The growth path for retail real estate in Saudi Arabia is promising for 2025–2026, primarily driven by the government’s commitment to infrastructure development, the rise of mega projects, and the entry of international brands.

Key cities like Riyadh and Jeddah are seeing a surge in new retail developments, ranging from shopping malls and entertainment complexes to mixed-use developments that integrate retail, hospitality, and residential spaces. Increased tourism will further boost retail sales, attracting both investors and developers. The government’s foreign investment policies, such as allowing 100 per cent foreign ownership, could also help grow the sector.

Despite the positive market outlook, the sector must navigate challenges such as changing consumer behaviour, e-commerce growth, and potential oversupply. Additionally, Saudi Arabia’s consumer spending and sentiment could be materially affected by volatile oil prices due to trade tensions.

Underlying retail real estate trends remain robust

The kingdom’s Vision 2030 plan aims to diversify the economy beyond oil, focusing on retail, tourism, and entertainment.

The plan includes projects such as NEOM, The Red Sea Project, and AlUla, intended to attract millions of visitors and boost retail demand. Saudi Arabia’s strong per capita income (estimated at $30,800–$32,400 for 2025–2028) and consumer spending on retail and entertainment are expected to grow, given the increasing youth population. Meanwhile, the country’s gradual transformation toward a more socially liberal society is leading to higher footfall in malls and retail destinations.

Saudi Arabia’s population of over 35 million is increasing steadily, with the younger demographic drawn to shopping, dining, and entertainment experiences. Urbanisation trends are driving demand for modern retail formats, including lifestyle and entertainment hubs and high-end shopping malls, making the kingdom a major target market for international brands and leading to increased demand for premium retail spaces.

The government revised its tourist visitor target to 150 million by 2030 after surpassing its yearly aim of 100 million in 2023. As of third-quarter 2024, 85.5 million tourists had spent SAR209bn in the kingdom. Events like Riyadh Season, Jeddah Season, and the expansion of religious tourism in Makkah and Madinah are key demand drivers for retail real estate.

New supply will pressure rental rates

The Saudi retail real estate market is witnessing a new supply wave, with large-scale developments set to open between 2025 and 2030. According to Knight Frank’s 2024 Saudi Arabia Giga Projects Report, 7.4 million square metres of new retail real estate is under development, including at Diriyah Gate, The Red Sea Project, and NEOM. The volume of retail projects in the pipeline does raise the risk of potential oversupply, particularly in secondary locations where demand may not be sufficient to absorb new retail spaces.

Changing landscape of Saudi retail and lifestyle

With an influx of retail space entering the market, rental rates could face downward pressure. Key factors influencing these rates include location, competition, and asset quality. With new malls and retail centres in the pipeline, landlords will likely offer competitive leasing terms to attract tenants.

Knight Frank forecasts Riyadh’s supply to grow by 50 per cent by 2027 and Jeddah’s by 75 per cent over the same period.

This growth could lead landlords to provide rental discounts, revenue-sharing lease models, and other incentives to maintain occupancies. Retailers are increasingly prioritising foot traffic and tenant mix over sheer size.

While prime locations in Riyadh and Jeddah will likely maintain stable rental rates due to strong demand, secondary locations might see a drop in rental values due to oversupply.

Traditional retail offerings need to evolve to meet changing consumer preferences. The demand for large anchor stores is declining as Saudi consumers shift toward digital shopping and experience-driven retail, a trend also evident in the UAE. This shift could weigh on rental rates in traditional malls, where businesses could struggle if they fail to adapt.

Saudi Arabia’s economy, a work in progress

Saudi Arabia’s economy, while diversifying, is still influenced by global oil prices. We recently lowered our oil price assumption by US$5 per barrel for the remainder of 2025 to $65/bbl for Brent and $60/bbl for WTI, reflecting our view that the oil market could be oversupplied.

Intensifying global trade tensions could also weigh on macroeconomic growth. Investment in key emerging markets may remain subdued until there is greater clarity regarding the effects of protectionism on economic growth, inflation, and interest rates. Additionally, global geopolitical tensions are, in our view, at the worst level in decades, posing a serious risk of economic disruption.

