Saudi Arabia Opens Investment Opportunities for Foreigners in Mecca and Medina Real Estate
Saudi Arabia's market regulator, the Capital Market Authority (CMA), has announced a new policy allowing foreign investors to invest in listed companies that own real estate in the holy cities of Mecca and Medina.
Saudi ArabiaForeign InvestmentReal EstateMeccaMedinaReal EstateJan 28, 2025
This move is part of the kingdom's broader economic reform agenda, Vision 2030, which aims to diversify the economy away from oil and boost revenue from tourism and religious pilgrimages.
The Islamic pilgrimage, comprising both Hajj and Umrah, is one of the most important sources of income for Saudi Arabia.
In 2019, the country earned approximately $12 billion from these pilgrimages.
The government has set an ambitious target to welcome 30 million pilgrims annually by 2030, significantly enhancing the economic impact of these religious journeys.
The decision by the CMA is expected to provide liquidity for both current and future projects in Mecca and Medina.
It also aligns with Saudi Arabia's efforts to transform its stock market, the largest in the Gulf Arab region with a market capitalization of 10.2 trillion riyals (approximately $2.72 trillion).
The market opened to foreign investors in 2015, leading to a significant increase in new listings and investment activity.
One of the immediate impacts of the new policy was observed in the Saudi stock market, where the benchmark index saw a 0.2% increase.
Companies like Jabal Omar Development Company and Makkah Construction and Development Company, which have substantial real estate holdings in Mecca, experienced a 10% rise in their stock prices.
However, the CMA has imposed certain restrictions to ensure that foreign investment remains within controlled limits.
Foreigners are allowed to invest through shares and convertible debt instruments but are excluded from becoming strategic foreign investors.
Additionally, non-Saudi nationals are not permitted to own more than 49% of the shares in the involved firms.
In a related development, the CMA had previously allowed non-Saudis to subscribe to real estate funds investing in Mecca and Medina in 2021.
This move was seen as a precursor to the current policy, aiming to gradually introduce foreign capital into the real estate market of the holy cities.
The new policy is expected to attract a diverse range of investors and provide a boost to the local economy, particularly in the areas of hospitality and infrastructure.
It also aligns with Saudi Arabia's broader vision to position itself as a global hub for religious tourism and investment.
Frequently Asked Questions
What is the new policy announced by the Capital Market Authority (CMA) of Saudi Arabia?
The CMA has announced that foreign investors are now allowed to invest in listed companies that own real estate in the holy cities of Mecca and Medina.
Why is this policy significant for Saudi Arabia's economy?
This policy is significant because it aims to attract foreign capital and provide liquidity for current and future projects in Mecca and Medina, thereby supporting the country's Vision 2030 economic reform agenda.
What restrictions are placed on foreign investors under this new policy?
Foreign investors are allowed to invest through shares and convertible debt instruments, but they cannot become strategic foreign investors. Additionally, non-Saudi nationals are not permitted to own more than 49% of the shares in the involved firms.
What impact has this policy had on the Saudi stock market?
The policy has had a positive impact on the Saudi stock market, with the benchmark index seeing a 0.2% increase, and companies like Jabal Omar Development Company and Makkah Construction and Development Company experiencing a 10% rise in their stock prices.
What is Saudi Arabia's target for pilgrims by 2030?
Saudi Arabia aims to welcome 30 million pilgrims annually for Hajj and Umrah by 2030, as part of its broader economic reform agenda.
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