Saudi Arabia’s Foreign Property Ownership System to Take Effect in January 2026

Details of the New System and the Start of Implementation

The Kingdom of Saudi Arabia announced that the updated system regulating property ownership by non-Saudis will come into force in January 2026, following its approval by the Saudi Council of Ministers in July.

This decision comes as part of a comprehensive strategy aimed at regulating ownership processes and attracting foreign direct investment into the Saudi real estate market, while maintaining controls and regulations that ensure sector stability.

Strategic Objectives Serving Vision 2030

The new system aims to enhance the contribution of the real estate sector to Saudi Arabia’s GDP, as it is considered one of the key tools for diversifying national income sources.

It also seeks to retain global talent by enabling them to settle in the Kingdom and to improve the quality of urban and residential life in Saudi cities, in line with the ambitious goals of Vision 2030.

Geographic Scope of Residential and Investment Ownership

Saudi Minister of Municipalities and Housing Majed Al-Hogail revealed that residential ownership will be permitted in all cities of the Kingdom except four major cities: Makkah Al-Mukarramah, Madinah Al-Munawwarah, Jeddah, and Riyadh.

Specific zones within these cities will be designated for foreign ownership, with special regulations to ensure that ownership aligns with the unique character of each city.

High Flexibility Across Economic Sectors

The system demonstrates significant flexibility toward other economic sectors, allowing foreigners to own property in all cities of the Kingdom without exception, particularly in the commercial, industrial, and agricultural sectors.

This flexibility aims to encourage international companies to establish headquarters and projects within Saudi Arabia and to attract foreign investment across various economic fields.

Allocation of Large Areas in Major Cities

Fahad bin Suleiman, Executive Director of Foreign Property Ownership at the General Authority for Real Estate, stated that the areas designated for foreigners in Riyadh, Jeddah, and the two holy cities are still under final review.

These areas are expected to be announced soon along with the executive regulations governing the new ownership rules. They are anticipated to be “very extensive” and to include mega projects, with foreign ownership ratios ranging between 70% and 90%.

Defined Ownership Controls and Conditions

Under the new system, buyers must be Muslim to purchase property in the two holy cities only, while buyers will not face significant restrictions in other cities.

In addition, a non-Saudi resident is entitled to own only one residential unit outside the designated geographic scope. These controls aim to balance opening the door to investment with preserving the Kingdom’s cultural and religious identity.

Expected Impact on the Saudi Real Estate Market

Experts expect the new ownership system to create additional demand for ready properties and to increase liquidity within the market.

The sector is also expected to undergo a major transformation, with a large segment of residents shifting from renting to ownership. This will encourage international companies to establish headquarters and projects in the Kingdom, positively impacting economic activity and laying the foundation for a more stable and growth-oriented real estate sector.

The system is expected to have a positive impact on the real estate markets of Riyadh, Jeddah, Makkah, Taif, and Madinah, as well as cities near major tourism destinations.

Improving the Quality of Real Estate Products

The new system will push real estate developers to innovate projects with higher specifications and better planning, thereby raising the overall quality of real estate products.

It will also increase the volume of organized supply through the entry of international investors and developers, enhancing market competitiveness and improving services provided to consumers.

Timeline for the Expected Market Impact

Forecasts indicate that the real impact of the system will begin to appear gradually, with initial signals emerging in the second quarter of 2026.

Clear indicators—such as higher transaction volumes and the entry of foreign investors—are expected to materialize during the third and fourth quarters of the same year. This timeline reflects the gradual nature of the impact, allowing the market to adapt to the new changes.

Incentives and Advantages for Investors

The new system allows non-Saudis to own real estate or acquire in rem rights over property within the Kingdom, within geographic areas determined by the Council of Ministers, based on a proposal from the Board of Directors of the General Authority for Real Estate and approval by the Council of Economic and Development Affairs.

This includes defining the types of in rem rights that may be acquired, maximum ownership ratios, and the controls governing them.

The system also allows a non-Saudi resident (natural person) to own one residential property designated for housing outside the specified geographic scope, excluding the cities of Makkah and Madinah, with the condition that the owner must be Muslim if ownership is within these two cities.

Additional Advantages for Legal Entities

The system permits non-listed companies in the Saudi financial market that have non-Saudi shareholders to own property within the designated geographic scope.
Listed companies and investment funds, however, will be allowed to own property throughout the Kingdom, including the two holy cities.

The implementation of the system does not affect rights granted under other regulations, such as the Premium Residency Program or GCC agreements. Moreover, foreign ownership does not grant any additional privileges beyond the legally prescribed rights.

Fees and Defined Financial Controls

The system imposes a fee not exceeding 5% of the value of the real estate transaction for non-Saudis, with details to be specified in the executive regulations.

Strict penalties have also been introduced for violations, reaching fines of up to SAR 10 million for providing misleading information. These financial controls aim to regulate the market and prevent illegal practices while maintaining the attractiveness of investment in the Saudi real estate sector.

Enhancing Market Stability and Transparency

The system is expected to contribute to greater price stability in the real estate market and to reduce short-term speculation.

Transparency and governance will also improve thanks to the accompanying legal and regulatory controls. These factors will help build confidence among local and international investors and make the Saudi real estate market more attractive for long-term investments.

Promising Prospects for the National Economy

The foreign property ownership system represents a pivotal step toward achieving Vision 2030 objectives, as it will contribute to diversifying income sources and creating job opportunities for Saudi citizens.

The system paves the way for a new phase of growth and stability in the Saudi real estate sector and helps position the Kingdom as an attractive investment destination at both the regional and global levels.