In a significant move, Saudi Arabia has officially introduced a new law that allows foreigners to own or lease property within its borders. The law is part of the Kingdom’s wider efforts to diversify its economy and attract foreign investment. It will come into force 180 days after its publication in the official gazette, giving interested parties time to understand and prepare for the regulations.
This update is expected to impact investors and expatriates from across the GCC, especially residents in the UAE who are already familiar with regional property markets.
Who Can Own What Under the New Law?
The new regulation allows the following groups to legally purchase property in approved parts of the Kingdom:
- Foreign individuals residing in Saudi Arabia
- Licensed investment funds
- International companies
- Non-profit organisations
- Special-purpose entities
- Diplomatic missions and foreign governments (under specific conditions)
Foreign residents can now own one residential property for personal use, provided it’s located outside restricted zones. Meanwhile, companies and institutions will have more flexibility when buying real estate for operational use or employee housing.
This change creates a unified framework for non-Saudi ownership, making it easier for expats and investors to participate in the Saudi property market under clear guidelines.
Makkah and Madinah Remain Largely Off Limits
Despite the shift, the cities of Makkah and Madinah will continue to restrict foreign ownership. These cities hold deep religious significance, and the law maintains strict limitations to preserve their sanctity.
Exceptions will apply only in limited cases, particularly for individual Muslim owners who meet certain conditions. Importantly, any non-Saudi who already owns property in these cities under existing laws will retain those rights.
For the broader foreign population, these two cities will remain inaccessible when it comes to property acquisition, unless future provisions specify otherwise.
Corporate Ownership Comes With Conditions
While the law opens doors for businesses, the permissions come with boundaries. Foreign companies and funds may own property if:
- The property is intended for employee accommodation
- It is used to support business operations
- It is acquired through a licensed fund or entity recognised by Saudi authorities
For listed companies and diplomatic entities, further approvals will be required, and acquisitions must align with specific rules. Registration with the appropriate real estate authority is mandatory, and ownership rights will only be recognised once documented in the national registry.
Fees, Compliance, and Penalties
The new law also introduces a structured fee and penalty framework. A real estate transfer fee of up to 5% may be levied on transactions involving foreign buyers.
Violations can result in severe penalties:
- Fines of up to SAR 10 million
- In some cases, the state may take possession of the property, especially if false information was provided
- A dedicated committee will investigate and manage compliance cases
Decisions can be appealed in administrative courts within 60 days, giving entities a fair window to respond.
Expats and Investors Should Know
For residents in the UAE who frequently explore real estate opportunities in neighbouring markets, this new law presents a valuable opportunity:
- Individuals who hold valid Saudi residency can legally acquire property for personal living
- UAE-based businesses looking to expand can consider employee housing or operational facilities in the Kingdom
- Investors from Dubai and Abu Dhabi can potentially diversify their portfolios to include Saudi assets, particularly in fast-growing cities like Riyadh or Jeddah
That said, any move should be well-informed. Understanding the zoning regulations and ensuring proper documentation is essential before proceeding with any property-related transaction in Saudi Arabia.
A Measured Step Towards a Modernised Market
This new property ownership law marks a clear shift in how Saudi Arabia views foreign participation in its economy. While it protects the cultural integrity of key religious cities, it simultaneously opens up new investment channels across the rest of the country.
It’s a balanced approach—one that acknowledges the needs of a modern economy while preserving heritage. For UAE investors and businesses, it’s time to start paying closer attention to the Saudi real estate sector.
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