RIYADH | JEDDAH, 14th DECEMBER: Riyadh and Jeddah are at the forefront of a lifestyle retail revolution that is reshaping the retail landscape across Saudi Arabia, with 184,000 square metres of new retail developments that are centred on food and beverage outlets, entertainment and the public realm, expected to be completed by 2025, according to Knight Frank's Riyadh and Jeddah Lifestyle Retail Market Review - 2023
Faisal Durrani, Partner – Head of Research, MENA says: "At the heart of the Saudi government’s transformative vision for the Kingdom sits the creation of world class lifestyle amenities to complement the phenomenal transformation of the Kingdom’s urban realm. Lifestyle retail developments that now dot cities across the country offer a glimpse into the cosmopolitan vibe that slowly becoming an entrenched part of the rapidly evolving societal fabric.
“The rapidity of this evolution is nowhere more evident than in Riyadh, where over the last 12 months alone, 84,800 square meters of lifestyle-led retail developments, across eight projects have been completed. Not far behind is Jeddah, where a total of four projects, spread across 41,700 square meters have added to the already vibrant retail scene”.
Knight Frank says Riyadh began to experience a surge in lifestyle retail developments in 2019. Since then, the lifestyle retail scene has exploded, with a string of food and beverage operators, both local and international vying for a position in the market.
Jonathan Pagett, Partner, Retail Advisory Saudi Arabia, explains: "A significant contributor to this evolution is Riyadh's burgeoning food and beverage scene. The city now boasts a total supply of 388,000 square metres of food and beverage led lifestyle retail developments, with a specific focus on parks and gardens, the public realm, and an array of lifestyle amenities.
“The driving force behind this transformative shift is the younger generation's inclination towards outdoor experiences and an active lifestyle. Riyadh and Jeddah are responding to this demand by creating multifaceted spaces that seamlessly blend retail, dining, and leisure. This synergy is the catalyst for their ongoing success and appeal to a diverse audience”.
F&B concepts are playing a pivotal role in redefining the Kingdom's lifestyle retail landscape and remain the primary driver of footfall in these developments, says Knight Frank.
Across Riyadh and Jeddah’s lifestyle-retail developments, F&B outlets are running at an average occupancy rate of 86%, with international restaurants (23%) dominating in Riyadh, while Jeddah’s resident’s appear to have a stronger preference for European cuisine, which accounts for nearly one-third (31%) of all restaurants in lifestyle-retail developments.
In Jeddah, Knight Frank says, the lifestyle retail scene began to take off in 2020, aligning with the global post-Covid desire for outdoor activities and holistic well-being. Since then, Jeddah has witnessed the opening of 10 lifestyle retail centres, each embodying a fusion of fountain-based attractions, retail, dining options and attractive promenades. Five more lifestyle retail developments are set to be unveiled in the Red Sea city over the next 12-months, totalling 131,700 square metres.
Jeddah's food and beverage venues boast an average occupancy rate of 77%, while the overall occupancy rate is at 81%. Currently, Jeddah offers 201,200 square meters of lifestyle retail space, with an additional 131,700 square meters in the pipeline.
Durrani concluded: “What we are witnessing today in Saudi’s retail scene is a glimpse of the future. With nearly 5 million square metres of retail likely to be delivered before the end of the decade, mall operators and developers need to pay close attention to creating ‘destinations’ that are centred around experiences, entertainment and wellbeing. This is going to be key to future success of retail, particularly as the younger generation – Generation Z – have a significantly higher preference for online shopping than any other age brackets”.
About Knight Frank:
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, the Knight Frank network has 487 offices across 53 territories and more than 20,000 people The Group advises clients ranging from individual owners and buyers to major developers, investors, and corporate tenants. For further information about the Firm, please visit www.knightfrank.com.
In the MENA region, we have strategically positioned offices in key countries such as the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, and Egypt. For the past 13 years, we have been offering integrated residential and commercial real estate services, including transactional support, consultancy, and management.
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