The approval of the Law of Real Estate Ownership and Investment by Non-Saudis in July has come with its share of goodies. At 16% rise in rents in Riyadh, the industrial real estate sector is already feeling the heat amidst scarce space for firms seeking to invest. Big names such as Apple, Huawei, and Shein are part of the multinational corporations tightening the competition for limited space.
By H1, 2025, the Kingdom of Saudi Arabia already recorded 585 new industrial licenses issues. Put in terms of value, this amounted to SAR 13.5 billion. There is already a strong demand for specialized logistic facilities while the occupancy is nearing full capacity. This explains the reason as to why the annual rental growth in rent for the industrial real estate sector in Q2, 2025 moved from 4.7% to 25.0%.
Today, let’s look at the industrial rental surge amidst the scarce space in the Saudi real estate sector…
Industrial Rental Surge Amidst Scarce Space in Saudi Arabia
In the realm of industrial real estate, there’s no such thing as “too much space”. Riyadh is a typical example where warehouse space is having something of a meltdown. Reports show that industrial and logistics rents in Saudi Arabia are climbing to record highs, as global tech and retail giants fight over the kingdom’s last remaining premium units.
Demand Goes Through the Roof
Here’s the situation: in the first half of 2025, more than 1.3 million m² of new warehouse space was delivered in Saudi Arabia. Nonetheless, occupancy rates in Riyadh stand at a staggering 98%. Rents in Riyadh rose about 16% year-on-year, reaching around SAR 208 per m².
In other major centres:
Jeddah’s rents ticked up by roughly 8%, with occupancy at ~97%.
Dammam saw rents increasing about 9%, occupancy at ~96%.
What’s driving this surge? Two big factors:
Global technology and e-commerce firms (we’re talking names like Apple, Huawei and Shein) are establishing or expanding Middle East hubs, and Saudi Arabia is a central target.
Demand for specialised facilities such as cold storage, data-centre equipped warehouses, and integrated logistics zones is rapidly outpacing “standard box” warehouses. For example, the huge new “Special Integrated Logistics Zone” near King Salman International Airport is becoming a magnet for international tenants.
In short: modern, high-spec supply is scarce. Even when supply comes, demand gobbles it up.
Supply Is Growing… But Still Not Enough
On the supply side, the numbers are encouraging. Total warehouse stock in Riyadh rose to about 28.9 million m², and manufacturing space to around 16.2 million m². However, despite new completions, the rate of uptake means the net increase in available space for rent is quite modest.
Additionally, strategic government reforms are in place. For instance, laws to discourage undeveloped land banking and the issuance of new industrial licences are robust. But here’s the kicker: Even with all that, these expansions haven’t kept pace with the rush to locate in Saudi Arabia. Which means scarcity persists, and rental growth is being sustained rather than tapering off.
Implications for Landlords, Tenants & the Market
For landlords: It’s a golden era. Modern, fit-for-purpose logistics and industrial properties in Riyadh, Jeddah and Dammam are achieving premium rents. This isn’t your standard warehouse anymore; it’s “logistics ready”, “tech-ready”, “cold-chain ready”. These specifications command a premium and the market is paying it.
For tenants: The war for space is real. If you’re a tenant coming in late to the dance expecting to pay last year’s rent, you might find the music has stopped. Your options will increasingly be either to pay more, accept less ideal space, or build your own facility (which takes time and more money). Strategic planning and speed of execution become competitive advantages.
For the broader market: This dynamic feeds into the national strategy of transforming the kingdom into a global industrial and logistics hub. The logistics sector’s target contribution to GDP is rising, from 6 % to 10 %.
The rental surge signals that global investors and corporations believe the vision is more than just smoke and mirrors.
A Light-hearted Sidebar: Racing for Rental Space
If we were to anthropomorphise the industrial real-estate market in Saudi Arabia: space has become the cool kid at the party. Everybody wants to sit next to it, and when new space arrives, it’s gone within minutes. The rental numbers? They’re like the “Uber surge-pricing” of real-estate except this ride doesn’t include a free bottle of water at the end.
Read also: Rental Management Best Practices in Riyadh
In sum…
The industrial rental surge in Saudi Arabia is not a fleeting blip but the result of persistent, structural forces. Demand from tech and retail heavyweights is aggressive. Supply, albeit increasing, remains constrained in key markets. Rents are rising, and occupancy levels are pushing all but full capacity. For landlords, it’s a moment to capitalize; for tenants, it’s a signal to act fast and strategically. And for the kingdom as a whole, the booming logistics-industrial rental market is a clear indicator that the transformation envisioned under Saudi Vision 2030 is well underway.
If you were hoping for cheap space in Riyadh’s newest logistics