Saudi Arabia’s construction market to surge to exceed USD 90 billion by 2029 fuelled by strategic investments: JLL

Driven by the government’s drive to diverse the economy, growing interest from regional and international private sector participants and streamlining of regulations, Saudi Arabia’s construction sector is poised for strong and resilient growth, underpinned by strategic risk management and investment in local manufacturing

Fuelled by Vision 2030 and substantial investments in infrastructure and a range of real estate sectors, the transformative growth in Saudi Arabia’s real estate sector is poised for robust performance and positive growth across most sectors in 2025, revealed JLL at its annual roundtable in Riyadh.

The Kingdom’s construction market, currently valued at USD 70.33 billion, is projected to reach SAR 342.6 billion (USD 91.36 billion) by 2029. More than USD 20 billion in projects are underway in the capital, positioning Riyadh as a key investment hub in the Kingdom.

Industry leaders at JLL’s roundtable highlighted the remarkable momentum in Saudi Arabia’s real estate sector, forecasting a 30% surge in hotel investments and emphasizing the transformative impact of government mandates on the real estate and construction landscape.

Although the total value of projects being awarded has slowed, many projects are entering the execution phase, accelerating future spending. 

Participants at the roundtable highlighted key market strengths including the streamlining of regulations and the needed evaluation of the project pipeline.

The discussion also explored the perceived cooling of the projects market, leading to increased capacity availability, and the government’s unwavering commitment to economic diversification. These factors contribute to a promising outlook for the sector’s continued growth in Saudi Arabia.

With flagship megaprojects like Diriyah Gate, King Salman Park, and Expo 2030, Riyadh is driving the Kingdom’s economic diversification agenda.

This rising global investment hub boasts surging demand for Grade A offices, strong residential sales, and a flourishing hospitality market.

Saud Alsulaimani, Country Head of KSA at JLL, added: “2024 has been a pivotal year for the KSA real estate market, with a sharp focus on project evaluation, regulatory improvements, and capital structuring, all geared towards engaging the private sector.

This public-private synergy is accelerating transformative projects that underpin Vision 2030. We anticipate robust Q4 performance across most sectors, driven by innovation, sustainability, and economic resilience, with government initiatives, declining interest rates, and increased project execution fuelling growth.”

This surge in investor confidence is particularly evident in Riyadh’s hospitality sector, which is experiencing unprecedented demand. Hotel investments are forecasted to grow by 30% by 2025, directly supporting Saudi Arabia’s goal of welcoming over 150 million visitors annually by 2030.

Amr El Nady, Managing Director for Hotels & Hospitality, MEA, remarked: “Riyadh’s booming tourism and business activity are transforming its hospitality landscape. The focus is shifting toward sustainable practices and cutting-edge experiences to meet the evolving expectations of modern travellers. The travel & tourism sector is on track to contribute 10% to GDP (up from an estimated 5% currently) evidencing the sector is ripe for investment.

While Riyadh and Jeddah benefit from advanced infrastructure and connectivity, emerging destinations such as Abha and AlUla offer unique opportunities for innovative, sustainable flagship developments that will redefine the hospitality sector.”

Meanwhile, the capital city’s residential market is benefiting from population growth and urbanization, driving increased demand for modern living spaces and steadily pushing up average sales prices. The city’s office market is equally dynamic, with a 21% year-on-year increase in Grade A office rents reflecting high demand for premium, hybrid-friendly workspaces designed to attract top talent.

James Allan, CEO Middle East and Africa, JLL; Taimur Khan, Head of Research for the Middle East and Africa; Dana Williamson, Head of Offices, Business Space & Retail for MEA; Maroun Deeb, Head of Projects and Development Services, KSA and Bahrain; Sean Doherty, Head of Project and Program Management, MEA, also led the roundtable discussions, highlighting Riyadh’s pivotal role in driving Vision 2030.

Despite some project delays, Saudi Arabia’s long-term vision remains robust, with significant cash flow expected to peak by 2027.

Greater supply chain collaboration among stakeholders is driving efficiency and the Kingdom is also exploring innovative construction techniques and technologies to enhance competitiveness and create a world-class built environment.

Lower interest rates and a growing appetite for Public-Private Partnerships (PPPs) are creating attractive investment opportunities across the Kingdom, particularly in local manufacturing.

Stakeholders are prioritizing sustainability and net-zero targets, supported by government mandates on local content for labour and materials procurement.

Green credentials and circularity are also emerging as key considerations for commercial real estate leaders. Hosting major events like the World Cup 2034 and Expo 2030 will further fuel growth, cementing Saudi Arabia’s position on the global stage.