The law grants foreigners the right to own property in designated areas, including the capital Riyadh [Getty]
Saudi Arabia has approved a landmark legal change that will, for the first time, allow foreign nationals to own property across the kingdom, including in the holy cities of Mecca and Medina, under specific conditions.
The cabinet decision, chaired by Crown Prince Mohammed bin Salman in Jeddah on Tuesday, marks a historic shift in real estate regulation and is part of broader reforms aimed at opening the economy and attracting foreign investment.
The new law is expected to take effect in January 2026, with executive regulations to be published in the coming months.
It grants foreigners the right to own property in designated areas, including key cities like Riyadh and Jeddah, and in limited zones within Mecca and Medina, though ownership in the holy cities will be restricted to Muslims and confined to major projects such as Masar Makkah.
Majid bin Abdullah Al-Hogail, Minister of Municipal and Rural Affairs and Housing, said the reform is an extension of real estate legislation “designed to grow the sector and encourage direct foreign investment”.
He added that it would increase supply by drawing international developers into the Saudi market.
Economic ambitions and market reaction
The announcement triggered a sharp rally in real estate stocks, with some development firms seeing gains of over six percent in the Saudi stock exchange.
Analysts expect the reform to be a turning point for the sector, unlocking new capital, increasing project quality, and helping balance demand and supply.
The new law aligns with Vision 2030, Saudi Arabia’s ambitious transformation plan, which includes major urban developments like NEOM and the Red Sea Project.
According to Knight Frank, the capital Riyadh is expected to reach 1.7 million housing units by 2030, up from 1.4 million at the end of 2024, driven by infrastructure expansion and population growth.
The housing market recorded transactions worth SR 60 billion ($16 billion) in the first quarter of 2025 alone, 65 percent of which were residential in a sign of strong demand even before the law was passed.
The new regulations include safeguards to protect Saudi citizens, with geographic and market controls built into the system.
Ownership in Mecca and Medina will be limited to Muslims and subject to project-specific conditions, while areas open to foreign ownership in Riyadh and Jeddah will be defined by the General Real Estate Authority.
Economic editor Khaled Al-Rabiah told Al Arabiya Business that the reform was not aimed at raising housing prices but at improving the quality and diversity of projects by attracting specialised foreign investment.
Link to premium residency and long-term plans
The legal reform may also lead to a review of the current premium residency ‘iqama’ scheme, which requires ownership of property worth at least SR 4 million ($1.1 million).
Easing that threshold could expand the pool of foreign buyers, especially among the kingdom’s large expatriate population.
While challenges remain, including limited mortgage options for foreigners and the early stage of off-plan sale models, observers say the law could spark a new phase of growth, making Saudi Arabia’s real estate market one of the most dynamic in the region.
The country is targeting the delivery of over one million new homes and hundreds of thousands of hotel rooms, retail spaces, and office units by 2030.
The General Real Estate Authority is expected to release the executive regulations on the government’s Public Consultation Platform for Laws and Regulations (Istitlaa) within 180 days.
