On 14 July 2025, the Council of Ministers of the Kingdom of Saudi Arabia issued Council of Ministers Resolution No. (M/14) approving the issuance of the Law on Real Estate Ownership by Non-Saudis (the “New Law”), which repeals and replaces the Law of Real Estate Ownership and Investment by Non-Saudis enacted in 1421H / 2000G (the “Old Law”).
The New Law was published in the Official Gazette (Umm Al-Qura) on 25 July 2025 and will enter into force 180 days thereafter, on 21 January 2026.
The New Law introduces a fundamental overhaul of the foreign ownership regime for real estate in the Kingdom, replacing previously restrictive and fragmented rules with a model governed predominantly by geographical zoning. By moving away from capital thresholds and purpose-based approvals, the New Law aligns real estate ownership with a national strategy to increase real estate supply, attract foreign investment and stimulate growth in the real estate sector.
Non-Saudi Ownership of Real Estate in Geographical Zones
The New Law defines “Non-Saudi” broadly to include:
- Individuals who do not hold Saudi nationality (residents or non-residents).
- Foreign-incorporated companies (i.e. companies not considered Saudi under the Companies Law).
- Foreign non-profit entities.
- Any other legal persons as determined by the Council of Ministers.
A Non-Saudi may own property or rights in rem over property in the Kingdom in certain geographical zones. The Council of Ministers (based on a proposal by the board of the Real Estate General Authority (“REGA”) and approval of the Council for Economic and Development Affairs) will determine these geographical zones (the “Geographical Zones”), in addition to establishing the following:
- The types of permitted in rem rights.
- Maximum ownership limits for Non-Saudis.
- Maximum durations for usufruct rights.
- Conditions relating to Non-Saudi ownership or acquisition of in rem rights.
The current expectation is that upon approval by the Council of Ministers, REGA will publish a ‘Geographic Scope Document’ outlining these Geographical Zones. This document will include maps of specific locations, permitted ownership limits, types of real estate rights granted, permitted durations, and regulatory controls that will apply to Non-Saudi ownership. It remains unclear at present when the Geographic Scope Document will be available, but it is expected to be issued alongside the Implementing Regulation to the New Law (the “Regulation”).
In addition to the rights set out above, a Non-Saudi natural person that legally resides in the Kingdom may own one residential property outside the Geographical Zones, provided that, with respect to Makkah and Madinah, a Non-Saudi individual cannot own property unless they are Muslim. The Regulation shall specify further conditions on this.
Unlisted Companies
The New Law makes a distinction between foreign-incorporated entities (classified as Non-Saudis) and Saudi-incorporated companies that have foreign shareholding (not classified as Non-Saudis). A non-listed company established under the Companies Law, with foreign ownership (natural or legal persons), may own property or acquire in rem rights within the Geographical Zones, including Makkah and Madinah. Such companies may also, subject to the Regulation, acquire real estate required for business purposes and employee housing both inside and outside of the Geographical Zones.
Public Companies and Licensed Investment Funds
Publicly listed companies, investment funds, and licensed special-purpose entities established under applicable Saudi laws may acquire real estate and in rem rights including in Makkah and Madinah in accordance with the Saudi financial market laws and the Regulation, subject to rules issued by the Capital Market Authority in coordination with REGA and other relevant bodies.
The New Law therefore appears to recognise the CMA’s recent approval of the ‘Controls for the Exclusion of Companies Listed in the Saudi Stock Exchange (Tadawul) from the Meaning of the Phrase (Non-Saudi) in accordance with the Law of Real Estate Ownership and Investment by Non-Saudis’. For background on this, see our earlier article: The Saudi Arabian Capital Market Authority Allows Foreign Investment in Real Estate in Makkah and Madinah Through Listed Companies.
Diplomatic and International Entities
On a reciprocal basis, foreign diplomatic missions may acquire official premises and residences for heads and members of consular missions within the Kingdom. International and regional organizations may also own premises in accordance with relevant treaties and subject to approval from the Ministry of Foreign Affairs.
Registration and Fees
The New Law designates REGA as the competent authority for all foreign ownership matters and requires mandatory registration of any transaction involving real rights by or to a Non-Saudi. Actions in relation to property ownership or acquisition of rights will only be valid upon registration with the Real Estate Registry.
The New Law also introduces a real estate transaction fee of up to 5% of the transaction value on transfers involving Non-Saudis, without prejudice to the Real Estate Transfer Tax (RETT) or other applicable levies. This fee is therefore on top of the 5% RETT already payable on land transactions. The New Law does not specify who should bear the cost of this additional fee.
Violations and Penalties
Violations of the New Law or the Regulation may be penalized with a warning or a fine of up to 5% of the property value, not exceeding SAR 10 million. Penalty schedules will be detailed in the Regulation and will, in their application, take into consideration the seriousness of the violation, the circumstances, and the impact of each violation.
REGA’s Board will also form one or more committees with at least three legal experts to review violations and impose penalties. The Board shall set procedures, operational policies, and member remuneration. Committee decisions may be appealed to the Administrative Court within 60 days.
A Non-Saudi that intentionally provides false or misleading information to acquire real estate or rights will be subject to penalties, which include:
- A fine (up to 5% of the value, max SAR 10 million).
- Compulsory sale of the property or right in rem.
- Investigation and pursuit of the claim by The Public Prosecution.
- Upon court-ordered sale, the violator will receive the lesser of the sale proceeds after deducting fines, taxes, fees, and costs and the actual amount paid to acquire the right, with the remainder going to the State treasury.
The Regulation
The New Law stipulates that the Regulation will be issued by the Council of Ministers within 180 days of the New Law. Within this 180-day period, the Regulation will be published on Istitlaa (public consultation platform) and upon conclusion of the consultation, REGA will submit the Regulation for issuance by a resolution of the Council of Ministers. Note that the Regulation will specify:
- Procedures for acquiring in rem rights.
- Requirements for Non-Saudi non-residents.
- Calculation of disposal fees.
- Exemptions and conditions for 0% rate transactions.
Final Observations
The repeal of the Old Law restricting foreign ownership for the limited purpose of conducting licensed operational activity is a development that investors and the market will welcome. It advances strategic reforms under the umbrella of the Kingdom’s Vision 2030 program, and in restructuring the applicable rules, the New Law removes the previous foreign ownership conditions in relation to purchasing buildings or land for construction and investment, namely, the 30 million SAR monetary threshold, required licensing and prior approval and a maximum development timetable of 5 years.
The New Law marks a turning point in the Kingdom’s real estate regulatory environment, replacing more restrictive, investor-specific rules with a modernized entitlement system linked to targeted zoning classifications.
However, while the changes unlock broader access for foreign and foreign-backed investors, they also introduce more nuanced constraints, particularly around location, the type of property right and duration. The effectiveness and impact of the New Law will depend on the detail and clarity of the Regulation once issued, along with the Geographical Scope Document.
The Geographic Scope Document, in particular, will set specified maximum terms for usufruct rights, types of permitted in rem rights and maximum ownership limits. These items will likely raise new considerations in relation to valuation, project feasibility, exit strategies and security structuring, particularly in sectors where long-term leasehold has developed as a substitute to ownership.
Further details will be forthcoming within the next 180 days, and a further alert will be issued with any updates in due course.
