Saudi Arabia to Implement New Foreign Property Law

Saudi Arabia is set to implement a new legal framework governing non-Saudi ownership of real estate starting January 2026. This significant policy shift aims to attract foreign investment and stimulate the real estate market by allowing foreign residents and non-residents to own property under specified conditions.

Key Provisions of the New Law

The updated regulations introduce several notable changes:

• Residential Property Ownership: Foreign residents will be permitted to own one residential unit in most Saudi cities, excluding Makkah, Madinah, Jeddah, and Riyadh. Non-residents may own property in designated areas approved by authorities.
• Commercial, Industrial, and Agricultural Properties: Ownership of these property types will be open to foreigners in all cities without exception, signaling broader access for investment and business activities.
• Regulatory Framework: The law sets clear geographic boundaries, ownership limits, and legal controls. Non-Saudis can own property or acquire real rights only within areas designated by the Council of Ministers, based on recommendations from the Real Estate General Authority and approval from the Council of Economic and Development Affairs.
• Company Ownership: Non-listed companies with foreign ownership may own property within approved zones, including Makkah and Madinah, provided they are established under Saudi company law. Listed companies, investment funds, and special-purpose entities will be allowed to own property across the Kingdom, subject to controls issued by the Capital Market Authority.
• Fees and Penalties: A transaction fee of up to 5% of the property value will apply to foreign ownership. Violations may result in fines or warnings, with penalties up to SR10 million for submitting false information, and in some cases, court-ordered sale of the property.

Implications for Foreign Investors

This legislative change is expected to have several impacts:

• Increased Investment Opportunities: By opening up the real estate market, Saudi Arabia aims to attract foreign capital, contributing to economic diversification and growth.
• Regulatory Clarity: The clear guidelines and designated zones provide a structured framework for foreign investors, reducing uncertainty and facilitating informed decision-making.
• Compliance Requirements: Foreign investors must adhere to the specified regulations, including registration with relevant authorities and payment of applicable fees, to ensure legal ownership and avoid penalties.

Conclusion

The implementation of the new foreign property ownership law marks a significant milestone in Saudi Arabia's efforts to modernize its economy and attract international investment. Stakeholders are encouraged to familiarize themselves with the new regulations and assess the opportunities and responsibilities they entail.