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The issue of foreigners owning real estate in Saudi Arabia is a significant topic of interest for many non-Saudis,especially with the substantial development in the real estate investment sector and Saudi Arabia’s diligent efforts to achieve its ambitious goals within Vision 2030.
The privileges, programs, and incentives provided by the Kingdom are major reasons that attract foreigners to invest in real estate in Saudi Arabia, making it one of the most appealing destinations for investors in this field.
Saudi Arabia is witnessing remarkable development in most sectors, especially the real estate sector, which holds significant importance in the national economy. In the context of promoting real estate and investment development, the Kingdom places special importance and valuable efforts in regulating and overseeing the procedures and conditions for real estate ownership in Saudi Arabia by non-Saudis. It is noted that until the year 2000, owning real estate in Saudi Arabia was limited to Saudi citizens only. However, with the development of the economy and the Kingdom’s strategic vision, significant amendments were introduced in the real estate policy to allow foreigners to own real estate in certain specified areas. This unprecedented openness is part of the plan to enhance the economic future of the Kingdom and attract foreign capital and investments.
The policies regarding the ownership of real estate by non-Saudis in Saudi Arabia have changed over the years in line with economic and legislative reforms:
Since the early 2000s, the Kingdom has adopted a legislative approach that gradually enables foreigners to own real estate in Saudi Arabia, leading up to the current laws that specify certain conditions and regulations for exercising this right. The issuance of the Foreign Investment Law in 2000, which allowed foreign investors to own the real estate necessary to manage their commercial activities, was one of the main steps in this direction.
These policies saw further development with the launch of Vision 2030, which aims to attract foreign investments and diversify the economy. In 2021, the Kingdom issued a decision allowing non-Saudis to own real estate in specified areas, including the Mecca and Medina regions, under certain conditions and regulations. This amendment was part of the government’s efforts to promote foreign investments in the Kingdom and achieve the objectives of Vision 2030. Thus, it can be said that the opportunity for non-Saudis to own real estate in Saudi Arabia began notably in 2000 and has gradually evolved over time to include greater facilities under Vision 2030.
Through this article, we aim to provide a clear and comprehensive overview of all aspects related to the ownership of real estate in Saudi Arabia by foreigners, contributing to facilitating investment decisions and enhancing understanding of the laws and regulations governing this vital sector.
- Who is the Foreigner Allowed to Own Real Estate in Saudi Arabia?
The system for the ownership of real estate by non-Saudis and its investment has clarified who the foreigner eligible to own property in the Kingdom exclusively is. They are:
– An individual who does not hold Saudi nationality.
– Non-Saudi companies.
– A Saudi company established or co-founded by, or in which shares are owned by, any natural or legal person not holding Saudi nationality.
Exceptions include:
– Banks and mortgage finance companies licensed by the Saudi Central Bank, provided that this is limited to their ownership of real estate for the purpose of financing those holding Saudi nationality, as well as real estate designated for their headquarters or branch offices necessary for their operations, according to regulations set by the Saudi Central Bank.
– Companies listed on the Saudi Stock Exchange, according to regulations set by the Capital Market Authority in coordination with relevant authorities.
– What the Council of Ministers determines according to regulations set for this purpose.
– Persons or categories that the Council of Ministers or the Prime Minister decides to include within this category.
- Ownership of Real Estate by Non-Saudi Investors in Saudi Arabia:
The first article of the “Non-Saudis’ Real Estate Ownership and Investment System” allows non-Saudi investors, whether natural or legal persons, licensed to practice any professional, craft, or economic activity to own real estate necessary for practicing that activity. This includes real estate necessary for their residence and housing of their employees, all subject to the approval of the licensing authority. If the license includes the purchase of buildings or land to build upon and invest by sale or lease, the total cost of the project (land and construction) must not be less than thirty million riyals. The Council of Ministers may amend this amount, and the real estate must be invested within five years of its ownership.
- Ownership of Real Estate by Non-Saudi Residents in Saudi Arabia:
The second article of the same system allows non-Saudi individuals residing legally in the Kingdom to own real estate for their private residence, subject to licensing by the Ministry of Interior.
- Ownership of Real Estate by Non-Saudi Entities in Saudi Arabia:
Article 3 of the same system, based on reciprocity, allows accredited foreign representations in the Kingdom to own the official residence and housing for their head and members. International and regional organizations, within the limits of their governing agreements, may own their official premises. All subject to licensing by the Minister of Foreign Affairs.
- Areas Exempt from Non-Saudi Ownership of Real Estate in Saudi Arabia:
Article 5 of the “Non-Saudis’ Real Estate Ownership and Investment System” states that it is not permissible for non-Saudis to acquire ownership or usufruct rights of real estate within the boundaries of Mecca and Medina, except through inheritance. An exception is made for the acquisition of ownership if it is associated with endowing the property according to Shariah rules to a specific Saudi entity, provided that the endowment stipulates that the Supreme Council for Endowments has the right of supervision over the endowed property. However, non-Saudi Muslims may lease property within the boundaries of Mecca and Medina for a period not exceeding two years, renewable for similar terms. It is worth noting that before the amendment of Article 5 by Royal Decree in 2021, there were strict penalties and fines for those violating these provisions, whether Saudi or foreigner.
Nevertheless, there are some exceptions to this rule:
– The Kingdom may allow foreign companies to own real estate in Mecca and Medina under specific conditions, such as banks and licensed mortgage finance companies owning real estate for the purpose of financing Saudi nationals. These properties must be designated for their main offices or branches, according to regulations set by the Saudi Central Bank.
– The Kingdom may also permit companies listed on the stock exchange to own real estate in Mecca and Medina, provided that this ownership is linked to the main offices or branches of the company, according to regulations set by the Capital Market Authority.
- Property Tax for Non-Saudis:
The Kingdom of Saudi Arabia has set a property tax for non-Saudis at 10% of the property’s value, payable to the Saudi Ministry of Finance.
Finally, we at Al-Haqban Law Firm and Legal Consultations commend the efforts of the Kingdom of Saudi Arabia and its vision regarding the opening of real estate investment avenues and attracting foreign investors, and the facilities and incentives provided in this field, achieving its goals within Vision 2030.