Saudi ArabiaSaudi Arabia Special
Saudi Arabia Publishes New Law Allowing Foreigners to Own Property
Saudi Arabia has officially released the comprehensive details of its new law regulating real estate ownership by non-Saudis, following Cabinet approval earlier this month.
The law, published in the official gazette Umm Al-Qura, represents a significant shift in the Kingdom’s approach to foreign property ownership.
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Key Provisions of the New Law
Effective Date
- The law will take effect 180 days from its publication date.
Ownership Rights for Non-Saudis
- Non-Saudis—including individuals, companies, and non-profit entities—are granted the right to own property or obtain real rights over real estate within designated geographic zones determined by the Cabinet.
- Rights include:
- Usufruct (beneficial use)
- Leaseholds
- Other real estate interests
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Restrictions
- Ownership remains prohibited in certain areas, notably Makkah and Madinah, except for individual Muslim owners under specific conditions.
- The law preserves all real estate rights established for non-Saudis prior to this regulation.
Defining Allowable Zones
- The Council of Ministers, upon a proposal by the Real Estate General Authority, will define allowable zones for foreign ownership and set limits on ownership percentages and durations for usufruct rights.
Residential Property for Foreigners
- Foreign individuals legally residing in Saudi Arabia may own one residential property outside restricted areas for personal housing purposes (not applicable to Makkah and Madinah).
Corporate Ownership
- Non-listed companies with foreign shareholders, investment funds, and licensed special-purpose entities can acquire real estate throughout the Kingdom, including in restricted areas, if it supports operational needs or employee housing.
- Listed companies and investment vehicles may acquire property in accordance with Saudi financial market regulations.
Diplomatic Entities
- Diplomatic missions and international organizations can own facilities for official use and representative housing, subject to Foreign Ministry approval and reciprocity conditions.
Compliance and Registration
- Non-Saudi entities must register with the competent authority before acquiring property. Ownership becomes valid only after formal registration in the national real estate registry.
Fees and Penalties
- A real estate transfer fee of up to 5% applies to transactions involving non-Saudis.
- Penalties for violations can include fines up to SR10 million and, in severe cases, forced sale of the property with proceeds remitted to the state.
Investigative Committee
- A dedicated committee under the Real Estate General Authority will investigate violations and impose penalties, with decisions subject to appeal in administrative courts within 60 days.
Repeal of Previous Restrictions
- The new law repeals prior rules that prohibited GCC citizens from owning property in Makkah and Madinah, standardizing regulations for all non-Saudi entities.
Upcoming Regulations
- Executive regulations detailing implementation mechanisms and specific geographic boundaries are expected to be issued within six months.
This new law replaces the previous foreign property ownership legislation established under Royal Decree No. M/15 in 2000, marking a transformative step in Saudi Arabia’s real estate landscape.
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