Manufacturing and logistics sectors fuel 22% rise in Riyadh warehouse rents

Manufacturing and logistics sectors fuel 22% rise in Riyadh warehouse rents

Riyadh: Increased activity in the manufacturing and logistics sectors are contributing to the strong demand for high-quality and specialised warehouse facilities across the Saudi Arabia, which has driven the annual rate of change in rents in cities like Riyadh to 22% at the end of Q3 2022, according to the latest analysis by global real estate consultancy, Knight Frank.

Faisal Durrani, Partner – Head of Middle East Research, explained: “The manufacturing sector is fast emerging as a key pillar in the government’s industrial strategy, now accounting for 8.3% of GDP. Government led incentives to boost domestic production of goods is attracting local and international investors, as well as boosting overall activity in this subsector.

“Separately, the pandemic fueled boom in online retailing which is fueling an ongoing buoyancy in warehousing requirements. And in Saudi, the same trend has taken hold, with a 90% increase in online shopping volumes/values over the last 12 months.

“In addition, government led initiatives to boost the manufacturing sector are also contributing to the mismatch between demand and supply, particularly for internationally specified, high-quality warehouse facilities and last mile logistics facilities. Unsurprisingly, when combined with the severe shortage of high-quality warehouses, rents in cities like Riyadh now stand as