring international brands to enter the market.
The Real Estate General Authority projects the sector will reach $101.62 billion by 2029, supported by a compound annual growth rate of 8 percent from 2024 onwards.
Faisal Durrani, partner and head of research for Middle East and Africa at Knight Frank, notes that lifestyle retail destinations are becoming more popular due to their combination of exciting retail, placemaking, and immersive experiences.
These locations offer dining options, outdoor spaces, art installations, and interactive exhibits, evolving beyond traditional malls into vibrant community hubs.
S&P Global credit rating agency has also highlighted the potential for international retail brands to fuel real estate sector growth in Saudi Arabia, provided careful planning and market positioning are applied.
Riyadh is leading this trend with lifestyle retail space expected to grow from 484,900 square meters to 871,200 square meters by 2027, driven by 12 upcoming projects.
The completion of Al-Hamra development will add 89,230 square meters, offering high-end retail, dining, and entertainment in a pedestrian-friendly environment.
Riyadh's lifestyle retail market demonstrates robust fundamentals, with overall occupancy at 97 percent and average lease rates standing at SR2,400 ($639.57) per square meter.
Jeddah added 24,100 square meters to its lifestyle retail market last year, increasing total completed space to 233,400 square meters across 17 developments.
Seven new projects are expected to add a further 205,600 square meters, bringing the total supply to 439,000 square meters by 2027.
The Jeddah Cove Waterfront project is set to contribute 70,000 square meters as part of a larger 127,000 square meter lifestyle destination featuring dining options, over 200 shops, a cinema, and a marina overlooking the Formula 1 circuit.
Jeddah's lifestyle retail sector enjoys strong average lease rates at SR2,200 per square meter, with overall occupancy standing at 81 percent and F&B units averaging 75 percent occupancy.
The shift in consumer preferences towards mixed-use destinations blending shopping with entertainment, dining, and cultural experiences is driving this growth, according to real estate consultancy Knight Frank.
This expansion coincides with Saudi Arabia's plan to attract 150 million tourists annually by 2030, up from an earlier target of 100 million, which is spurring international brands to enter the market.
The Real Estate General Authority projects the sector will reach $101.62 billion by 2029, supported by a compound annual growth rate of 8 percent from 2024 onwards.
Faisal Durrani, partner and head of research for Middle East and Africa at Knight Frank, notes that lifestyle retail destinations are becoming more popular due to their combination of exciting retail, placemaking, and immersive experiences.
These locations offer dining options, outdoor spaces, art installations, and interactive exhibits, evolving beyond traditional malls into vibrant community hubs.
S&P Global credit rating agency has also highlighted the potential for international retail brands to fuel real estate sector growth in Saudi Arabia, provided careful planning and market positioning are applied.
Riyadh is leading this trend with lifestyle retail space expected to grow from 484,900 square meters to 871,200 square meters by 2027, driven by 12 upcoming projects.
The completion of Al-Hamra development will add 89,230 square meters, offering high-end retail, dining, and entertainment in a pedestrian-friendly environment.
Riyadh's lifestyle retail market demonstrates robust fundamentals, with overall occupancy at 97 percent and average lease rates standing at SR2,400 ($639.57) per square meter.
Jeddah added 24,100 square meters to its lifestyle retail market last year, increasing total completed space to 233,400 square meters across 17 developments.
Seven new projects are expected to add a further 205,600 square meters, bringing the total supply to 439,000 square meters by 2027.
The Jeddah Cove Waterfront project is set to contribute 70,000 square meters as part of a larger 127,000 square meter lifestyle destination featuring dining options, over 200 shops, a cinema, and a marina overlooking the Formula 1 circuit.
Jeddah's lifestyle retail sector enjoys strong average lease rates at SR2,200 per square meter, with overall occupancy standing at 81 percent and F&B units averaging 75 percent occupancy.
