Saudi Arabia's New Property Law: Opening Doors for Foreign Buyers with Key Restrictions
Saudi Arabia has passed a new property law allowing foreigners to own real estate across the Kingdom, excluding most of Makkah and Madinah, as part of its Vision 2030 economic diversification plan.
Saudi ArabiaReal EstateForeign InvestmentProperty LawVision 2030Real Estate NewsJul 29, 2025
The new law permits non-Saudis, whether individuals or companies, to invest in real estate under certain conditions. Previously, the country had stricter norms for outsiders to buy property, especially in the holy cities. While these restrictions still remain, the new law allows for significant relaxations elsewhere.
What the New Law Allows
Designated Ownership Zones
The Saudi government will identify specific zones where foreigners are permitted to purchase property. These areas will have clearly defined limits on ownership percentage, property types, and duration of rights.
Types of Property Rights
The law permits various forms of property interest, not just outright ownership. These include:
- Usufruct rights: Use and benefit without full ownership
- Leases: Long-term and short-term
- Full ownership: Subject to conditions in approved zones
Eligibility Criteria
- Foreign individuals legally residing in Saudi Arabia can own one residential property outside the restricted cities of Makkah and Madinah, strictly for personal use.
- Foreign companies can buy property across the Kingdom to support business operations or provide employee housing.
- Embassies and international organisations can own property for official use, with prior approval from the Saudi Foreign Ministry.
Restrictions in Makkah and Madinah
The holy cities of Makkah and Madinah remain largely off-limits:
- Only Muslim individuals are allowed to own property in these cities, and even then, only under strict conditions.
- Foreign residents are limited to one personal-use home outside these cities.
- These restrictions aim to protect the religious significance of the holy sites.
Ownership Rules, Fees, and Penalties
Registration Requirements
All foreign-owned properties must be registered with the National Real Estate Registry to ensure legal validity.
Transaction Fees
A transfer fee of up to 5% will apply to property transactions involving foreigners.
Penalties for Violations
Offenders may face:
- Fines up to SAR 10 million (approx. $2.67 million)
- Forced sale of property in cases of serious violations (e.g., forged documents)
- Legal appeals may be filed within 60 days in administrative courts.
- A regulatory committee under the Real Estate General Authority will oversee enforcement and compliance.
Special Provisions for Existing Owners and GCC Citizens
Existing foreign property rights prior to the law’s enactment are protected. The law removes a previous restriction on Gulf Cooperation Council (GCC) citizens, allowing them to own property in Makkah and Madinah under the new unified rules.
Next Steps: Awaiting Executive Regulations
Within six months, the Saudi government will issue executive regulations detailing:
- Specific geographic zones for foreign ownership
- Operational rules and procedures for implementing the law
Foreign investors are advised to monitor these updates closely to understand where and how they can invest.
Frequently Asked Questions
Can foreigners buy property in Makkah and Madinah?
No, foreigners are generally restricted from buying property in the holy cities of Makkah and Madinah, with only Muslim individuals allowed to own property there under strict conditions.
What types of property rights are available to foreigners?
Foreigners can have usufruct rights, leases, and full ownership, depending on the specific conditions and zones designated by the Saudi government.
What are the eligibility criteria for foreign individuals to buy property?
Foreign individuals legally residing in Saudi Arabia can own one residential property outside Makkah and Madinah, strictly for personal use.
What are the transaction fees for foreign property purchases?
A transfer fee of up to 5% will apply to property transactions involving foreigners.
What penalties can be imposed for violating the new property law?
Violators can face fines up to SAR 10 million, forced sale of property, and legal appeals within 60 days in administrative courts.
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