Image: Getty Images/ For illustrative purposes
Saudi Arabia has officially published the full text of a new law regulating real estate ownership by non-Saudis, following cabinet approval earlier this month.
The legislation, released in the Umm Al Qura official gazette on Friday, July 25, will come into effect 180 days from publication and marks a significant shift in the country’s real estate and investment policy, a Saudi Gazette report said.
Read-Saudi’s property ownership law for foreigners: What you need to know about it
The new law grants non-Saudis, including individuals, corporations, and non-profit organisations, the right to own property or obtain other real rights within designated zones to be defined by the Council of Ministers.
These rights include usufruct (beneficial use), leaseholds, and other interests, but will be subject to geographic and usage-based restrictions.
Importantly, all legal property rights held by non-Saudis prior to the law’s enactment will remain protected.
Key restrictions remain
Despite the liberalization, the law maintains a firm stance on property ownership in the holy cities. Ownership remains prohibited in Makkah and Madinah, except under specific conditions for individual Muslim owners. Foreign individuals legally residing in the country may own a single residential property outside restricted zones for personal housing purposes.
A central provision mandates that the Council of Ministers, based on recommendations from the Real Estate General Authority and with approval from the Council of Economic and Development Affairs, will designate the permissible zones for foreign ownership. These zones will include limits on ownership percentages and the duration of usufruct rights.
Foreign-owned non-listed companies, licensed investment funds, and special-purpose entities may acquire real estate throughout the Kingdom, including in Makkah and Madinah, provided the ownership is for operational needs or employee housing. Listed companies and investment vehicles are permitted to own property in line with Saudi financial regulations.
Diplomatic missions and international organisations will also be allowed to own property for official use, subject to Foreign Ministry approval and reciprocity.
Mandatory registration and oversight
Non-Saudi entities must register with the relevant authorities prior to acquiring real estate. Legal ownership or rights will only be recognised following registration in the national real estate registry.
To enforce compliance, the law introduces a real estate transfer fee of up to 5 per cent for transactions involving non-Saudis. Violations could incur fines of up to SAR10m, with penalties including forced sales in severe cases such as the use of falsified documents. Proceeds from such sales will be transferred to the state after necessary deductions.
A committee under the Real Estate General Authority will be established to monitor violations and impose sanctions. Affected parties can appeal committee decisions to the administrative courts within 60 days.
Repeal of previous rules for GCC citizens
The new law also revokes a previous ban on real estate ownership by Gulf Cooperation Council (GCC) citizens in Makkah and Madinah, thereby aligning the rules for all non-Saudi individuals and entities under a single legal framework.
Executive regulations, including geographic boundaries and implementation procedures, are expected to be issued within six months.
The law replaces the previous foreign ownership legislation issued under Royal Decree No. M/15 in 2000.
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