Saudi Arabia to officially open property market to foreigners as long-awaited law takes effect this month

Saudi Arabia will this month formally open parts of its real estate market to foreign buyers, bringing into force a long-awaited law that allows non-Saudis to own property in designated areas of the Kingdom.

The new Law on Non-Saudis’ Ownership of Real Estate, approved by royal decree last year and published in the official gazette in July 2025, came into effect on January 21 following a six-month transition period. This marks one of the most significant structural shifts in the Kingdom’s property market in decades and is closely aligned with the government’s broader economic diversification agenda under Vision 2030.

For months before the law was formally approved, developers, investors and advisers had been closely tracking its progress, with expectations building that Saudi Arabia would eventually follow other Gulf markets in easing restrictions on foreign ownership. While foreign investment in Saudi real estate has been permitted in limited forms since 2000, the new legislation replaces that older framework with clearer rules, wider eligibility and stricter enforcement.

Designated zones and clear limits

At the heart of the reform is a designated-zone model. Under the new law, non-Saudi individuals and entities may acquire ownership, usufruct or other rights in rem over property located within specific areas to be identified by the Council of Ministers, based on recommendations from the Real Estate General Authority (REGA).

These zones have yet to be formally published, but are widely expected to include selected districts in major economic centres such as Riyadh, Jeddah and parts of the Eastern Province. Outside the approved zones, foreign ownership remains restricted, subject to narrow exceptions.

The law allows non-Saudis to purchase residential, commercial, industrial and agricultural property within designated areas. For residential ownership, foreign residents of Saudi Arabia are granted an additional right to own one personal residence outside the zones, provided it is not located in the holy cities of Mecca or Medina.

Non-residents, by contrast, may only own property within the designated zones once these are announced.

Restrictions remain firmly in place for Mecca and Medina. Ownership in the two holy cities continues to be limited to Muslims, and even then subject to conditions. Foreign companies are generally prohibited from owning property in Mecca and Medina, except where Saudi-incorporated companies with foreign shareholders require real estate for operational purposes or employee housing, and where such ownership is permitted under the law and accompanying regulations.

Fees, thresholds and enforcement

The legislation introduces new financial and compliance obligations for foreign buyers. Property transactions involving non-Saudis are subject to a real estate transfer tax of 5 per cent, in line with existing Saudi rules, as well as an additional transfer fee that may bring the combined levy to as much as 10 per cent, depending on the structure of the transaction and future implementing regulations.

For certain investment activities, a minimum investment threshold of SAR 30 million ($8 million) applies, reflecting the government’s intention to attract longer-term capital rather than speculative inflows. All acquisitions must be registered in the national real estate registry to be legally effective, with notarisation barred for non-compliant transactions.

The law also establishes a tougher enforcement regime. Violations, including the provision of false information or ownership in prohibited areas, can result in fines of up to SAR10 million ($2.7 million) and, in serious cases, the forced sale of the property. Oversight is vested in a specialised committee under REGA, with decisions subject to appeal before the administrative courts.

Corporate and institutional access

Foreign companies, investment funds and non-profit organisations are among the major beneficiaries of the new framework. Both listed and unlisted entities may acquire property within designated zones to support their business activities, including offices, industrial facilities and staff accommodation.

Saudi companies with foreign ownership are treated differently depending on their status. Firms listed on Tadawul may own property across the Kingdom, including in Mecca and Medina, subject to Capital Market Authority rules. Unlisted companies with foreign shareholders may also acquire property in designated zones and, where necessary for operations, outside those zones under specified conditions.

Diplomatic missions and international organisations accredited in Saudi Arabia are explicitly permitted to own premises for official use, subject to approval by the Ministry of Foreign Affairs and reciprocity arrangements with their home countries.

Market context

The law comes into effect as Saudi Arabia’s property market sees sustained momentum. According to CBRE Middle East, the Kingdom’s non-oil economy accounted for 56 per cent of GDP in 2025, underpinning demand across residential, office, retail, hospitality and industrial segments.

Saudi Arabia’s development pipeline is among the largest globally, with around $440 billion in committed projects and a longer-term pipeline valued at $1.55 trillion. Giga-projects such as NEOM, Diriyah and the Red Sea developments dominate future supply, while more immediate activity has been concentrated in Riyadh, driven in part by the Regional Headquarters programme.

Office demand in the capital has remained particularly strong. Grade A rents rose 15 per cent year-on-year in 2025, with occupancy rates close to 98 per cent, while residential transactions grew nearly 18 per cent quarter-on-quarter in the third quarter, reaching SAR 7.7 billion in value.

These trends have been supported by a series of regulatory interventions over the past year, including the expansion of the White Land Tax to encourage development and a five-year rent freeze in Riyadh aimed at improving affordability.