Saudi Arabia, known for its rich cultural heritage and thriving economy, is taking a bold step towards attracting foreign investors by opening the door to real estate ownership. Historically, non-Saudi nationals faced significant restrictions when it came to investing in the Kingdom’s property market. However, recent reforms have signaled a new era, offering exciting opportunities for both local and international investors.
New law allowing foreigners to buy all kind of properties in Saudi Arabia
Saudi Arabia issued a directive in 2021 allowing non-Saudis, legal residents of the country to buy single property with some conditions. The reading of the law shows that it allows foreigners to own property everywhere in the Kingdom, including Makkah and Madinah. Based on this law, Foreigners will be able to purchase real estate of all kinds, including commercial, residential and agricultural properties.
Regulatory Framework and Investor Protection
To ensure a smooth transition and protect the interests of both local and foreign investors, Saudi Arabia has introduced a comprehensive regulatory framework. This framework outlines the rights and responsibilities of foreign property owners, establishes clear guidelines for investment procedures, and provides legal protection for investors. By implementing robust regulations, the Kingdom aims to instill confidence in the real estate market, safeguard investor interests, and promote long-term stability and growth.
Conditions of Real Estate Ownership and Investment by Non-Saudis
According to Saudi law, foreigners are allowed to own real estate in the Kingdom, according to the following conditions:
-Non-Saudi persons with legal status residing in the Kingdom are allowed to own real estate for their own residence, after obtaining a license from the Ministry of Interior.
– If foreigners own real estate or lands in Saudi Arabia for the purpose of investment, the total cost of the real estate investment project must not be less than 30 million riyals (subject to modification by the Council of Ministers according to what the Council deems appropriate).
– One of the most important conditions for foreigners to own property in Saudi Arabia for the purpose of investment is that the period of investment in the aforementioned property or any other property should not be less than five years from the date of registering its ownership.
-Foreigners are not allowed to own a property within the city limits of Makkah or Medina, while they are only allowed to rent for a maximum period of two years, with them allowed to extend the rental period once or twice.
– The Real Estate Property Law allows foreigners to own a property for private housing in the Kingdom of Saudi Arabia on the condition of obtaining approval from the Ministry of Interior, while legal persons, corporate headquarters and international bodies are required to obtain approval from the Ministry of Foreign Affairs.
Restrictions imposed on Real Estate Ownership and Investment by Non-Saudis
- Foreigners who possess an Iqama, regardless of whether it is a regular or Golden Iqama, are the only residents eligible to own property in Saudi Arabia. So not all foreigners meet this requirement.
- Individuals are not permitted to own property in sacred cities such as Makkah and Madinah, although they can obtain usufruct rights for a period of 99 years.
- Properties must be used exclusively for residential purposes, and obtaining additional permissions may be necessary for other uses.
- Approval from the relevant authorities is mandatory for property ownership. It is not allowed to own property in protected areas, including those near borders and military zones.
- The maximum size of a property that can be owned is 3,000 square meters, and each foreigner is limited to owning only one property.
Requirements for Foreigners to Buy Property in Saudi Arabia
- Fill out the application form (https://www.my.gov.sa/wps/portal/snp/servicesDirectory/servicedetails/8180
- Attach a copy of valid Iqama (Resident ID).
- Attach a copy of first passport registered when the applicant entered Saudi Arabia for the first time.
- Attach a copy of birth certificate of the applicant’s children who were born in Saudi Arabia.
- Employment verification letter that stated the applicant’s salary amount and certificate of good character.
- Attach a copy of the property deed that the applicant is seeking to own.
- Map of the building showing surrounding streets’ dimensions, names, building number and link it with the most prominent location in the district.
- A written acknowledgment by the applicant stating that the property will be occupied by his family.
- After completing all requirements, police will send documents to the Emirate, province or center to take the required action.
No fees have been imposed on the transfer of ownership, whether to foreigners or Saudis, according to the latest laws issued regarding foreigners’ ownership in Saudi Arabia and the ownership of real estate by non-Saudis in the Kingdom. In addition, the procedures for the ownership transfer process are completed within one hour if all conditions are met.
A Paradigm Shift in Real Estate Investment
Saudi Arabia’s decision to allow foreigners to own property is a significant paradigm shift that holds immense potential for the country’s real estate sector. The move aligns with the Vision 2030 reform plan, which aims to diversify the economy and reduce its dependence on oil revenue. By encouraging foreign investment in real estate, the Kingdom aims to boost economic growth, create job opportunities, and stimulate the construction industry.
Attracting Global Investors
Opening the real estate market to foreigners positions Saudi Arabia as an attractive destination for global investors. The move provides an opportunity for individuals, corporations, and institutional investors to participate in the country’s economic growth and capitalize on the potential of its real estate sector. As a result, Saudi Arabia can expect an influx of capital, expertise, and innovation from around the world, driving economic development and creating a vibrant property market.
Diversifying the Real Estate Landscape
Foreign investment in real estate will contribute to diversifying the Kingdom’s real estate landscape. The presence of international investors will introduce new concepts, designs, and technologies, elevating the quality and variety of properties available. Additionally, foreign investors will bring their expertise in property management, marketing, and sustainability practices, fostering a culture of innovation and professionalism within the industry.
Boosting Tourism and Hospitality
Saudi Arabia is actively investing in its tourism and hospitality sectors, aiming to become a global tourist destination. Allowing foreigners to own property aligns with this objective, as it encourages the development of hotels, resorts, and vacation homes to accommodate the growing number of visitors. With the ability to invest in these sectors, international investors can play a pivotal role in transforming Saudi Arabia into a vibrant tourism hub, attracting visitors from all corners of the globe.
Stimulating the Real Estate Ecosystem
The decision to open the real estate market to foreigners will have far-reaching effects on the entire real estate ecosystem. It will create a surge in demand for construction materials, services, and expertise, providing lucrative business opportunities for local companies. Moreover, the increased investment in real estate will drive the development of supporting industries such as property management, brokerage, and legal services, further strengthening the overall ecosystem.
The decision to allow foreigners to own real estate in Saudi Arabia marks an exciting chapter in the Kingdom’s economic development. By attracting global investors, diversifying the real estate landscape, and stimulating the overall real estate ecosystem, Saudi Arabia is set to experience a surge in economic growth and job creation.