Foreign Investment in Saudi Companies with Real Estate in Makkah and Madinah Now Permitted

Foreign Investment in Saudi Companies with Real Estate in Makkah and Madinah Now Permitted

Riyadh, The Gulf Observer: The Saudi Capital Market Authority (CMA) has announced that, starting from Monday, January 27, foreigners will be permitted to invest in listed Saudi companies that own real estate in the cities of Makkah and Madinah. This decision aims to stimulate investment, enhance the capital market’s attractiveness, and boost its regional and international competitiveness while supporting the local economy.

In a statement, the CMA emphasized that this move would attract foreign capital and provide the necessary liquidity for both current and future projects in Makkah and Madinah. The initiative positions the Saudi capital market as a key funding source for distinctive developmental projects in these cities, which hold significant religious and economic importance.

This decision follows the approval of new regulations that exclude certain companies from the definition of “Non-Saudi” under the Law of Real Estate Ownership and Investment by Non-Saudis. Under the new guidelines, foreign investment in these companies will be limited to shares of these Saudi-listed companies or convertible debt instruments. However, foreign investors will not be allowed to own more than 49 percent of the shares in these companies.

The CMA clarified that foreign strategic investors, who are not permitted to own shares or convertible debt instruments, would be exempt from ownership restrictions. This allows non-Saudi investors to benefit from the economic advantages of existing and future projects in Makkah and Madinah without breaching the relevant laws and regulations, particularly the Law of Real Estate Ownership and Investment by Non-Saudis.

Additionally, the new rules grant Saudi-listed companies the right to acquire ownership, easement, or usufruct rights over properties designated for their headquarters or branch offices in Makkah and Madinah, provided these properties are used for their intended purpose and comply with the Exclusion Controls exemption regulations.

The CMA has long been committed to enhancing the attractiveness of the Saudi capital market to foreign investors. These efforts include initiatives such as allowing foreign residents to invest directly in the Saudi stock market, enabling foreign investors to access the market via swap agreements, and permitting foreign strategic investors to acquire significant stakes in listed companies. These measures reflect the capital market’s diverse funding options available for projects in Makkah and Madinah.

In 2021, the CMA also allowed non-Saudis to subscribe to real estate funds focused on Makkah and Madinah, further diversifying the capital market’s financing channels and supporting the objectives of Saudi Vision 2030. This move was aimed at positioning the Saudi capital market as an attractive destination for both local and foreign investment.

The decision followed the public consultation process for the “Regulations of Foreign Investors’ Ownership of Shares in Saudi Listed Companies that have Investment Properties in Makkah and Madinah,” which was published on November 15, 2023, on the Public Consultation Platform “Istitlaa” and the CMA’s website.