Saudi Arabia’s New Law Opens Property Ownership for Non-Saudis

Saudi Arabia has introduced a transformative real estate law that redefines property ownership for non-Saudis, marking a significant shift in the Kingdom’s regulatory landscape. Published in the Umm Al-Qura Gazette on July 25, 2025, and set to take effect on January 21, 2026, this law expands opportunities for foreign ownership, usufruct rights, and leaseholds across designated zones. As reported by the Saudi Gazette, the legislation aims to attract global investors, residents, and entities while maintaining strict controls, particularly in the holy cities of Makkah and Madinah. This move aligns with Saudi Arabia’s Vision 2030, which seeks to diversify the economy and enhance foreign investment.

Expanded Property Rights for Non-Saudis

The new law grants non-Saudis—including individuals, companies, and non-profit organizations—unprecedented access to real estate ownership and real rights in designated zones. These zones, to be determined by the Council of Ministers, will allow foreign investors to own properties, secure usufruct rights (the right to use and profit from a property), and enter leasehold agreements. The law also introduces flexibility for GCC nationals, lifting previous restrictions on property ownership in Makkah and Madinah under specific conditions.

However, the legislation maintains stringent restrictions in the holy cities. Foreign ownership in Makkah and Madinah is prohibited for non-Muslims, with limited exceptions for Muslim individuals under strict guidelines. This balance ensures that Saudi Arabia opens its real estate market while preserving the cultural and religious significance of these sacred areas.

Key Provisions for Ownership

• Designated Zones: The Council of Ministers, in collaboration with the Real Estate General Authority and the Council of Economic and Development Affairs, will define specific areas where non-Saudis can own property.
• Ownership Caps: The law introduces limits on the percentage of property ownership and the duration of usufruct rights, ensuring controlled foreign participation.
• Property Types: Ownership rights vary based on location, property type, and intended use, such as residential, commercial, or operational purposes.

Regulations for Foreign Residents

Foreign residents legally residing in Saudi Arabia can now own a single residential property for personal use, provided it is located outside restricted zones like Makkah and Madinah. This provision is a game-changer for expatriates, offering them the opportunity to invest in Saudi real estate for long-term stability. The law ensures that foreign residents meet specific eligibility criteria, such as legal residency status, to qualify for ownership.

This move aligns with Saudi Arabia’s efforts to make the Kingdom a more attractive destination for expatriates, fostering a sense of belonging and encouraging investment in the real estate market. By allowing foreign residents to own homes, the law supports the growing expatriate community in cities like Riyadh, Jeddah, and Dammam.

Corporate and Investment Entities

The law introduces significant opportunities for corporate entities and investment vehicles. Non-listed companies with foreign shareholders, licensed investment funds, and special-purpose entities can own real estate throughout the Kingdom, including in Makkah and Madinah, if the property serves operational needs or employee housing. This provision is particularly appealing for businesses looking to establish a presence in Saudi Arabia.

Listed companies and investment vehicles must comply with regulations set by the Saudi Capital Market Authority to acquire property. This ensures transparency and alignment with the Kingdom’s financial governance standards. The ability to own commercial properties or employee housing in strategic locations enhances Saudi Arabia’s appeal as a business hub.

Diplomatic and International Organizations

Diplomatic missions and international organizations can now own property for official functions or housing representatives, subject to approval from the Ministry of Foreign Affairs. The law introduces a reciprocity condition, meaning that property ownership is contingent on similar rights being granted to Saudi entities in the respective countries. This provision strengthens Saudi Arabia’s diplomatic ties while ensuring fairness in international property ownership.

Mandatory Registration and Fees

A cornerstone of the new law is the requirement for mandatory registration with the Real Estate General Authority before acquiring property. Non-Saudi entities must register to validate their ownership or usufruct rights in the national real estate registry. This ensures transparency and streamlines the process of tracking foreign property ownership.

Additionally, a real estate transfer fee of up to 5% will apply to transactions involving non-Saudis. This fee supports the Kingdom’s efforts to regulate the market and fund infrastructure development. The registration process and fee structure are designed to maintain accountability while encouraging foreign investment.

Enforcement and Penalties

The law introduces a robust enforcement mechanism to ensure compliance. Violations, such as providing falsified information, can result in fines up to SR10 million. In severe cases, authorities may order the forced sale of the property, with proceeds reverting to the state after deductions. A dedicated committee under the Real Estate General Authority will investigate breaches and impose penalties, with decisions appealable in administrative courts within 60 days.

This strict enforcement regime underscores Saudi Arabia’s commitment to maintaining a transparent and regulated real estate market, protecting both investors and the public interest.

Replacing the 2000 Legislation

The new law repeals Royal Decree No. M/15 of 2000, which previously governed foreign ownership in Saudi Arabia. The updated framework introduces a more comprehensive and flexible approach, aligning with the Kingdom’s economic goals under Vision 2030. Executive regulations, expected within six months from July 2025, will provide detailed guidelines on implementation, geographic boundaries, and specific conditions.

This transition reflects Saudi Arabia’s evolving approach to foreign investment, aiming to attract global capital while maintaining regulatory oversight. The new law positions the Kingdom as a competitive player in the global real estate market, offering opportunities for investors, residents, and businesses alike.

Implications for Investors and Residents

The introduction of this real estate law has far-reaching implications for non-Saudis in the Kingdom. For foreign investors, the ability to own property in designated zones opens new avenues for real estate investment, particularly in high-growth areas like Riyadh and Jeddah. The flexibility of usufruct and leasehold rights provides options for those seeking temporary or long-term investments without full ownership.

For expatriates, the opportunity to own a residential property enhances quality of life and financial security, making Saudi Arabia a more attractive destination. Corporate entities benefit from the ability to acquire operational properties, supporting business expansion and employee welfare. The inclusion of diplomatic missions ensures that international organizations can establish a stable presence in the Kingdom.