Non-Saudi individuals and institutions can now own properties and hold real estate rights in the Kingdom, with specific restrictions based on location, property type, and usage, according to the new foreign property ownership law published in the official gazette (pdf) on Friday.

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The fresh law expands ownership rights for non-Saudis in the Kingdom, replacing the previous law of 2000. The cabinet approved the new legislation earlier this month with an intent to revitalize the real estate market by attracting new sources of FDI to boost supply.

Non-Saudi residents now have the right to own a single property for residence anywhere in the Kingdom, with only Muslims granted the right to own properties in Makkah and Madinah. This overrides a prior prohibition on GCC citizens owning properties in the holy cities, effectively standardizing the rules for all non-Saudis.

Other non-Saudis will be allowed to purchase and hold properties only in designated zones, to be determined by the Cabinet, along with the type of rights to be granted, ownership percentage, and usufruct duration.

Non-listed companies owned by non-Saudis are now permitted to own properties or hold property rights in the designated zones, for their operational use or as residence for their employees — only after they fulfill all necessary registrations in the Kingdom. Meanwhile, ownership rules for Tadawul-listed companies follow the exchange law and regulations.

As for diplomatic missions and international organizations, they are also allowed to purchase property for their premises or as a residence for their representatives, following the Foreign Ministry’s approval.

Fees and penalties: Violations of real estate transactions involving non-Saudis will be punished by a formal warning or a 5% fine of up to SAR 10 mn. In severe cases, such as providing falsified information, the property would be subject to a forced sale, with the initial purchase price only remitted to the owner after deductions and fees.

What’s next? The law will come into effect after six months, within which the executive regulations will be out detailing the implementation mechanisms and specifying the designated zones. Foreign property ownership will only be valid after registration with the national real estate registry.

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 planning the release of 10k-40k affordable residential plots per year.

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