Saudi Arabia Unveils New Real Estate Ownership Law for Foreigners
The law, published in the official gazette Umm Al-Qura, outlines a comprehensive framework allowing non-Saudis to acquire property or establish real rights over land in the country. The key element of the reform is its establishment of specific geographic zones where foreign ownership is permitted, a move expected to attract considerable international investment.
The Cabinet will play a pivotal role in defining the boundaries of these designated areas, which are likely to be concentrated in key urban and economic hubs such as Riyadh, Jeddah, and the Eastern Province. While the precise locations are yet to be announced, officials indicate that the decision will be based on strategic economic priorities, aiming to stimulate growth and diversification in critical sectors like tourism, hospitality, and logistics.
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One of the core principles of the new law is its flexibility. Unlike previous regulations, which were highly restrictive, the law grants non-Saudis the opportunity to own real estate in various forms, including commercial and residential properties. The legislation outlines conditions under which foreign entities can acquire land, offering them the chance to leverage the Kingdom's thriving economy and vibrant business environment.
This legal shift is expected to have a transformative impact on Saudi Arabia's real estate market. Analysts predict an influx of foreign capital as investors look to take advantage of the Kingdom's growing appeal as a regional hub. The move is also seen as a step towards diversifying the economy, in line with the objectives set out in Saudi Arabia's Vision 2030, which aims to reduce the Kingdom's dependence on oil revenues and foster sustainable growth through non-oil sectors.
Experts note that while the law represents a major departure from previous policies, it does not open up the entire country to foreign ownership. Instead, the policy is focused on ensuring that foreign property holdings contribute meaningfully to the national economy. The Cabinet will likely impose further regulations to balance the interests of local stakeholders with the benefits of foreign investment. The move could foster job creation, provide a boost to construction and development projects, and potentially increase the demand for high-quality infrastructure in designated zones.
The new law also highlights Saudi Arabia's efforts to modernise its regulatory environment, providing clarity for international investors who have long been wary of the Kingdom's real estate market due to its complex legal framework. While non-Saudis have previously been able to invest in real estate through specific channels like joint ventures and special economic zones, this new legislation offers a more straightforward path for foreign ownership, which could position Saudi Arabia as a competitive player in the global real estate market.
For real estate developers and global companies, this development could mean greater opportunities to tap into a burgeoning market. Large-scale projects, such as the NEOM city and Red Sea tourism initiatives, could see increased international interest as foreign ownership regulations become more transparent and accessible.
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However, there are still questions about the long-term implications of these changes. While the law offers new avenues for foreign investment, there are concerns about the potential impact on local property prices and the availability of affordable housing for Saudi citizens. Critics argue that an influx of foreign capital might inflate property values, making it harder for Saudis to purchase homes. The government is expected to address these concerns through policies that safeguard the interests of the local population, ensuring that housing remains affordable for citizens.
The government's strategy also includes efforts to ensure that foreign investments contribute to the broader goals of economic diversification. By allowing foreign ownership in select zones, the Kingdom hopes to align property investments with its broader economic objectives, particularly in sectors like tourism, entertainment, and high-tech industries.
For non-Saudis looking to invest, the new law provides a clearer roadmap for property ownership. Investors will need to navigate a system that offers greater transparency and less bureaucratic red tape than previous regulations. While specific details on the process of acquiring property remain to be fully clarified, the law marks a significant shift toward openness, making it more appealing to foreign capital.
