Saudi Arabia has released the full text of a landmark law governing real estate ownership by non-Saudis, marking a deliberate shift in the kingdom’s approach to foreign investment and property rights. The bill, approved by the cabinet earlier this month and published in the Umm Al Qura official gazette, will become effective 180 days after publication. This move signals a significant reorientation of Saudi policy toward real estate and investment, with a framework designed to balance liberalization with strategic safeguards. The new law explicitly protects all pre-existing legal property rights held by non-Saudis prior to its enactment, ensuring continuity and reassurance for existing foreign stakeholding as the regime shifts toward clearer, centralized oversight.
Overview of the Law and Its Core Aims
The newly published law fundamentally restructures how non-Saudis—whether individuals, corporate entities, or non-profit organizations—may engage with property within the Kingdom. It authorizes non-Saudis to own property or to hold other real rights within zones that will be defined by the Council of Ministers. The scope of the rights is broad and purposive: usufruct (the right to beneficial use), leaseholds, and other real rights may be designated to foreign owners. These rights are not blanket entitlements; they are bounded by geographic and usage-based restrictions designed to align ownership with national planning, security, and economic objectives. The law thus creates a structured, permission-based approach to foreign ownership, balancing openness with tightly controlled parameters.
A central principle outlined in the act is that all non-Saudi property rights created under the new framework will be clearly governed by registration and oversight mechanisms. The design ensures that rights can be legally recognized, enforced, and transferred only through formal procedures, thereby reducing ambiguity and dispute potential in cross-border property activities. Importantly, the statute preserves existing rights held by non-Saudis prior to the law’s enactment, a provision that avoids disruption to ongoing investments and respects the legal status of property claims accrued before the reform.
The law also signals a measured stance toward two critical areas: ownership in the holy cities of Makkah (Mecca) and Madinah, and the treatment of foreign ownership in zones outside these cities. The regulatory architecture acknowledges religious and cultural sensitivities by maintaining stringent controls in the two holiest locales. Simultaneously, it creates structured pathways for foreign ownership in other parts of the country, subject to rules that govern geographic boundaries and permissible use cases. A key policy objective is to attract foreign investment while safeguarding national interests, urban planning integrity, and social cohesion.
Executive mechanisms are introduced to operationalize these aims. Ownership zones will be designated by the Council of Ministers, guided by recommendations from the Real Estate General Authority and with the express approval of the Council of Economic and Development Affairs. This tri-partite process ensures that zoning decisions reflect both market dynamics and macroeconomic strategy. The law also empowers the government to define ownership limits and the duration of usufruct rights within each zone, thereby embedding a clear cap on how long foreign interests may exert control or access to property in designated areas.
In terms of governance and implementation, the act contemplates a phased rollout. The introduction of a national real estate registry serves as the backbone for recognizing, recording, and regulating foreign property rights. The registry will be the formal locus for establishing legal ownership or rights, thereby providing a transparent, centralized repository that can be audited and monitored by authorities. The combination of zone designation, rights delineation, and mandatory registration collectively creates a comprehensive framework intended to reduce legal uncertainty and foster confidence among foreign investors and domestic institutions alike.
The law also contemplates a clear regulatory trajectory. Executive regulations will be issued within six months, detailing geographic boundaries, operational procedures, and the practical steps necessary to implement the law’s provisions. This timeline underscores the government’s commitment to timely clarity and predictable administration for market participants. In addition, the framework it supersedes is the earlier foreign ownership regime established under Royal Decree No. M/15 in 2000, marking a substantive departure from the previous paradigm and signaling a move toward a unified framework for all foreign ownership activities.
Designated Zones for Foreign Ownership and Rights Granted
A defining feature of the new law is the establishment of designated zones where foreign ownership rights will be permitted, accompanied by explicit constraints. These zones are not random or unbounded; they will be carefully delineated by the Council of Ministers, based on thorough recommendations from the Real Estate General Authority and with the requisite approval from the Council of Economic and Development Affairs. The zoning process will consider factors such as ownership percentages, the duration of usufruct rights, and the specific uses allowed within each zone. By constructing zones with predetermined caps and timelines, the policy aims to steer investment toward areas aligned with national economic strategies, urban development plans, housing needs, and infrastructure priorities.