Lower oil prices and market volatility amid escalating global trade tensions and a fragmented geopolitical environment could dampen government spending and non-oil economic growth in Saudi Arabia.

A weakening macro environment could affect consumer spending and retail sector performance in Saudi Arabia. Challenges such as potential oversupply, shifting consumer behaviour, and the rise of e-commerce will require market players to adapt strategically.

If developers and landlords focus on differentiation, experiential retail, and flexible leasing models, they stand a better chance of remaining competitive.

While the sector has strong growth prospects, careful planning and market positioning will be crucial for its long-term success.

The writer is director, Corporate Ratings, S&P Global Ratings

flydubai, the Dubai-based carrier, has announced the launch of direct flights to Damascus starting June 1, 2025.

Read-Sky’s the limit: flydubai announces record-breaking annual results

According to a WAM report, flights to Damascus International Airport (DAM) will operate daily from Terminal 2 at Dubai International Airport (DXB).

“We are very pleased to be the first national carrier to resume flights to Syria after 12 years of halted operations. Damascus holds significant cultural and historical importance in the region, and we are excited to serve the city again with a direct daily service. This move highlights our commitment to supporting the United Arab Emirates’ efforts to foster regional connectivity,” said Ghaith Al Ghaith, Chief Executive Officer of flydubai.

Damascus: One of the first flydubai destinations

Damascus was one of flydubai’s original destinations, with service first launched in June 2009—nearly 16 years ago. The decision to restart operations follows the UAE General Civil Aviation Authority’s (GCAA) announcement in April 2025 allowing the resumption of flights between the two countries.

“The relaunch of flights to Damascus will offer passengers from the UAE and across our network convenient travel options to the Syrian market. After working closely with the relevant authorities to meet all necessary operational standards, we look forward to welcoming passengers back on board just in time for the upcoming Eid al-Adha holiday and peak summer travel season,” said Jeyhun Efendi, Divisional Senior Vice President of Commercial Operations and E-commerce at flydubai.

The Abu Dhabi National Oil Company (ADNOC) has signed framework agreements worth Dhs6bn ($1.64bn) with 12 UAE-based manufacturers for the local production of critical industrial equipment, as part of the country’s “Make it in the Emirates” initiative.

The long-term agreements cover the manufacturing of cables and pressure vessels in the UAE, potentially creating up to 1,300 skilled private-sector jobs. ADNOC said the deals will help ensure availability of key equipment across its value chain, reduce delivery times, and mitigate global supply chain risks.

The agreements were signed at the “Make it in the Emirates” forum currently taking place in Abu Dhabi, in the presence of UAE Minister of Industry and Advanced Technology and ADNOC MD and group CEO, Dr Sultan Ahmed Al Jaber.

“These framework agreements to manufacture pressure vessels and cables in the UAE highlight ADNOC’s success in strengthening the resilience of our supply chain, expanding the UAE’s manufacturing base, and creating jobs in the private sector through our In-Country Value programme,” said Yaser Saeed Almazrouei, ADNOC executive director, People, Commercial and Corporate Support.

The deals are expected to drive investment across industrial zones in Abu Dhabi, Dubai and the Northern Emirates, while deepening the impact of ADNOC’s In-Country Value (ICV) programme, which aims to boost local manufacturing, enhance business continuity, and build a more resilient industrial base.

Read: ADNOC awards Dhs65.7bn in contracts to nearly 400 local suppliers in H1 2025

ADNOC signs agreements with UAE-based companies

The 12 companies selected under the framework agreements are located in key industrial zones, including the Industrial City of Abu Dhabi (ICAD), Khalifa Economic Zones Abu Dhabi (KEZAD), Dubai Industrial Park, Jebel Ali Free Zone (JAFZA), and industrial areas in Sharjah and Umm Al Quwain.

Nine companies will manufacture 10 types of pressure vessels: ADOS Engineering Industries, Arabian Industries, Berg Industries, Euro Mechanical & Electrical Contracting Company, METALFAB Middle East, Micoda Process Systems International Company, NASH Engineering, Polar Specialized Industries, and United Metal Works Factory Abu Dhabi. Three companies — Dubai Cable Co, Mark Cables, and National Cable Industry — will produce four types of cables.

