Saudi Arabia allows foreigners to invest in property companies with Mecca, Madina operations

Dubai: Saudi Arabia has announced a significant policy shift by allowing foreigners to invest in real estate companies operating in the Holy Cities of Mecca and Medina.

According to Saudi Capital Market Authority (CMA), foreigners can choose listed real estate companies that own permanent or temporary property assets within the boundaries of Mecca and Medina.

The decision follows a similar move made three years ago, permitting non-Saudis to subscribe to real estate funds targeted at assets in the two Holy Cities. The initiative aims to boost investment, increase the financial market's attractiveness, and enhance its regional and international competitiveness.

According to the CMA, the policy is part of efforts to support the local economy by attracting foreign capital and providing necessary liquidity for current and future development projects in Mecca and Medina.

Foreign investment in real estate companies within Mecca and Medina will be restricted to shares of Saudi companies listed on the Tadawul or convertible debt instruments for shares, or both.

The regulations stipulate that the collective ownership by non-Saudi natural and legal persons cannot exceed 49% of a company's shares. An exception applies to foreign strategic investors, who are not permitted to own shares or convertible debt instruments in these companies under any circumstances.

The Kingdom is ramping up efforts to attract foreign investment into its real estate market. In the third quarter of 2024, the General Real Estate Authority issued over 130 licences for foreign real estate investments.

According to Abdullah bin Saud Al Hammad, CEO of the Authority, global investors have taken note of the ‘Kingdom’s attractiveness as a destination for global investment, the increasing opportunities for international investors in the Saudi real estate sector and the strength of its legislation’.

The real estate sector accounts for 12% of the Kingdom's GDP.