Saudi Arabia's Real Estate Market Now Open to Foreign Investors, With Exceptions
Saudi Arabia has officially opened its real estate market to foreign ownership, marking a significant shift in policy to attract international investment. However, restrictions remain in place in the holy cities of Makkah and Madinah.
Real EstateForeign InvestmentSaudi ArabiaProperty MarketVision 2030Real Estate NewsJul 29, 2025
This development aligns with the Kingdom’s Vision 2030 initiative, which seeks to diversify the economy and boost non-oil sectors. While the new regulations offer broader opportunities for foreign investment, they retain strict limitations in the holy cities of Makkah and Madinah due to religious and cultural sensitivities.
What the New Law Permits
Foreign individuals and entities will now be allowed to purchase property in designated zones across Saudi Arabia. These zones will be clearly demarcated and subject to limits on the type of properties that can be bought, ownership percentages, and the duration of rights granted. The law introduces multiple forms of property interests, not just full ownership. These include usufruct rights (the ability to use and benefit from a property without owning it), lease agreements (both long-term and short-term), and full ownership (applicable only in government-approved areas).
Who Can Buy?
Foreign individuals legally residing in Saudi Arabia may purchase one residential property, provided it is located outside Makkah and Madinah, and used strictly for personal purposes. Foreign companies can buy property anywhere in the Kingdom to support business operations or employee housing. Diplomatic entities like embassies and international organizations may also acquire property for official use, but require prior approval from the Saudi Foreign Ministry.
Restrictions in Makkah and Madinah
Ownership rules in Makkah and Madinah remain largely unchanged. Only Muslim individuals may own property in these cities, and even that is allowed only under tightly regulated conditions. Foreigners are explicitly restricted from owning property for personal use in these areas. “These restrictions aim to protect the religious significance of the holy sites,” the official notification clarified.
Fees, Compliance, and Penalties
All properties purchased by foreigners must be registered with the National Real Estate Registry to ensure legal standing. A transfer fee of up to 5% will apply to property transactions involving foreign buyers. Violations—such as submitting forged documents—may attract severe penalties, including fines up to SAR 10 million (approximately $2.67 million), forced sale of the property, and the right to legal appeal within 60 days in administrative courts. A regulatory committee under the Real Estate General Authority will monitor compliance and enforcement.
Special Provisions and Transitional Rules
Foreigners who already own property prior to the law’s enactment will retain their rights. The law also lifts earlier restrictions on Gulf Cooperation Council (GCC) citizens, now allowing them to own property even in Makkah and Madinah under the updated unified legal framework.
What’s Next
The government is expected to issue executive regulations within six months, outlining the exact geographic zones open to foreign ownership and detailed operational rules and procedures. Foreign investors are advised to closely monitor these updates to determine where and how they can participate in the Saudi property market.
Frequently Asked Questions
Can foreign individuals buy property in Saudi Arabia?
Yes, foreign individuals can now purchase property in designated zones across Saudi Arabia, provided the property is used for personal purposes and is located outside Makkah and Madinah.
What are the restrictions in Makkah and Madinah?
Foreigners are restricted from owning property for personal use in Makkah and Madinah. Only Muslim individuals may own property in these cities, and that too under tightly regulated conditions.
What types of property interests are introduced by the new law?
The new law introduces multiple forms of property interests, including usufruct rights, lease agreements (both long-term and short-term), and full ownership in government-approved areas.
What are the penalties for violations of the new property laws?
Violations can result in severe penalties, including fines up to SAR 10 million, forced sale of the property, and the right to legal appeal within 60 days in administrative courts.
What should foreign investors do next?
Foreign investors should closely monitor the upcoming executive regulations to determine the exact geographic zones open to foreign ownership and the detailed operational rules and procedures.
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