New Saudi Law Opens Real Estate Market to Foreign Ownership

Saudi Arabia has introduced a new law allowing foreigners to own property under specific conditions. This law, published on July 25 in the Umm Al-Qura gazette, will be effective 180 days from its announcement. It marks a significant policy shift, enabling non-Saudis, including individuals and companies, to purchase real estate within designated zones.

The law maintains strict restrictions on property ownership in Makkah and Madinah. Only Muslims can own property there, and even then, under specific conditions. Foreigners can own one residential property outside these restricted areas for personal use only. This ensures respect for religious and cultural sensitivities while opening other regions for foreign ownership.

Foreign Ownership Zones

The Saudi government will define specific zones where foreigners can buy property. These areas will have rules about ownership percentages and duration of rights. The law includes various rights like full ownership, leases, and usufruct, which allows using and benefiting from property without owning it outright.

Foreign embassies and international organisations are allowed to own property for official purposes with approval from the Saudi Foreign Ministry. Both individuals residing in Saudi Arabia and foreign companies can own property. Individuals may own one home outside restricted zones for personal use, while companies can acquire properties to support business operations or house employees.

Registration and Penalties

Foreign property owners must register their ownership with the national real estate registry for legal recognition. A transfer fee of up to 5% applies to transactions involving foreigners. Violations can lead to fines up to SAR 10 million (approximately $2.67 million). In severe cases like using fake documents, authorities might force the sale of the property with proceeds going to the state after deductions.

A committee under the Real Estate General Authority will oversee rule enforcement and investigate violations. Property owners have the right to appeal committee decisions in administrative courts within 60 days.

Protection of Existing Ownership

The new law safeguards all foreign property rights that existed before its enactment, ensuring current foreign owners retain their rights. It also lifts a previous ban preventing Gulf Cooperation Council (GCC) citizens from owning property in Makkah and Madinah. Now, GCC citizens follow the same rules as other foreigners, simplifying the legal framework around foreign ownership in Saudi Arabia.

The Saudi government plans to issue executive regulations within six months detailing geographic boundaries for foreign ownership zones and explaining how the law will be applied practically. Foreign buyers should watch for these updates to understand where they can legally purchase property in Saudi Arabia.