Within these zones, non-Saudi individuals and entities will be permitted to own property or hold other real rights, subject to restrictions designed to preserve public interest and strategic objectives. For example, usufruct rights—where a foreign owner can use and benefit from a property without owning it outright—will be subject to limits on duration and scope, ensuring that asset ownership remains aligned with long-term national plans. Leaseholds will likewise be regulated to define maximum terms, renewal options, and the types of property that can be leased to foreign investors, including residential, commercial, and mixed-use assets. The precise percentages of ownership available to foreign buyers and the permitted durations of usufruct are to be established within the designated zones, allowing the state to calibrate risk, liquidity, and control across diverse regions and asset classes.
The zones will thus operate as controlled environments in which foreign involvement can be expanded methodically as confidence grows, regulatory capacity strengthens, and performance metrics validate the policy’s objectives. Notably, the law acknowledges that zones may be tailored to reflect different economic imperatives—ranging from housing and mixed-use developments to commercial corridors, industrial zones, or strategic investment districts—while maintaining a centralized framework that secures national oversight and alignment with long-term development goals. This zone-based approach ensures that foreign ownership does not occur haphazardly but is integrated into planning channels that facilitate orderly growth and measurement.
The scope of rights within these zones includes, but is not limited to, usufruct and leasehold arrangements. The law also contemplates other forms of real rights that may be designated as necessary to achieve policy aims. Each right will be defined with careful attention to legal enforceability, transferability, and compatibility with existing regulatory regimes. Even with these expansive potential rights, the regime retains checkpoints to protect national interests, including geographic restrictions, usage-based constraints, and compliance obligations that foreign owners must meet to maintain their rights. The overarching design is to create a framework that is flexible enough to adapt to evolving market conditions while being sufficiently prescriptive to prevent misalignment with strategic priorities.
In addition to the rights granted to individuals and corporations within zones, the law clarifies how ownership rights will be recognized and enforced in the broader national registry. Registration is not a mere formality; it is the gate through which legal ownership or rights are validated and protected. This feature ensures legal certainty for foreign buyers, lenders, and developers who rely on enforceable titles and clear transfer mechanisms. The registry will hold the official record of foreign property rights, preventing discrepancies and enabling smoother dispute resolution, mortgage financing, and investment planning.
Holy Cities Restrictions and Personal Housing Provisions
Despite the liberalization embedded in the regime, the law preserves a stringent regime for the holy cities. Ownership in Makkah and Madinah remains prohibited for non-Saudi individuals and entities, except under defined conditions for individual Muslim owners. This carve-out acknowledges religious considerations while preserving the core intent of maintaining strict control in these sacred locations. The policy thus balances openness elsewhere with reverence for religious sensitivities in the two holiest sites.
Beyond the holy cities, a limited personal housing provision allows foreign residents to own a single residential property outside restricted zones for personal housing purposes. This clause provides a direct benefit to individuals who are legally residing in the Kingdom, offering them a tangible stake in the housing market without enabling broad commercial or investment-driven ownership. It serves as a practical mechanism to attract and retain foreign residents who contribute to the economy while ensuring that personal use remains tightly bounded and supervised by the regulatory regime.
The design of these personal housing provisions reflects a dual objective: to make the Kingdom more hospitable to foreign residents and to maintain strict governance over sensitive geographic areas. The policy is intended to help diversify housing demand, support urban housing supply, and stabilize markets by allowing a controlled form of foreign participation in the residential segment, all while guarding strategic assets and sacred precincts from speculative or non-resident concentration.
