In a significant step toward enhancing transparency and governance in the real estate sector, Saudi Arabia’s Cabinet has approved a new law regulating the expropriation of property for public interest.
The legislation seeks to strike a balance between the Kingdom’s rapid pace of development and the protection of property owners’ rights, guaranteeing them fair compensation.
Unlike the previous law enacted in 2003, the updated framework introduces stricter provisions requiring the allocation of financial resources before any expropriation process begins. It also mandates standardized and independent property evaluations, underscoring the government’s commitment to building trust and ensuring the sustainability of the real estate market in line with Vision 2030.
Finance Minister Mohammed Al-Jadaan said the updated system raises governance standards for both expropriation and temporary seizure of properties. He stressed that the law aims to safeguard public funds, guarantee fair compensation, and ensure development proceeds in a transparent and sustainable manner.
Abdulrahman bin Hamad Al-Harkan, Governor of the General Authority for State Real Estate, highlighted that the law protects both property owners and project developers. Under its provisions, properties will be assessed by certified appraisers accredited by the Saudi Authority for Accredited Valuers.
Compensation will be based on the fair market value plus an additional 20 percent to account for expropriation, as well as rental compensation with a similar premium in cases of temporary seizure.
Ajlan Al-Ajlan, member of the Shura Council, described the move as a milestone in regulatory reform, enhancing fairness and transparency while accelerating urban and economic development.
In remarks to Asharq Al-Awsat, CEO of Menassat Realty Co Khalid Al-Mobid noted that the requirement for financial allocations before launching any procedures ensures compensation is paid without delay, reflecting the government’s seriousness in protecting property owners.
He praised the system of using three independent valuers to minimize discrepancies and guarantee fairness in assessments. The additional 20 percent compensation, he said, demonstrates sensitivity to the social and psychological impact on affected owners.
The law also exempts property owners from real estate transaction tax and registration fees when purchasing replacement properties, a move Al-Mobid believes will reduce financial burdens and support housing stability.
Real estate expert Abdullah Al-Mousa echoed that the reforms represent a turning point for transparency and governance in the sector. He stressed that the new framework strengthens financial discipline and legal consistency, setting a foundation for a balanced investment environment that supports the growth of the real estate sector while aligning with Vision 2030 objectives.
