Saudi Arabia is moving toward a new phase of economic openness in the real estate sector, as the implementation date approaches for the updated system governing property ownership by non-Saudis, scheduled to take effect in January next year.
The Saudi Cabinet approved the new system in July last year, in a move described as strategic to regulate real estate ownership by non-Saudis, whether individuals or entities. The measure aims to enhance the contribution of the real estate sector to gross domestic product and diversify national income sources away from oil, in line with the objectives of Vision 2030.
The General Real Estate Authority is responsible for implementing the system and is currently preparing the executive regulations, including defining the geographic zones in which non-Saudis will be permitted to own and invest in property. These details are expected to be announced before the system comes into force.
The new legislation also seeks to retain global talent and expertise by enabling long-term settlement and improving the urban and residential quality of life.
Saudi Minister of Municipal and Rural Affairs and Housing Majed Al Hogail confirmed in a televised interview last week that the coming month will witness the implementation of the foreign property ownership system at the residential level across all cities in the Kingdom, except four cities: Mecca, Medina, Jeddah, and Riyadh. Within these cities, specific zones will be designated where ownership will be permitted. For residents inside Saudi Arabia, the system allows the ownership of one residential unit.
In contrast, the system provides broader flexibility in other economic sectors. Foreign ownership will be permitted in all cities of the Kingdom without exception in the commercial, industrial, and agricultural sectors.
In press statements made last November, Fahd bin Sulaiman, Executive Director of Non-Saudi Property Ownership at the General Real Estate Authority, explained that the zones allocated for foreign ownership in Riyadh, Jeddah, and the holy cities are still under review and will be announced very soon alongside the issuance of the regulatory bylaws.
He added that these zones will be very extensive and will include what are known as mega projects, with the percentage of non-Saudi ownership expected to be set between 70% and 90%.
Bin Sulaiman noted that ownership in Mecca and Medina will be restricted to Muslim buyers, with no major additional constraints. He stressed that there are no significant conditions and no desire to impose restrictive measures, pointing out that a comparison between the current and updated systems shows a clear difference.
The updated system aims to regulate non-Saudi property ownership in a manner consistent with Vision 2030, attract foreign direct investment to the Saudi real estate market, enhance the sector’s contribution to the national economy, retain global talent, increase the contribution of non-oil sectors to economic support, diversify income sources sustainably, and improve urban and residential quality of life.
Under the system, non-Saudi individuals are permitted to own property or acquire real rights to it within the Kingdom, within the geographic scope determined by the Council of Ministers, based on a proposal from the Board of Directors of the General Real Estate Authority and the approval of the Council of Economic and Development Affairs. The system also specifies the types of real rights that may be acquired, maximum ownership percentages, and related regulatory controls.
The system also allows a non-Saudi resident with natural person status to own one residential property outside the designated geographic scope, excluding the cities of Mecca and Medina. Ownership within these two cities requires that the buyer be Muslim.
According to the regulations, non-listed companies in the Saudi financial market that include non-Saudi shareholders are permitted to own property within the designated geographic scope, including Mecca and Medina, provided that the entity is established under Saudi corporate law. Such companies may also own property outside this scope for the purpose of conducting business activities or housing employees, as specified by the executive regulations.
Listed companies on the Saudi financial market, investment funds, and special purpose entities are also permitted to own property throughout the Kingdom, including Mecca and Medina, in accordance with controls issued by the Capital Market Authority in coordination with the General Real Estate Authority and other relevant bodies.
The application of the system does not affect rights granted under other regulations, such as the Premium Residency system or agreements with Gulf Cooperation Council states. Property ownership by non-Saudis does not confer any additional privileges beyond legally defined rights.
The system also approves the imposition of a fee not exceeding 5% of the value of real estate transactions involving non-Saudis. Details will be specified in the executive regulations. Penalties for violations include fines or warnings, while those who provide misleading information face fines of up to 10 million riyals, with the possibility of the offending property being sold by court order.
Support the Voice of the Ummah
Our Website don’t survive without you.
Your donation fuels every word and every truth shared.
Click here to Donate & Fund your Islamic Independent Platform
