Riyadh’s office demand has risen following a residential ultimatum from Reuters

DUBAI (Reuters) – Demand for high-quality offices in Riyadh has risen after Saudi Arabia said foreign companies must move their regional headquarters there to do business with the kingdom, real estate consultant Knight Frank said in a report.

Saudi Arabia, the world’s largest oil exporter and the largest Arab economy, said in February that it would give foreign companies the risk of establishing residences in the country or losing government contracts by the end of 2023, with the aim of attracting and creating investment. Jobs for Saudis.

“Demand for Class A offices in the Saudi capital Riyadh has put upward pressure on Class A office rental rates, which rose by 2.9% in the 12 months to the end of the 2021 quarter,” Knight Frank said.

Last month, Saudi Arabia said it had licensed 44 international companies to set up regional headquarters in the capital.

In a separate report this week, CBRE real estate consultancy said a visit to Saudi Arabian workplaces in the third quarter exceeded the pre-pandemic base, according to Google (NASDAQ:) mobility data.

Riyadh’s office supply is expected to grow by 8.1% this year.

The ultimatum from the Saudi headquarters, as part of Prince Mohammed bin Salman’s efforts to create new industries to get rid of the oil economy, competed with the region’s business hub: the United Arab Emirates.

“Clearly, the decision to position Riyadh as a regional rival in Dubai comes with its own considerations,” Knight Frank said, citing issues such as the quality of available offices and tax disparities.

“However, Saudi Arabia is the largest economy in the region and has a population of about 35 million, which means there is room in the region for more than one business center,” the consultant said.