Saudi Arabia’s lifestyle retail sector is on track to surge by almost 600,000 sq m, reaching a cumulative 1.31 million sq m by 2027, signalling its rising profile as a global shopping and leisure destination. This projection, outlined in a Knight Frank report, underscores the shift in consumer behaviour favouring mixed-use developments that blend retail with entertainment, dining and cultural experiences.
The expansion is fundamental to the Kingdom’s strategy to draw 150 million tourists annually by 2030, up from its previous target of 100 million, bolstered by substantial spending power and infrastructure investment. The Real Estate General Authority forecasts that the retail sector will be valued at $101.62 billion by 2029, expanding at a compound annual growth rate of 8 per cent from 2024.
Riyadh is the epicentre of this growth, with lifestyle retail space expected to climb from 484,900 sq m to 871,200 sq m by 2027 through 12 new projects that will bring the total developments in the capital to 39. Key additions include the Al-Hamra development, adding 89,230 sq m of high-end retail, dining and entertainment; Riyamarche’s 21,840 sq m redevelopment; and The Bellvue, delivering 90,000 sq m of mixed-use experiences.
Riyadh’s lifestyle retail sector boasts strong fundamentals: overall occupancy sits at 97 per cent, food and beverage units average 76 per cent occupancy, and average lease rates are at SAR 2,400 per sq m. Consumer spending, which rose by 7 per cent year-on-year to SAR 1.4 trillion, continues to reinforce demand. All flagship lifestyle developments in Riyadh are operating at or near full capacity.
In Jeddah, 24,100 sq m was added in the past year, lifting completed lifestyle retail space to 233,400 sq m across 17 projects. An additional 205,600 sq m from seven new developments will elevate the total to 439,000 sq m by 2027. The marquee Jeddah Cove Waterfront, delivering 70,000 sq m as part of a broader 127,000 sq m lifestyle hub with retail, dining, cinema and marina views over the F1 circuit, exemplifies this trend. Lease rates average SAR 2,200 per sq m, with overall occupancy at 81 per cent and F\&B averaging 75 per cent.
Consumer preference is clearly evolving: shoppers now expect destinations to serve as “vibrant community hubs” that combine socialising, entertainment and cultural programming with retail activities. Knight Frank’s research, echoed by S\&P Global, indicates that lifestyle retail is far more appealing than traditional enclosed malls, particularly as the pace of new malls worldwide renders loyalty harder to sustain.
Luxury and experiential offerings are playing a strategic role. The pop-up Dior Café at the Saudi National Museum and Ralph’s Coffee in the King Abdullah Financial District illustrate the growing appetite for premium dining experiences within retail contexts. Such concepts support the Kingdom’s Vision 2030 objective of enhancing tourism and developing experiential retail that attracts global brands.
Despite robust demand, analysts caution that oversupply—especially in conventional malls—could dampen the sector’s long-term performance. Success will depend on developers creating distinctive experiences and maintaining market positioning amid increasing competition from Riyadh, Jeddah and Al-Khobar.
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Saudi Arabia