ADNOC said it plans to procure Dhs90bn ($24.5bn) worth of locally manufactured products by 2030.

Since 2018, the company’s ICV programme has driven Dhs242bn ($65.9bn) back into the UAE economy and enabled the employment of 17,000 Emiratis in the private sector.

As part of its ICV initiative, ADNOC aims to drive Dhs200bn ($54.5bn) into the UAE economy over the next five years.

Bain Capital has unveiled hscale, a dedicated hyperscale data centre platform.

The announcement marks a significant milestone in Bain Capital’s broader EMEA digital strategy, which began with its October 2024 acquisition of AQ Compute.

With a leadership team boasting a track record of delivering nearly 7 gigawatts of data centre capacity across EMEA and APAC, hscale is primed to meet soaring demand from hyperscalers driven by the surge in AI and cloud computing.

Spearheading the venture is CEO Oliver Schiebel, former head of Mainova WebHouse, supported by a team of industry veterans with deep operational and technical expertise. The company is positioning itself as a customer-first provider of scalable, replicable infrastructure tailored to the complex and evolving needs of hyperscale clients.

“Our vision with hscale is to build the fastest route to market for hyperscalers — combining cleaner energy, high-capacity infrastructure and outstanding service,” said Schiebel. “Backed by Bain Capital’s global investment strength and operational know-how, we are developing digital infrastructure that is future-proof, sustainable and built for scale.”

Aquila Group to have a 20 per cent stake in hscale

Aquila Group, which sold AQ Compute to Bain Capital last year, remains invested with a 20 per cent stake in hscale.

The sustainable asset management firm and its subsidiary, Aquila Clean Energy, will provide critical low-carbon and renewable energy expertise, supporting hscale’s ESG commitments and long-term growth goals.

Aquila will also back hscale with additional capital investment, underlining its confidence in the venture’s trajectory.

Michael Huber, principal at Bain Capital, confirmed that the firm plans a multi-billion Euro investment over the next few years, fueling an ambitious pipeline of over 1GW in key European data centre hubs including Frankfurt, London, Milan, Madrid, Oslo, Barcelona, and Zaragoza.

More than 100MW is already under construction, enabling hscale to deliver near-term capacity for clients operating on accelerated digital transformation timelines.

The platform’s official debut will take place at the Datacloud Global Congress in Cannes this June, where hscale will serve as a Gold Sponsor. CTO Abed Jishi is scheduled to join a high-profile panel on June 5th, where he will outline the company’s strategic blueprint and technology roadmap.

As hyperscale demand intensifies and sustainability becomes a core differentiator, hscale enters the market with a powerful proposition: a purpose-built, AI-ready infrastructure platform backed by two giant s— Bain Capital and Aquila Group — that combines global investment muscle with deep sustainability credentials.

Gold prices rose to a two-week peak on Thursday as investors leaned toward the safe-haven asset amid mounting concerns over the US government’s growing debt and soft demand for 20-year Treasury bonds, highlighting low appetite for US assets.

Spot gold gained 0.8 per cent to $3,340.53 an ounce as of 0300 GMT, after hitting its highest level since May 9.

Read-Gold set for worst drop in six months: Find out why

US gold futures rose 0.9 per cent to $3,341.90.

The dollar is hovering near a two-week low hit in the previous session, making greenback-priced gold cheaper for holders of overseas currency.

“Gold’s bullish reversal is supported by a weaker U.S. dollar and lingering stagflation risks in the US economy,” said Kelvin Wong, senior market analyst, Asia Pacific at OANDA.

The Republican-controlled US House of Representatives Rules Committee on Wednesday voted to advance President Donald Trump’s sweeping tax-cut and spending bill, setting the stage for a vote on the House floor in the coming hours.

The US Treasury Department saw soft demand for a $16bn sale of 20-year bonds on Wednesday, which is weighing not just the dollar but Wall Street as well, with traders already jittery after Moody’s cut the US triple-A credit rating last week.

Gold is seen as a safe investment amid economic and geopolitical turmoil and thrives in a low-rate environment.

On the geopolitical front, the fifth round of nuclear talks between Iran and the United States will take place on May 23 in Rome, Oman’s foreign minister said on Wednesday.