TL;DR
- Foreigners can now own property in Saudi Arabia but only in specific zones and under clear rules.
- Ownership in holy cities like Makkah and Madinah is still mostly restricted.
- Non-Saudis must register their ownership, and there are fees and penalties for violations.
Saudi Arabia recently published a new law that changes how foreigners can own real estate in the Kingdom. This law, announced officially on July 25 in the Umm Al-Qura gazette, will start applying 180 days from its release. It’s a big shift in policy because it allows non-Saudis, whether individuals, companies, or organizations—to buy and hold property under certain conditions.Before, the rules were more restrictive, especially in holy cities like Makkah and Madinah. The new law still protects these cities by limiting ownership, but it also opens new opportunities for foreigners in other areas. This change comes as part of Saudi Arabia’s wider plan to attract investment and encourage economic growth, but with clear limits to protect cultural and religious sensitivities.
What the New Law Allows
- Foreign Ownership Zones: The government will define specific areas where foreigners can buy property. These zones will come with rules about how much property can be owned and for how long.
- Types of Rights: Ownership isn’t just about buying a building. The law includes rights like usufruct (the right to use and benefit from property), leases, and other property interests.
- Individuals and Corporations: Both people living in Saudi Arabia and foreign companies can own property. For individuals, owning one home outside restricted zones is allowed for personal use. Companies can buy property to support their business or house employees.
- Diplomatic and International Use: Foreign embassies and international organizations can own property for their official work, but they need approval from the Saudi Foreign Ministry.
Ownership Zones and Rights
The government will designate certain zones where foreigners are allowed to own property. These zones will have defined limits on ownership percentages and the duration of property rights. The law covers various types of rights, including full ownership, leases, and usufruct rights, which means the right to use and benefit from property without owning it outright. Foreign individuals legally residing in Saudi Arabia can own one residential property outside restricted zones for personal use only. Foreign companies can buy property throughout the Kingdom to support their business operations or to provide housing for employees. Diplomatic missions and international organizations can also own property for official purposes, subject to approval from the Saudi Foreign Ministry.
Restrictions in Holy Cities
The law maintains strict limits on foreign property ownership in the holy cities of Makkah and Madinah. Only Muslim individuals can own property there, and even then, ownership is allowed only under specific conditions. Foreign residents are also restricted to owning just one home for personal housing outside these restricted zones. This ensures that religious and cultural sensitivities are respected while opening up other parts of the country for foreign ownership.
Registration, Fees, and Penalties
Foreign property owners must register their ownership with the national real estate registry for it to be legally recognized. The law introduces a transfer fee of up to 5% on property transactions involving foreigners. Violations of the law can result in hefty fines of up to SAR 10 million (approximately $2.67 Million). In serious cases, such as using fake documents, authorities can force the sale of the property, with the proceeds going to the state after necessary deductions. To monitor and enforce these rules, a committee under the Real Estate General Authority will investigate violations and impose penalties. Property owners have the right to appeal committee decisions to administrative courts within 60 days.
Protection of Existing Ownership and GCC Citizens
The law protects all foreign property rights that existed before its enactment, so current foreign owners won’t lose their rights. It also removes an earlier ban that prevented Gulf Cooperation Council (GCC) citizens from owning property in Makkah and Madinah. Now, GCC citizens are subject to the same rules as other foreigners, which simplifies the legal framework around foreign ownership in the Kingdom.
What Comes Next
The Saudi government plans to issue executive regulations within six months. These will provide details on geographic boundaries for foreign ownership zones and explain how the law will be applied in practice. Foreign buyers and investors should watch for these updates to understand exactly where and how they can legally purchase property in Saudi Arabia.FAQs1. Can any foreigner buy property anywhere in Saudi Arabia now?No. Foreign ownership is limited to government-designated zones. Ownership in holy cities remains mostly restricted.2. What types of property rights are allowed?Foreigners can own property outright or hold other rights like leases and usufruct, depending on the rules for the zone.3. What happens if a foreigner breaks the ownership rules?They may face fines up to SAR 10 million, and in severe cases, their property can be sold by the authorities with proceeds going to the state.
