Diriyah Co. awards $1.13bn contract for King Saud University relocation 

RIYADH: Saudi Arabia’s industrial and logistics market is experiencing growth, with warehouse occupancy rates nearing saturation and rental prices in Riyadh increasing by 16 percent year-on-year, according to Knight Frank. 

The firm’s latest “Saudi Arabia Industrial and Logistics Market Review” highlighted a booming sector driven by e-commerce expansion, strategic government initiatives, and surging foreign investment. 

The Kingdom’s logistics hubs — Riyadh, Jeddah, and the Dammam Metropolitan Area— are operating at near-full capacity. 

Riyadh leads with a 98 percent occupancy rate, while Jeddah and Dammam follow closely at 97 percent each.

This momentum was also reflected in occupancy rates in Abu Dhabi with its industrial and logistics market maintaining near-full capacity, mirroring Dubai’s tight supply.

Key hubs like Khalifa Economic Zones Abu Dhabi and Abu Dhabi Airports Free Zone saw sustained demand, driven by strategic infrastructure projects and growing manufacturing activity, according to a separate report by Knight Frank.

Riyadh’s prime warehouse spaces now command rents exceeding SR250 ($66.6) per sq. meter, while city-wide averages hit SR208.

“Despite a slowdown in demand during the second half of the year, city-wide rental rates increased by 16 percent year-on-year,” the report said. 

Jeddah’s lease rates for Grade B facilities rose to SR238 per sq. meter, with the high-end Asfan district maintaining 100 percent occupancy at SR387 per sq. meter. Dammam Metropolitan Area saw rents jump 14.8 percent to SR202 per sq. meter, fueled by a chronic shortage of quality logistics space.

E-commerce and mega-projects fuel growth 

Rapid urbanization, a tech-savvy consumer base, and giga-projects like the Special Integrated Logistics Zone and Sino-Saudi Logistics Zone are reshaping demand. 

“Demographic shifts including rapid urbanization, increased female workforce participation, and a tech-savvy Gen Z and millennial consumer base are accelerating the growth of the e-commerce sector,” the report stated. 

The 3-million-sq. meter Special Integrated Logistics Zone has attracted global players like SHEIN and Apple, while the 4-million-sq. meter Sino-Saudi zone aims to strengthen trade ties with China. 

Government initiatives and private investment 

The National Industrial Development and Logistics Program is a cornerstone of the Kingdom’s industrial strategy, aiming to increase the transport and logistics sector’s contribution to the gross domestic product to 10 percent by 2030, from 6 percent in 2021.

Public-private partnerships are flourishing, with projects like the Tamer Logistics Park and Agility Logistics Park set to expand supply in key regions. 

“Substantial investments to improve and expand connectivity and trade infrastructure, along with regulatory reforms are helping transform Saudi Arabia into a logistics powerhouse,” the report emphasized.

Sustainability and digital transformation 

The sector is also pivoting toward sustainability and automation. Companies like Maersk and Agility are adopting solar-powered warehouses, while digital tools streamline operations. 

“Sustainability has become a major market driver, with companies integrating renewable energy fields and LEED-certified buildings,” said Adam Wynne, partner at Knight Frank. 

With 36,000 factories projected by 2035 and FDI reforms attracting multinationals, Knight Frank predicts sustained growth. 

“Saudi Arabia is on track to become a regional logistics powerhouse,” Wynne said, citing the Kingdom’s integration of “global expertise, modern infrastructure, and green initiatives.”

RIYADH: Saudi Arabia and China are strengthening their air cargo cooperation through a new agreement to create a joint freight hub as part of the Air Silk Road initiative.

The deal, inked between Saudia Cargo and Henan Aviation Group, will see new new routes opened between Riyadh and Zhengzhou, according to a statement.

This correlates with the Saudi Aviation Strategy, which recognizes the need to increase air connectivity with key markets such as China as part of the Kingdom’s goal of transporting 4.5 million tonnes of air cargo by 2030.

The statement further highlighted that the agreement aims to “support integrated logistics services and free trade zone development” and “advance sustainability and cross-border e-commerce through logistics innovation.”

It also seeks to explore investment opportunities in the high-tech and aviation sectors in Zhengzhou.

The MoU came during a meeting held by President of the General Authority of Civil Aviation Abdulaziz bin Abdullah Al-Duailej in Riyadh with Henan Province Vice Governor Sun Shougang to bolster investments between the two countries, the Saudi Press Agency reported.

During the discussion, the two sides discussed strengthening economic relations, focusing on fostering high-quality investments for leading firms and empowering the private sector to seize available opportunities. Both parties also explored enhancing Saudi-Chinese air transport in alignment with Vision 2030 and the Saudi Aviation Strategy.

GACA also held a Saudi-Chinese roundtable to explore collaboration opportunities in logistics zones and air cargo. The meeting included the Chairman of China Henan Aviation Group, along with representatives from national carriers and logistics firms.

The roundtable also included various Saudi government entities, such as the Ministry of Energy, the Ministry of Investment, and the Ministry of Transport and Logistic Services, as well as the Saudi General Authority of Foreign Trade, the Economic Cities and Special Zones Authority, the Industrial Center, and the Air Connectivity Program.
 
The Chinese delegation conducted a field visit to the Special Integrated Logistics Zone in Riyadh and the cargo zones at King Abdulaziz International Airport in Jeddah, where they observed operational capabilities, cargo-handling facilities and zones, e-commerce shipments, and the digital capabilities and mechanisms in use.

The delegation also visited King Khalid International Airport in Riyadh, where they toured the Airport Operations Control Center to observe the services provided as well as explored the commercial areas, and duty-free store.

China’s COSCO Shipping unveils Dammam office

Chinese company COSCO Shipping has launched its first office in the Kingdom in Dammam in an attempt to enhance operational efficiency and logistical connectivity.

This move also strengthens the firm’s partnership with the Saudi Ports Authority, or Mawani, supports trade growth, and achieves the goals of the nation’s Vision 2030 of consolidating the Kingdom’s position as a global logistics hub.

Saudi NHC continues house building deal with Chinese firm

Saudi Arabia’s National Housing Co. has extended its partnership with China State Construction Engineering Corporation, which aims to build 20,000 housing units within NHC destinations.

The partnership has been realized through the launch of multiple projects across NHC sites in the Eastern Region, Riyadh, and Jeddah, delivering over 3,800 housing units.

It comes as an extension of the Saudi-Chinese partnership series and several agreements signed with Chinese firms during the official visit to China by Minister Al-Hogail and NHC CEO Mohammed bin Saleh Al-Buty.

NHC stated that the partnership extends its efforts to enhance the real estate supply and inject more housing units through quality partnerships with major international companies to establish urban destinations with high-quality standards across the Kingdom.