For foreign-owned non-listed companies, licensed investment funds, and special-purpose entities, ownership across the Kingdom is permitted, including in Makkah and Madinah, but only when the ownership serves operational needs or is linked to employee housing. This nuance is intended to ensure that corporate activity translates into real productivity and living arrangements for workers, rather than enabling speculative capital gains in sacred or strategically sensitive zones. In practice, this means that foreign corporate entities can acquire real estate to support their business operations, provide employee housing, or fulfill other legitimate operational requirements, all within the legal constraints governing zones and ownership terms.
Conversely, listed companies and investment vehicles are allowed to own property in line with Saudi financial regulations. This alignment with existing financial governance frameworks ensures consistency with market norms and investor expectations while maintaining oversight through established regulatory channels. By distinguishing between non-listed foreign entities and publicly traded or regulated investment vehicles, the law creates a nuanced hierarchy that accommodates different risk profiles, governance structures, and compliance capabilities.
Diplomatic missions and international organizations are also positioned within the regulatory scheme as legitimate property holders for official use, subject to the approval of the Foreign Ministry and the principle of reciprocity. This provision recognizes the practical needs of international entities operating within the Kingdom while simultaneously enforcing the principle that foreign engagement in property rights should be governed by mutual diplomatic-specific arrangements, ensuring equity and consistency with international practices.
Summary of Key Provisions by Category
- Non-Saudi individuals, corporations, and non-profit organizations may own property or hold real rights within designated zones.
- Rights include usufruct, leaseholds, and other recognized interests, with geographic and usage-based restrictions.
- All non-Saudi property rights created after enactment require registration in the national real estate registry to be legally recognized.
- The Council of Ministers, guided by the Real Estate General Authority and with the Council of Economic and Development Affairs’ approval, will designate zones and set ownership caps and usufruct durations.
- Holy cities retain ownership restrictions; foreign ownership is prohibited there except under specific conditions for individual Muslims; a single foreign residential property may be owned by eligible residents outside restricted zones.
- Foreign-owned non-listed companies, licensed funds, and SPVs may own real estate for operational needs or employee housing, including in Makkah and Madinah.
- Listed companies and investment vehicles may own property in accordance with Saudi financial regulations.
- Diplomatic missions and international organizations may own property for official use, subject to Foreign Ministry approval and reciprocity.
- Overall framework supports strict registration, enforcement, and oversight, with penalties for violations and an appeals process.
Corporate Ownership, Operational Needs, and Investment Vehicles
The law distinguishes between the different categories of foreign actors and the specific ownership rights they may wield within the designated zones. Foreign-owned non-listed companies, licensed investment funds, and special-purpose entities are empowered to acquire real estate across the Kingdom, including in Makkah and Madinah, but with a clear caveat: the ownership must be tied to operational needs or to provide housing for employees. This provision aligns property rights with real economic activity, ensuring that foreign investment translates into tangible improvements in business capacity and workforce welfare rather than speculative inflows.
In practice, this means that entities structured for international investment or cross-border operations can secure properties to house staff, establish regional offices, or support production and logistics activities. The “operational needs” criterion provides flexibility for corporate expansion while preserving policies aimed at maintaining national sovereignty over strategic assets and ensuring that land use aligns with development plans and security considerations. The clause also emphasizes employee housing as a legitimate use, which can stimulate the KSA’s labor market and support the growth of foreign-operated ventures by addressing housing pressures faced by expatriate workers.
For listed companies and general investment vehicles, ownership is permitted in a manner consistent with Saudi financial regulations. This alignment helps integrate foreign property investments into established market governance frameworks, promoting investor confidence and ensuring that property acquisitions are subject to the same disclosure, governance, and compliance standards as other financial activities. The separation between listed and non-listed entities reflects an intent to balance market access with robust regulatory control, preserving market integrity while encouraging broad participation from well-capitalized, regulated institutions.
Diplomatic missions and international organizations enjoy a tailored framework that permits property ownership for official use, contingent on Foreign Ministry authorization and reciprocity. This arrangement recognizes the practical needs of international actors operating within the Kingdom, ensuring that diplomatic and institutional functions can be carried out efficiently while maintaining mutual respect for the sovereignty and laws of the host state. Reciprocity ensures that Saudi entities receive comparable rights in other jurisdictions where they have official functions, reinforcing a balanced approach to international engagement in real estate markets.
