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Saudi Arabia’s retail landscape is undergoing a major shift, with Riyadh and Jeddah leading the way in developing new lifestyle destinations. A total of 394,900 square metres (sqm) of upcoming lifestyle retail projects featuring restaurants, entertainment venues, and public spaces are set to be completed by 2027, according to Knight Frank’s Riyadh and Jeddah Lifestyle Retail Market Review.

The unprecedented evolution of the country’s retail sector has been driven by the ambitious Vision 2030 programme. Since 2021, Riyadh and Jeddah alone have added over 148,400 sqm of new retail space, Knight Frank data shows. These developments go beyond retail, creating social and entertainment hubs that align with Saudi Arabia’s broader vision to enhance urban life, attract investment, and build dynamic public spaces.

According to Knight Frank, around 52% of Riyadh’s lifestyle retail projects include casual dining options, with occupancy rates averaging 96%. Over the last two years, the capital has completed 73,400 sqm of new retail space across five major projects.

Riyadh’s lifestyle retail supply now stands at 452,800 sqm, with developments such as Boulevard World and Boulevard City setting a new standard by blending shopping, dining, and entertainment features. Lease rates in the city’s lifestyle retail sector average SAR 2,360 per sqm, reflecting strong demand. Food and beverage outlets dominate, making up 84% of the sector, with casual dining (52%) and cafés (20%) being the most sought-after categories. By 2027, Riyadh is expected to add another 232,000 sqm of retail space, bringing the total number of lifestyle retail projects to 33.

JEDDAH’S RETAIL GROWTH

Jeddah’s lifestyle retail market is also expanding rapidly, with 217,700 sqm of existing supply. In the last two years alone, the city has added 75,000 sqm, including major developments like U Walk Jeddah (60,000 sqm) and La Paz (13,500 sqm).

Knight Frank reports that lease rates in Jeddah’s lifestyle retail sector average SAR 2,030 per sqm, with food and beverage occupancy at 76%, underscoring the popularity of dining-driven retail destinations.

The projects that incorporate strong entertainment and lifestyle components continue to attract higher rental rates, as retailers seek locations with high foot traffc. Looking ahead, Jeddah is set to welcome 162,900 sqm of new lifestyle retail space by 2027, increasing the total number of developments to 17.

With Riyadh and Jeddah at the forefront, Saudi Arabia’s lifestyle retail sector is rapidly creating destinations that go far beyond traditional shopping, catering to a new era of consumer preferences.

YOUNG CONSUMERS TRANSFORM SECTOR

The country’s retail sector contributes 23% of the non-oil GDP, and is estimated to have grown to more than SAR 460 billion (USD 122.6 billion) by the end of 2024, according to offcial estimates.

Saudi Arabia’s younger generation is driving that retail growth. Their preference for immersive experiences, social spaces, and integrated entertainment is redefining expectations and pushing brick-and-mortar stores to innovate. This is particularly crucial as e-commerce continues to grow.

Around 63% of the kingdom’s population is under 30 years old, and the government and private sector are collaborating to ensure the coming retail era caters to their needs.

Young people are not only emerging as major consumers, but also creators of demand. New wholesale and retail trade licence led a 60% overall increase in commercial registration last year compared to 2023, according to the Ministry of Commerce.

Just over 521,000 commercial registrations were issued in 2024, compared to 368,038 in 2023. These included 368,038 registrations for establishments and 153,931 for companies. 

Franchise registrations have surged 866% in Saudi over the past three years, reaching 1,788 by the end of the third quarter of 2024, compared to just 185 in 2021.

The significant growth is attributed to the Franchise Law, enacted in October 2019, and its executive regulations introduced in May 2020. These measures have provided a robust regulatory framework that enhances transparency and clarity in the relationship between franchisors and franchisees, spurring increased activity across the country’s franchise sector.

The accommodation and food services sector, encompassing tourism, hotels, and restaurants, has emerged as the leading sector with 1,232 franchise registrations. Followed by the wholesale and retail sector with 689 registrations, and the transportation and storage sector with 257. Notably, one franchise registration may encompass multiple activities.

Regionally, Riyadh leads with 647 franchise registrations, followed by the Makkah Province with 363, and the Eastern Province with 225, underscoring the concentration of franchise activity in the kingdom's key economic hubs.