Saudi Arabia Publishes New Law Regulating Real Estate Ownership by Non-Saudis

Riyadh, The Gulf Observer: The Kingdom of Saudi Arabia has formally issued the full text of its new law governing real estate ownership by non-Saudis, following Cabinet approval earlier this month. The landmark legislation was published in the official gazette Umm Al-Qura on Friday and will come into effect 180 days from the date of publication.

This comprehensive legal framework marks a significant reform in Saudi Arabia’s real estate sector, granting non-Saudis — including individuals, companies, and non-profit organizations — the right to own property and other real rights within specified geographic areas to be determined by the Cabinet.

Under the law, non-Saudis may acquire rights such as usufruct, leaseholds, and other interests in real estate, subject to specific conditions regarding the property’s location, classification, and intended use.

The regulation affirms the preservation of all legally established real estate rights for non-Saudis that existed before the enactment of the new law. However, it explicitly prohibits ownership in certain restricted areas, particularly Makkah and Madinah, except under specific conditions applicable to individual Muslim owners.

A key provision mandates the Council of Ministers, based on recommendations from the Real Estate General Authority and with approval from the Council of Economic and Development Affairs, to define the geographic zones eligible for foreign ownership. It will also set upper limits on ownership percentages and the duration of usufruct rights.

Foreign nationals legally residing in Saudi Arabia may own a single residential property outside restricted zones for personal housing purposes. This provision does not apply to properties located in Makkah and Madinah.

The law also provides a framework for corporate real estate ownership. Non-listed companies with foreign shareholders, investment funds, and licensed special-purpose entities may acquire property across the Kingdom — including in Makkah and Madinah — provided the acquisition serves operational needs or employee accommodation.

Publicly listed companies and other investment vehicles will be permitted to acquire property in accordance with regulations of the Saudi financial market.

Diplomatic missions and international organizations are allowed to own premises for official use and the residence of their representatives, subject to Ministry of Foreign Affairs approval and reciprocal agreements.

All non-Saudi entities must register with the competent authority prior to acquiring property. Real rights, including ownership and usufruct, will only be valid once registered in the national real estate registry.

The law introduces a real estate transfer fee of up to 5% for transactions involving non-Saudis. Violations of the law may result in fines up to SAR 10 million. In serious cases, such as providing false information, the law permits the compulsory sale of the property, with proceeds reverting to the state after necessary deductions.

A specialized committee under the Real Estate General Authority will be established to investigate violations and impose sanctions. Its decisions can be appealed in administrative courts within 60 days.

Additionally, the law abolishes the previous restriction that barred GCC citizens from owning property in Makkah and Madinah, unifying all non-Saudi ownership under one regulatory system.

The executive regulations — which will provide detailed implementation procedures, geographic limits, and conditions — are expected to be issued within six months.

The new law replaces Royal Decree No. M/15 of 2000, which previously governed foreign real estate ownership in the Kingdom.