Practical Implications for Businesses
- Foreign entities may purchase or lease property in designated zones to support core operations, subject to zone-specific caps and conditions.
- Employee housing provisions support workforce stability, potentially improving recruitment and retention of foreign talent.
- Listed companies benefit from alignment with existing financial regulatory regimes, facilitating capital flows and governance.
- Non-listed and SPV-type entities gain a pathway to secure operational bases in Saudi territory, expanding regional footprints while remaining within regulatory boundaries.
Diplomatic and International Organizations: Official Use and Reciprocity
A dedicated provision covers the treatment of diplomatic missions and international organizations, acknowledging their essential role in global governance, diplomacy, and multinational operations. These entities will be allowed to own property for official use, but their rights are contingent upon the Foreign Ministry’s approval and the principle of reciprocity. In practice, reciprocity ensures that Saudi authorities assess foreign ownership rights in other countries on a like-for-like basis, promoting fairness and predictable treatment for Saudi interests abroad.
This diplomatic accommodation is designed to facilitate smooth operating environments for foreign missions, embassies, consulates, and international organizations conducting their official business within the Kingdom. By formalizing these arrangements, Saudi Arabia supports international cooperation while preserving sovereignty and ensuring that foreign use of land aligns with national policies and security considerations. The explicit requirement for Foreign Ministry clearance and reciprocal arrangements provides layered oversight, reducing the risk of mismatched expectations and potential disputes.
The reciprocity principle also signals strategic diplomacy. It creates an incentive for treaty-like alignment between Saudi policies and those of partner states, encouraging cooperation and mutual understanding in the context of international real estate engagements. It also clarifies that bilateral agreements or customary diplomatic practice will be harmonized with domestic law, avoiding gaps that could otherwise lead to ambiguity in ownership, transfer, or use rights for foreign missions operating within the Kingdom.
Acceptance of diplomatic and international organizations’ property rights under this framework enhances Saudi Arabia’s appeal as a host country for international institutions and global diplomacy. It also reinforces the government’s broader aim of integrating foreign actors into the economic and social fabric of the country, while ensuring that foreign participation remains governed by transparent, legally enforceable standards.
Compliance, Registration, Transfer Fees, Penalties, and Enforcement
A central pillar of the new regime is mandatory registration. Non-Saudi entities seeking to acquire real estate must register with the relevant authorities before completing any purchase or transfer. The law makes clear that legal ownership or any form of real rights will be recognized only upon registration in the national real estate registry. This registration requirement serves as the official gateway to ownership, ensuring that rights are publicly recorded, traceable, and enforceable, which in turn supports reliable lending, clear title, and robust dispute resolution mechanisms.
To enforce compliance and deter violations, the law introduces a real estate transfer fee of up to 5% for transactions involving non-Saudis. This fee structure creates a financial incentive for orderly, compliant transfers and contributes to state revenue while encouraging careful due diligence and appraisal in cross-border acquisitions. The regime’s enforcement framework includes penalties for breaches, with fines reaching up to SAR 10 million. In the most severe cases, penalties may include forced sales or other coercive measures, particularly in scenarios involving falsified documents or other fraudulent practices. Proceeds from such compelled sales are to be transferred to the state after deductions for necessary costs.
A dedicated committee under the Real Estate General Authority will supervise violations and impose sanctions. This body will be empowered to investigate, adjudicate, and sanction non-compliance, ensuring that enforcement is systematic, predictable, and aligned with the law’s broader objectives. Those affected by the committee’s decisions have recourse to appeal to administrative courts within a 60-day window, preserving due process and judicial oversight in the enforcement process. The appeals mechanism is designed to provide timely remedies while maintaining the integrity of the regulatory regime and preventing undue delays in resolving disputes.
Administrative Structure and Oversight
- A real estate transfer fee mechanism to deter non-compliance and support state revenue.
