Opening up of the real estate market in Saudi Arabia to non-Saudi owners and investors
Saudi Arabia has announced a significant step forward in opening up its real estate market to ownership and investment by non-Saudis. This new law is to take effect in January 2026 and is to allow ownership by non-Saudi individuals and entities in designated real estate investment zones.
This is a logical next step in attracting foreign capital to boost real estate development, supply and liquidity in the real estate market in The Kingdom as part of Vision 2030.
It is uncertain how the law will reconcile conflicting imperatives of (1) attracting foreign capital and (2) ensuring that this additional market stimulus does not further fuel a real estate market which in some areas is already running hot. The inevitable limitations to be set out in the regulations will be key to achieving this delicate balance and avoiding an unwelcome real estate bubble, as will the interplay between this and other recent market interventions with similar commercial aims, such as the reform of the White Land Tax.
Although the text of the law has not yet been published and the implementing regulations from Real Estate General Authority (REGA) are awaited, some details of the proposals have been issued.
Current regulatory framework
Currently:
- Non-Saudi investors who are licensed to conduct commercial activity in KSA can purchase or rent real estate necessary for their commercial activities. If the licensed commercial activity is real estate development, the cost of the project must be 30million+ Riyals and that capital must be invested (i.e. the project completed) within 5 years
- Non-Saudi individuals can acquire a place of residence (1) if they have a residency permit and permission from the Ministry of Interior or (2) with the special permission of the Council of Ministers or (3) if they have a Privileged Residency Permit
- land in the Holy Cities of Makkah and Medina cannot be owned by Non-Saudis nor, with a few minor exceptions, can Saudi companies with non-Saudi investors acquire such land.
There are also rules permitted property ownership by GCC nationals for both residential and investment purposes.
The proposals
The new law is expected to retain the existing framework but to build on it by allowing Non-Saudi investment in specific real estate investment zones to be designated by REGA. These are anticipated to include some of the major projects in Kingdom, parts of Riyadh and Jeddah and potentially other locations with high demand where an injection of foreign capital may stimulate development.
To avoid this stimulus over-heating the market, the regulations are expected to include controls such as:
- the ability for REGA to redesignate real estate investment zones to balance supply/demand and pricing
- limitations on the number, size or values of real estate acquired by a foreign investor
- investment thresholds
- limitations on the nature of real estate invested in
- mechanisms for monitoring and enforcing the regulations to prevent abuse or unanticipated aggregation of real estate assets by Non-Saudis.
Conclusion
The prospects of an economy in growth mode, a young and rapidly growing population with a high disposable income, policies dedicated to increasing home ownership and the unprecedented opportunities that Vision 2030 creates will be hard for international investors to resist.
The nature and extent of any controls on foreign ownership will need to ensure alignment with existing laws and commercial drivers to create an integrated and rational investment ecosystem to optimise appeal to foreign cash looking for a safe and stable investment environment. They will also need to ensure that other principles underpinning Vision 2030 are not negatively impacted.
CMS will continue to monitor the situation and keep this note up to date. If you need advice in the meantime, please email Austin Judson.
