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On 25 September 2025, Riyadh took a decisive step: Crown Prince Mohammed bin Salman announced a five‑year rent freeze across both residential and commercial property in the city. The freeze, which is effective immediately, prevents landlords from increasing rents above their most recently registered levels and introduces penalties of up to one year’s rent for violations. For businesses operating in the capital, this decision represents both stability and new strategic considerations.
Over the past five years, Riyadh has experienced surging property prices and escalating rents. Apartment prices have risen by more than 80% since 2019, while villa rents rose nearly 14% year‑on‑year in Q2 2025. This inflation was driven by rapid population growth, with an influx of both Saudis and expatriates, alongside speculative activity in the real estate market.
The rent freeze is designed to curb volatility and stabilise costs for both households and businesses. It also complements broader reforms, including land taxation and urban planning initiatives under Vision 2030.
Key features of the freeze:
For companies with a footprint in Riyadh, rent is one of the largest operational costs. Unchecked rental inflation threatened not only profitability but also the city’s appeal as a hub for regional headquarters. By locking rents for five years, businesses can now plan with greater financial certainty.
Yet stability brings its own challenges:
Housing typically accounts for 30–40% of household budgets in Riyadh, and escalating rents have weighed heavily on both citizens and expatriates. For employers, this volatility created pressure on compensation packages and relocation budgets.
The rent freeze offers relief:
This makes Riyadh a more attractive city for talent, a crucial factor as Saudi Arabia accelerates its efforts to attract foreign expertise and multinational headquarters.
Flexible workspaces are already expanding in Riyadh, catering to startups, SMEs, and global firms seeking agility. The rent freeze could accelerate this trend:
Coworking hubs may become the winners of this new environment, offering a flexible, lower‑risk alternative for companies cautious about committing to long‑term commercial space.
Saudi Arabia’s commercial real estate sector, valued at over USD 70 billion in 2025, has been one of the fastest‑growing in the region. Riyadh, as the flagship city, has attracted significant investment in retail, logistics, and office towers.
The rent freeze will reshape market dynamics:
For investors, the freeze reduces upside potential in rent-driven returns, but enhances predictability, a benefit for long‑term capital planning.
Riyadh’s rent freeze is a bold intervention with wide‑ranging consequences. For businesses, the next five years bring a rare window of predictability in a fast‑moving market. The winners will be those who secure the right locations early, adapt their operating models, and use the stability to invest in growth rather than firefighting costs.
As Saudi Arabia pushes forward with Vision 2030, this move underscores the government’s commitment to building a globally competitive, business‑friendly capital. For executives weighing expansion into Riyadh, the message is clear: the time to plan is now.
Alistair Paine brings 15 years of dedicated experience in Saudi market entry, guiding Fortune 500 companies and innovative scale-ups through successful establishment in the Kingdom. His expertise in Saudi company formation, licensing and market entry strategy, positions him as a leading authority and consultant in international business expansion to Saudi Arabia.
Schedule a free consultation with Alistair and the Peninsula team to understand which market entry strategy is best suited to your business setup in Saudi Arabia.
Email: Alistair@peninsulacs.com