- A dedicated enforcement committee within the Real Estate General Authority to monitor violations and impose sanctions.
- An administrative justice pathway allowing appeals within 60 days of committee decisions.
- A clear linkage between registration, enforcement, and dispute resolution to ensure coherence across the regime.
Repeal of the Previous Rules for GCC Citizens and Integration into a Single Framework
An important consolidation in the new law is the repeal of the previous ban on real estate ownership by Gulf Cooperation Council (GCC) citizens in Makkah and Madinah. By removing the GCC-specific restrictions in these holy cities, the framework creates a unified legal approach for all non-Saudi individuals and entities, irrespective of regional or national origin. The amendment aligns Saudi policy with a broader, more inclusive approach to foreign ownership while preserving the essential safeguards that govern sacred spaces and national interests. The harmonization under a single legal framework is intended to reduce regulatory fragmentation, simplify compliance for investors, and improve clarity for foreign participants operating across multiple jurisdictions within the Kingdom.
Executive regulations, which will spell out geographic boundaries and the procedural steps for implementation, are expected to be issued within six months. This timelines underscores the government’s intent to translate the policy into operational rules swiftly, reducing uncertainty for prospective buyers and institutions seeking to align their strategies with the new framework. The new statute thus supersedes the older foreign ownership regime established under Royal Decree No. M/15 in 2000, marking a decisive break with the past and signaling the state’s intent to modernize and streamline its approach to foreign involvement in real estate.
Implications of the Repeal
- GCC citizens, previously constrained by a separate regime in specific holy sites, now operate under a standardized system similar to other non-Saudi actors.
- The unification reduces regulatory complexity for international buyers, funds, and corporate entities looking to deploy capital across Saudi markets.
- It creates predictable, business-friendly conditions by consolidating rights and obligations under a single statutory framework.
- The six-month window for executive regulations provides a concrete, near-term path to practical application and compliance.
Implementation Timeline, Executive Regulations, and Compliance Readiness
The law lays out a concrete timeline for implementation. Executive regulations, which will define precise geographic boundaries, detailed procedures, and the practical steps necessary to operationalize the law, are expected to be issued within six months. This six-month horizon is designed to provide regulatory clarity while allowing time for the Real Estate General Authority, the Council of Ministers, and other relevant bodies to finalize operational guidelines, registries, and enforcement protocols. The presence of these executive regulations will enable a smoother transition for potential foreign buyers, property developers, and financial institutions by offering explicit procedures, forms, timelines, and compliance requirements.
As with any major reform, the transition period will likely involve transitional arrangements to handle existing foreign ownership arrangements, contractual obligations, and ongoing investments. The law’s explicit commitment to protecting pre-existing legal rights for non-Saudis ensures that investors with established holdings will not be disadvantaged by the reform, providing a stable baseline for portfolio adjustments, renegotiations, and restructured finance arrangements while the new regime takes full effect.
The reform ultimately replaces the older foreign ownership regime, which had been in place since 2000, and positions Saudi Arabia for a more modern, market-oriented approach to real estate transactions involving non-Saudis. The six-month implementation window will require coordinated action across government ministries, regulatory authorities, and private sector participants, including law firms, banks, developers, and corporate counsel. The coordination will center on establishing the national real estate registry, setting up the zone-designation process, and finalizing enforcement and appeals mechanisms to ensure speedy, fair adjudication of disputes and compliance issues.
Practical Readiness Steps for Stakeholders
- Foreign buyers: monitor for the publication of the executive regulations detailing zone boundaries, permissible uses, and documentation requirements.
- Banks and financing institutions: prepare for new title and registration processes to support mortgage lending and collateral arrangements for foreign buyers.
- Developers and investment funds: evaluate project portfolios against zone specifications to determine eligibility for ownership, usufruct, or lease arrangements.
- Legal and advisory firms: align due diligence, risk assessments, and compliance checklists with the forthcoming registry and regulatory procedures.
