Saudi Arabia Opens Up Mecca and Medina Property Firms to Foreign Investment
Saudi Arabia’s market regulator has announced that it will allow foreign investment in listed companies that own real estate within the holy cities of Mecca and Medina, aiming to attract more capital and support the country's Vision 2030 economic reform a
Saudi ArabiaForeign InvestmentReal EstateMeccaMedinaReal Estate NewsJan 27, 2025
This move is part of the kingdom's broader strategy to attract foreign capital and enhance liquidity for ongoing and future projects in these sacred sites.
The Islamic pilgrimage, which includes both the Hajj and Umrah, is one of the top revenue sources for Saudi Arabia.
In 2019, the country generated approximately $12 billion from these pilgrimages.
The annual Hajj and the year-round Umrah are crucial components of Saudi Arabia’s Vision 2030, an ambitious economic reform agenda that seeks to diversify the economy and reduce its dependency on oil revenues.
The CMA stated that the decision is aimed at attracting foreign capital and supporting the development of the two holiest cities.
This move is expected to boost the Saudi stock market, which is the largest in the Gulf Arab region with a market capitalization of 10.2 trillion riyals ($2.72 trillion).
On the day of the announcement, the benchmark index rose by 0.2%, driven by a 10% increase in the shares of Jabal Omar Development Company and Makkah Construction and Development Company, both of which have significant real estate holdings in Mecca.
The CMA clarified that foreign investment will be limited to shares and convertible debt instruments, excluding strategic foreign investors.
Additionally, foreigners will not be allowed to own more than 49% of the shares in these firms.
This move builds on previous efforts to open up the market to foreign investors.
In 2015, the stock market was opened to foreign investors to attract more funds, and in 2021, non-Saudis were allowed to subscribe to real estate funds focused on Mecca and Medina.
The Saudi government has set a target to welcome 30 million pilgrims annually by 2030, which is a key pillar of its Vision 2030 plan.
This new policy is expected to facilitate the development of infrastructure and services required to support the growing number of pilgrims, thereby contributing to the country's economic diversification and growth.
Frequently Asked Questions
What is the main reason for Saudi Arabia's new foreign investment policy?
The main reason for Saudi Arabia’s new foreign investment policy is to attract more capital and support the development of projects in the holy cities of Mecca and Medina, as part of the country's Vision 2030 economic reform agenda.
How much revenue does Saudi Arabia generate from pilgrimages?
In 2019, Saudi Arabia generated approximately $12 billion from the Hajj and Umrah pilgrimages.
What is the market capitalization of the Saudi stock market?
The market capitalization of the Saudi stock market is 10.2 trillion riyals ($2.72 trillion), making it the largest in the Gulf Arab region.
What is the limit on foreign ownership in these firms?
Foreigners will not be allowed to own more than 49% of the shares in the firms involved in this new investment policy.
When did the Saudi stock market first open to foreign investors?
The Saudi stock market first opened to foreign investors in 2015 in a bid to attract more funds.
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