The cabinet approved a new law enabling non-Saudis to own real estate property in the Kingdom, state news agency SPA reported Tuesday. The legislation — set to come into effect in January 2026 — intends to revitalize the real estate market by attracting new sources of FDI to boost supply.

There are restrictions: Foreigners will be allowed to purchase and own property for residential or commercial purposes in designated areas without a residency permit, but the law will be restricted to specific geographic areas, with special regulations for Riyadh, Jeddah, Makkah, and Madinah, the Municipalities and Housing Minister Majed Al-Hogail told SPA.

The holy cities will face stricter conditions, where ownership is limited to Muslims within major projects like Masar, Al Riyadh’s managing editor of economics Khaled Al Rubaish told Al Arabiya. The law will likely be limited to ownership of developed properties for residential or commercial use, as raw land for speculation is off the table to prevent monopolies, Sulaimani said.

What’s next? The Real Estate General Authority will designate the potential areas for non-Saudi ownership and submit its proposal for public consultation via the Istilaa platform within 180 days.

Pundits are optimistic: The legislation protects future Saudi homeowners against higher competition and potential inflation by directing foreign investment toward gigaprojects and limiting ownership to designated areas, Manassat Real Estate CEO Khalid Al-Mobaid told Al Arabiya.

.. and the demand is here: Some 22% of high-net-worth Muslim investors surveyed are eyeing real estate purchases in the Kingdom this year, and another 33% in the next 24 months, according to a Knight Frank survey.

BUT- The market is already under pressure, with nearly a third of Saudis and residents looking to buy property this year. Many mid-market buyers are struggling to afford homes due to the rapid price increases seen in recent years.

REMEMBER- The Kingdom’s residential real estate market is expected to expand in 2025 despite rising prices, S&P Global had said in a May note. EFG Hermes recommended earlier this year lowering premium residency visa requirements and opening a path to mortgages for foreigners to stimulate foreign purchases.

The law joins a battery of reforms pushed recently to stimulate the real estate market. The changes allowed foreign investment in Makkah- and Madinah-based real estate companies, lifted development restrictions on 81 sq km of land in northern Riyadh, and approved the White Land Tax, in addition to a planning the release of 10k-40k affordable residential plots per year.

Market reax: Listed real estate companies rallied strongly on the approval of the new law. Leading the charge was Masar (+8.6%), followed by Alakaria (+7.7%) and Retal Urban Development (+6.6%).

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