- Diplomats and international organizations: anticipate alignment of official-use property rights with Foreign Ministry protocols and reciprocity considerations.
Implications for Investors, Markets, and Strategic Policy
The full enactment of this law carries broad implications for foreign investment, real estate markets, urban development, and economic policy in Saudi Arabia. By creating a formalized, zone-based system for foreign ownership and establishing a national real estate registry, the regime aims to reduce uncertainty, improve enforceability of titles, and attract capital by offering clear, regulated pathways for investment. The explicit protections for pre-existing rights demonstrate a balanced approach, acknowledging the existing global capital flows while implementing a robust governance framework to prevent speculative exploitation and ensure alignment with the Kingdom’s strategic priorities.
In markets where zones are effectively designed to channel foreign capital into housing, commercial development, or industrial hubs, the law could stimulate supply responses, influence pricing dynamics, and alter demand patterns. The ability for non-Saudi entities to own real estate for operational purposes or to house employees may also influence corporate localization strategies, migration trends of skilled labor, and the geographic distribution of foreign-owned assets across urban centers. The restriction in the holy cities, coupled with the right to own a single personal residence outside restricted zones, may shape the distribution of expatriate housing demand and the types of housing developments pursued by developers and investors.
Diplomatic and international organization ownership provisions are likely to bolster Saudi Arabia’s attractiveness as a hub for international operations, research collaborations, and multinational governance activities. The reciprocity-based approach ensures that Saudi interests are safeguarded in other jurisdictions while enabling international actors to carry out official work with greater ease in the Kingdom. This could have downstream effects on international trade, investment promotion, and cross-border collaboration in sectors that benefit from a stable and predictable regulatory environment for property rights.
From a regulatory perspective, the introduction of a 5% transfer fee and the imposition of up to 10 million SAR in penalties establish a clear deterrent against non-compliant behavior. The enforcement framework, including a dedicated committee under the Real Estate General Authority and the ability to appeal to administrative courts, creates a system of checks and balances designed to ensure accountability and due process. Investors may thus anticipate a transparent mechanism for resolving disputes, with a defined pathway for contesting decisions and ensuring compliance with the new regime.
The law’s modernization, including repealing the prior GCC-specific restrictions and replacing the 2000 regime, signals Saudi Arabia’s intent to integrate foreign property ownership into a broader strategy of economic diversification, urban development, and global competitiveness. Executable regulations within six months will be crucial in transforming high-level policy into actionable procedures for market participants, lenders, and regulators to implement with confidence.
Conclusion
Saudi Arabia’s new law on foreign ownership of real estate represents a carefully calibrated reform designed to broaden access to property for non-Saudis while preserving essential safeguards. By allowing non-Saudi individuals and entities to own property or hold other real rights within clearly designated zones, the Kingdom opens new avenues for investment, development, and employment, all within a framework that emphasizes registration, oversight, and compliance. The retention of protections for existing rights ensures a stable transition, while the maintenance of strict controls in the holy cities underscores respect for religious and cultural priorities.
The key elements—zone designation by the Council of Ministers with guidance from the Real Estate General Authority and approval from the Council of Economic and Development Affairs, mandatory registration in a national registry, a 5% transfer fee, penalties up to 10 million SAR, and a structured appeals process—collectively create a robust governance architecture for foreign real estate activity. The repeal of the GCC citizens’ ban in Makkah and Madinah further unifies the framework, aligning Saudi policy with a streamlined, single legal regime for all non-Saudi purchasers. Executive regulations within six months will provide the operational specificity needed for market participants to implement the policy with confidence, while the legacy regime from 2000 is formally superseded.
For investors, developers, financial institutions, and international partners, the reform offers clearer pathways to participate in Saudi Arabia’s growing real estate market, with defined rights, responsibilities, and risk controls. As implementation progresses, stakeholders should monitor the publication of executive regulations, the delineation of zones, and the ongoing development of the national real estate registry, as these elements will determine the practical contours of foreign ownership and the pace at which opportunities materialize across the Kingdom.
