The Saudi retail sector is shifting toward experience-led destinations that blend shopping, dining, and entertainment, according to part two of Knight Frank’s Saudi Report 2025 (pdf). The report — conducted in partnership with YouGov — focused on non-residential sectors and surveyed Saudi nationals earning above SAR 10k per month and Saudi-based expats with monthly incomes above SAR 30k.

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By the numbers: Riyadh’s lifestyle retail market spans 484.9k sqm across 27 developments and maintains a 97% occupancy rate. It is projected to grow 34% annually through 2027, driven by new projects such as the 90k-sqm The Bellevue. In Jeddah, the market totals 233.4k sqm and is expected to nearly double to 439k sqm by 2027, led by Jeddah Cove Waterfront as its flagship destination. Occupancy in Jeddah stands at 81% overall, with F&B outlets at 75%. Across the Kingdom, lifestyle retail supply is expected to exceed 1 mn sqm by 2027.

Riyadh leads retail development: The capital remains the Kingdom’s retail hub with 4.17 mn sqm of gross leasable area (GLA) as of 1H 2025. Landmark projects such as The Avenues Riyadh (2026) and Diriyah Square (2027) will add over 600k sqm, part of a total 2.2 mn sqm pipeline through 2028. Across other major cities, 8.7 mn sqm of quality retail space is already in play, with over 3.4 mn sqm of new developments expected by 2028.

Strong demand keeps occupancy high: In Riyadh, prime regional and superregional mall rents average SAR 2.8k per sqm with 91% occupancy, led by high-end centers like Solitaire Mall. Jeddah’s occupancy stands at 87% with comparable rents, while the Dammam Metropolitan Area maintains 91% occupancy and average lease rates of SAR 2.3k per sqm.

MEANWHILE- E-commerce is becoming mainstream, with fewer than 2% of surveyed consumers saying they have never shopped online. E-commerce and PoS transactions rose 5% y-o-y to SAR 374 bn in 1H 2025, including a 42% jump in online spending to SAR 41 bn. Despite the digital boom, malls remain social hubs, with 29% of respondents visiting once or twice weekly, and another 27% going two to three times a week. A hybrid shopping model — combining online and in-store experiences — is preferred by 53% of consumers, especially high-income Saudis (63%) compared to expats (46%).

What Saudis are buying: Online spending is dominated by clothing and fashion (58%), electronics (49%), and groceries (48%), while categories like stationery (26%) and baby products (21%) lag due to their “specialty” nature. In physical stores, the mix tilts toward groceries (59%), clothing (46%), and beauty products (35%). Saudis show a stronger preference for home furnishings (26% vs. 15% among expats) and imported goods (28% vs. 14%).

Spending habits by income: High-income Saudis (earning SAR 80k+ monthly) shop online mainly for access to global brands, while middle-income shoppers prioritize convenience and value. Across all groups, 71% remain value-driven, typically spending SAR 100-400 per retail visit, compared to 27% of high earners who spend over SAR 1k.

Coffee and dining culture on the rise: Coffee outings have become the most common social activity, with 43% of Saudis going out multiple times a week and spending under SAR 50 per visit. Dessert outings follow, as family dining remains popular, with 38% dining out at least once weekly. While global cuisines dominate menus — Arabic food accounts for 19% in Riyadh and 15% in Jeddah — yet 60% of consumers still prefer Saudi cuisine.

Retailers need to embrace clicks and bricks: Saudi retail’s next phase will be driven by the convergence of digital and physical experiences, with success hinging on omni-channel retail, localized F&B, and offerings that appeal to both value-driven and luxury consumers. Brick and mortar stores unable to sell online “will suffer,” as rising digital demand — fueled by a population 63% under 30 — forces adaptation, Knight Frank Partner and MENA Head of Research Faisal Durrani told Asharq Business (watch, runtime: 06:48).

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