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Saudi Arabia has published the full details of its property ownership law for non-Saudis in the official gazette Umm Al-Qura on Friday, following Cabinet approval earlier this month. The law will take effect 180 days from publication and replaces previous foreign property ownership legislation issued under Royal Decree No. M/15 in 2000, the Saudi Gazette reported. The legislation grants non-Saudis — including individuals, companies, and non-profit entities — the right to own property or obtain other real rights over real estate within designated geographic zones to be determined by the Cabinet. Non-Saudis can own property in Saudi Arabia under new law published in official gazette These rights include usufruct (beneficial use), leaseholds, and other real estate interests, but will be subject to controls and restrictions based on location, property type, and usage. Ownership remains prohibited in certain locations and regions, particularly in Makkah and Madinah, except under conditions for individual Muslim owners. The law states that all real estate rights that were legally established for non-Saudis prior to the regulation taking effect will be preserved. The Council of Ministers — upon a proposal by the Real Estate General Authority and with the approval of the Council of Economic and Development Affairs — will define the allowable zones for foreign ownership and set upper limits on ownership percentages and durations for usufruct rights. Foreign individuals legally residing in Saudi Arabia may own one residential property outside restricted areas for personal housing purposes. This provision does not apply to Makkah and Madinah. The regulation includes provisions for corporate ownership. Non-listed companies with foreign shareholders, as well as investment funds and licensed special-purpose entities, will be permitted to acquire real estate throughout the Kingdom, including in Makkah and Madinah, provided the ownership supports operational needs or employee housing. Listed companies and investment vehicles may also acquire property in line with Saudi financial market regulations. Diplomatic missions and international organisations can own premises for official use and residence of their representatives, subject to Foreign Ministry approval and reciprocity conditions. Non-Saudi entities must register with the competent authority before acquiring property. Ownership or real rights become valid only after formal registration in the national real estate registry. The law introduces a real estate transfer fee of up to 5 per cent for transactions involving non-Saudis. Sanctions for violations include fines up to SAR10 million and, in cases such as falsified information, the forced sale of the property with proceeds remitted to the state after deductions. A committee under the Real Estate General Authority will be formed to investigate violations and impose penalties. Decisions of this committee can be appealed to the administrative courts within 60 days. The law repeals a prior rule that prohibited GCC citizens from owning property in Makkah and Madinah, standardising rules for all non-Saudi entities under a single framework. The executive regulations, which will detail implementation mechanisms and specify geographic boundaries and conditions, are expected to be issued within six months.
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While the precise locations are yet to be announced, officials indicate that the decision will be based on strategic economic priorities, aiming to stimulate growth and diversification in critical sectors like tourism, hospitality, and logistics. ADVERTISEMENT One of the core principles of the new law is its flexibility. Unlike previous regulations, which were highly restrictive, the law grants non-Saudis the opportunity to own real estate in various forms, including commercial and residential properties. The legislation outlines conditions under which foreign entities can acquire land, offering them the chance to leverage the Kingdom's thriving economy and vibrant business environment. This legal shift is expected to have a transformative impact on Saudi Arabia's real estate market. Analysts predict an influx of foreign capital as investors look to take advantage of the Kingdom's growing appeal as a regional hub. The move is also seen as a step towards diversifying the economy, in line with the objectives set out in Saudi Arabia's Vision 2030, which aims to reduce the Kingdom's dependence on oil revenues and foster sustainable growth through non-oil sectors. Experts note that while the law represents a major departure from previous policies, it does not open up the entire country to foreign ownership. Instead, the policy is focused on ensuring that foreign property holdings contribute meaningfully to the national economy. The Cabinet will likely impose further regulations to balance the interests of local stakeholders with the benefits of foreign investment. The move could foster job creation, provide a boost to construction and development projects, and potentially increase the demand for high-quality infrastructure in designated zones. The new law also highlights Saudi Arabia's efforts to modernise its regulatory environment, providing clarity for international investors who have long been wary of the Kingdom's real estate market due to its complex legal framework. While non-Saudis have previously been able to invest in real estate through specific channels like joint ventures and special economic zones, this new legislation offers a more straightforward path for foreign ownership, which could position Saudi Arabia as a competitive player in the global real estate market. For real estate developers and global companies, this development could mean greater opportunities to tap into a burgeoning market. Large-scale projects, such as the NEOM city and Red Sea tourism initiatives, could see increased international interest as foreign ownership regulations become more transparent and accessible. ADVERTISEMENT However, there are still questions about the long-term implications of these changes. While the law offers new avenues for foreign investment, there are concerns about the potential impact on local property prices and the availability of affordable housing for Saudi citizens. Critics argue that an influx of foreign capital might inflate property values, making it harder for Saudis to purchase homes. The government is expected to address these concerns through policies that safeguard the interests of the local population, ensuring that housing remains affordable for citizens. The government's strategy also includes efforts to ensure that foreign investments contribute to the broader goals of economic diversification. By allowing foreign ownership in select zones, the Kingdom hopes to align property investments with its broader economic objectives, particularly in sectors like tourism, entertainment, and high-tech industries. For non-Saudis looking to invest, the new law provides a clearer roadmap for property ownership. Investors will need to navigate a system that offers greater transparency and less bureaucratic red tape than previous regulations. While specific details on the process of acquiring property remain to be fully clarified, the law marks a significant shift toward openness, making it more appealing to foreign capital.
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