THE ENGINE: REAL ESTATE INVESTMENT •
Led by the Ministry of Investment (MISA) and the Royal Commission for Riyadh City (RCRC), the initiative is designed to attract multinational companies to Saudi Arabia. Its success to date is reflected by the fact the kingdom is now home to around 780 regional headquarters, up from just 44 in 2021. Foreign investment licences have followed a similar trajectory, rising to more than 24,000 in 2025, highlighting the kingdom’s status as one of the region’s fastest-growing business hubs. From an investor standpoint, the significance extends beyond office demand. International businesses create sustained demand for hotels, serviced apartments, retail, restaurants and entertainment, reinforcing the commercial logic behind mixed-use development. CBRE reaches a similar conclusion in its Q1, 2026 Saudi Arabia Real Estate Market Review, arguing that hospitality is becoming increasingly interconnected with wider real estate markets as destinations mature. For investors, that generates more resilient, diversified income streams by combining accommodation with retail, food and beverage, offices, entertainment and residential assets rather than relying on hotel performance alone. The implications are significant with investors increasingly favouring large-scale projects capable of generating value across multiple asset classes rather than individual buildings dependent on a single source of demand. INVESTING IN DIVERSITY Saudi Arabia's tourism portfolio is equally notable for its diversity. Riyadh represents an urban investment opportunity driven by corporate demand, population growth, major events and rapidly improving physical and digital infrastructure. JLL notes that the capital's hospitality market has diversified well beyond catering to business travellers, with RevPAR increasing by more than 9% annually since 2019, supported by initiative such as Riyadh Season and expanding leisure demand. At the same time, the city is in the process of building millions of square metres of additional Grade A office space, reinforcing its position as a regional business hub. Meanwhile, emerging destinations across the kingdom are attracting increased interest from investors. One of the most popular is Diriyah, which combines heritage with mixed-use development and integrates hospitality, retail, residential and cultural assets into a single commercial ecosystem. The Red Sea and AMAALA are creating investment opportunities centred on luxury tourism, branded residences and wellness, while Makkah and Madinah continue to benefit from highly resilient demand underpinned by religious tourism and ongoing investment in premium accommodation and visitor infrastructure.
Rather than creating competing destinations, Saudi Arabia is assembling a diversified investment portfolio capable of attracting different capital types aligned to a variety of market segments. In this scenario, every major tourism project complements the other. BEYOND GATEWAYS AND FLAGSHIPS While investors have historically focused on Saudi Arabia’s flagship destinations, attention is increasingly turning towards the kingdom's emerging regional markets. JLL notes that Saudi Arabia's Tier 2 cities, encompassing provincial capitals and key development areas like Taif and Al Ahsa, represent untapped potential in the kingdom’s hospitality sector. These destinations, which are renowned for their cultural heritage and attractions yet are underserved by international hotel operators, already account for 23% of total visitor numbers, albeit mainly domestic travellers. For investors, this represents a classic supply- demand imbalance: established visitor demand combined with relatively limited internationally branded accommodation. Combined with government incentives and improving transport connectivity, that supply gap is creating opportunities for investors willing to enter emerging markets ahead of the curve. INVESTING IN PLACES Knight Frank argues that the market is moving beyond announcements into execution, with the next phase of growth depending less on launching new projects and more on delivering destinations capable of attracting long-term private capital. The firm estimates that $6.3 billion of global private capital is actively targeting Saudi real estate opportunities, highlighting growing international confidence in the kingdom's long- term investment story. Its latest global investor survey found that while residential property remains the most attractive real estate sector, hospitality, branded residences and retail all rank among investors' preferred asset classes. The implications are profound for Saudi Arabia’s tourism sector. Hotels remain central to the country’s visitor economy, but they are increasingly one component of a much broader investment ecosystem that includes culture, entertainment, mobility, residential development, retail and public infrastructure. While Saudi Arabia's first tourism cycle was defined by development, its long-term success will be judged on its operational performance and its ability to attract repeat investment alongside repeat visitors. The opportunity for investors now extends beyond financing hotels to participating in the creation of integrated destinations designed to generate long-term economic value.
TOURISM INVESTMENT LANDSCAPE SAR 452bn Total committed tourism investment SAR 219bn Private-sector investment 48% Private-sector share of total investment SAR 233bn Public Investment Fund con- tribution 60% New hotel rooms backed by private capital 56 Major tourism projects attracted between 2019 and 2024 $1.9bn Combined project value 50+ International hotel brands 40+ New investors since 2020 10 regions Receiving private-sector tour- ism investment
Source: Saudi Ministry of Tourism
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