Saudi Arabia is preparing to enter a new phase of economic openness in the real estate sector, with the updated law regulating property ownership by non-Saudis set to take effect in January.
The law, approved by the Saudi cabinet in July, is a strategic step to regulate real estate ownership by non-Saudis, both individuals and entities. Its main objective is to boost the real estate sector’s contribution to gross domestic product and diversify national income sources away from oil, in line with Vision 2030 goals.
The General Authority for Real Estate, the body responsible for implementation, is currently drafting the executive regulations and defining the geographic scope of areas where foreigners will be allowed to own and invest in property. These details are expected to be announced before the law comes into force.
The new legislation also aims to retain global talent by enabling long term residency and improving urban and housing quality.
Scope of ownership
Saudi Minister of Municipalities and Housing Majed Al-Hogail said in a televised interview last week that the system allowing foreigners to own residential property would be implemented next month across all Saudi cities, except for four, Makkah, Madinah, Jeddah and Riyadh.
In those cities, ownership will be permitted in specific designated areas. Resident expatriates will be allowed to own one residential unit.
In contrast, the system offers broader flexibility in other economic sectors, with foreign ownership open across all Saudi cities without exception in the commercial, industrial and agricultural sectors.
Fahd bin Suleiman, executive director of non-Saudi property ownership at the authority, said in November that areas designated for foreign ownership in Riyadh, Jeddah and the holy cities of Makkah and Madinah were still under review and would be announced “very soon” alongside the executive regulations governing the new rules.
He said those areas would be “very wide” and include what are known as mega projects, with foreign ownership ratios expected to range between 70 percent and 90 percent.
Bin Suleiman added that buyers would be required to be Muslim to purchase property in the two holy cities, but would otherwise face limited restrictions.
“In general, there are no major conditions, and we do not want to impose constraints. When comparing the current law with the updated one, the difference will be clear,” he said.
Market expectations
Commenting on the imminent implementation of the updated system, several real estate experts told Asharq Al-Awsat that the law would generate additional demand for ready built housing units and increase liquidity in the property market.
They said it would also encourage international companies to establish headquarters and projects in the Kingdom, supporting economic activity and laying the foundation for a more stable and growing real estate sector.
They expect the positive impact to be most evident in Riyadh, Jeddah, Makkah, Taif and Madinah, as well as cities near tourist destinations, with initial effects emerging in the third and fourth quarters of 2026 and extending into 2027.
Real estate expert and marketer Saqr Al-Zahrani said the system’s implementation would mark a turning point for the Saudi property market by expanding the base of market participants and prompting many expatriates to move from renting to ownership, particularly in permitted cities.
This shift, he said, would create additional demand for ready built units and planned residential communities, boosting sales activity and market liquidity.
Raising property quality
Al-Zahrani added that opening commercial, industrial and agricultural ownership to foreigners across all cities would give international companies stronger incentives to establish operations in Saudi Arabia, supporting economic growth and long term real estate sector stability.
He said one of the first expected changes would be an improvement in property quality, as developers move toward higher specifications and better planning to meet the needs of a broader buyer base.
The market is also likely to see an increase in organized supply, driven by the entry of local and international investors and developers targeting new demand.
The updated system, he said, would support price stability, as ownership by expatriates and foreigners tends to be long term, reducing short term speculation.
It would also enhance transparency and governance through accompanying legal and regulatory controls, while creating wider opportunities for the financing sector to develop tailored products for expatriates and foreigners, boosting lending activity and liquidity.
Al-Zahrani said the announcement of the system’s implementation would trigger immediate inquiries and interest, but the real impact on transaction volumes would emerge gradually, with initial signs expected in the second quarter of 2026, as the first deals are completed.
Clear indicators such as higher trading volumes, faster project delivery and increased foreign investor participation are likely to materialize in the third and fourth quarters, once the market has absorbed the executive regulations and begun to interact with them in a stable manner.
He said the first year of implementation would be a transition period, with the strongest effects becoming evident in the second half of 2026 and beyond.
Varying impact by geography
Real estate expert Ahmed Al Faqih said the system’s impact would vary by location, with the strongest positive effects expected in the Makkah region and its cities, including Jeddah and Taif, as well as Madinah. Riyadh, he said, would also play a prominent role in attracting non-Saudi capital for both ownership and investment.
Al Faqih said capital targeting tourism investment would likely focus on cities near tourist areas, such as Taif, Abha and Jazan, as well as Tabuk due to its proximity to the Neom project.
He expects the first year of implementation to serve as a testing and evaluation phase, with the system’s impact becoming more evident in 2027. He said the law would support key Vision 2030 objectives, including income diversification and reducing reliance on oil, while creating hundreds of thousands of job opportunities for Saudi men and women.
System incentives
The updated law aims to regulate real estate ownership by non-Saudis in line with Vision 2030, attract foreign direct investment into the Saudi property market and increase the sector’s contribution to the economy.
It also seeks to retain global talent by enabling long term settlement, raise the contribution of non-oil sectors, support sustainable economic growth and improve urban living standards.
Under the law, non-Saudis are permitted to own property or acquire rights within geographic areas designated by the cabinet, based on a proposal from the Real Estate General Authority and approval by the Council of Economic and Development Affairs. This includes specifying eligible rights, maximum ownership ratios and related controls.
The law also allows a non-Saudi resident natural person to own one residential property outside the designated geographic scope, excluding Makkah and Madinah. Ownership in those two cities requires the buyer to be Muslim.
Non listed companies partly owned by non-Saudis are permitted to own property within the designated areas, including Makkah and Madinah, provided they are established under Saudi company law. They may also own property outside those areas for operational purposes or employee housing, as defined by the regulations.
Listed companies, investment funds and special purpose entities are allowed to own property across the Kingdom, including Makkah and Madinah, in accordance with rules issued by the Capital Market Authority in coordination with the real estate authority and other relevant bodies.
The law stipulates that its application does not affect rights granted under other systems, such as the Premium Residency Program or Gulf Cooperation Council agreements, and that foreign ownership does not confer any additional privileges beyond legal rights.
It also introduces a fee of up to 5 percent of the property transaction value for non-Saudi ownership, with details to be set out in the executive regulations.
Violations may result in fines or warnings, while providing misleading information can lead to fines of up to 10 million riyals and, in some cases, court ordered sale of the violating property.
