An IMGW News Report
Saudi Arabia’s retail real estate sector is enjoying a period of buoyancy, propelled by the Kingdom’s ambitions under Vision 2030 and a sustained surge in tourism. According to S&P Global, demand for premium retail space is set to rise as international brands expand their footprint and mega-projects such as NEOM, The Red Sea Project, and AlUla gather pace.
“Saudi Arabia’s shift from a closed, oil-dependent economy to one driven by services, tourism and consumption is reshaping its urban fabric”
Government reforms—ranging from infrastructure investment to permitting full foreign ownership—are transforming the retail landscape. The Real Estate General Authority expects the property market to exceed $100bn by 2029, with annual growth of 8% from 2024.
S&P forecasts that Riyadh, Jeddah, and other major cities will continue attracting investment in malls, entertainment venues, and mixed-use developments that blend retail with hospitality and residential space. Domestic demand is also shifting. Younger consumers, increasingly urbanised and socially liberal, are favouring open-air, boulevard-style retail environments over traditional enclosed malls, whose standardised offerings are falling out of favour.
The report mirrors findings from property consultancy JLL, which has observed a pivot toward “experiential” retail formats. Shopping centres are no longer just places to spend—they are where Saudis dine, socialise, and seek entertainment. Physical retail is thriving alongside e-commerce, as consumers prize in-store experiences.
Yet the outlook is not without caveats. The sheer volume of space under development—7.4 million square metres, according to Knight Frank—risks saturating the market, particularly in secondary locations. Rental yields may come under strain as landlords grapple with rising capital costs and a more competitive environment. Incentives such as rent discounts and revenue-sharing lease models are becoming more common.
Even so, S&P believes that demand will remain robust in prime areas, particularly with Expo 2030 and the 2034 FIFA World Cup on the horizon. Saudi Arabia’s shift from a closed, oil-dependent economy to one driven by services, tourism and consumption is reshaping its urban fabric. If managed astutely, retail real estate stands to be one of the beneficiaries.
