Saudi Arabia launched a set of real estate reforms aimed at expanding land availability, improving rental regulations, and reining in soaring property prices in Riyadh. A new royal directive published in the official gazette Umm Al Qura will see the government lift land freezes in the north of the capital and introduce an overhaul to the White Land Tax Law, in addition to new rental regulations aimed at balancing the landlord-tenant relationship.

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The details: Land freeze has been lifted on 81.5 sq km in northern Riyadh, as the new directive lifted the suspension on land sales, development, subdivision, and building permits in two newly activated zones totaling 33.2 sq km — adding to 48.28 sq km that were previously reactivated. The newly released zones are located north of King Salman Road and are bordered by Abu Bakr Al Siddiq Road, Prince Khalid bin Bandar Road, and the neighborhoods of Al Aarid and Al Qirawan.

Plots will be offered: Plans will also see the government offer some 10-40k serviced residential plots annually over the next 5 years at a maximum of SAR 1.5k per sqm. The new plots will be allocated to married citizens or individuals over the age of 25 who do not currently own any real estate assets. Buyers will be prohibited from selling, renting, or mortgaging their purchased plots for 10 years, unless it is for financing construction.

BUT- If the lands are not developed within this period, they will be reclaimed at the original purchase price, reads the directive.

Where to start? The Royal Commission for Riyadh City (RCRC) is preparing to launch a digital platform through which citizens can apply for residential land in the newly released areas — set to be launched “soon,” according to a statement. The RCRC has also been tasked with providing planned and developed residential plots and monitoring real estate prices in Riyadh while submitting regular reports.

The rationale: The moves are being positioned as “a step that enhances fairness and attractiveness in Riyadh’s real estate market,” which would guarantee justice for all parties involved and boost investment in a transparent and efficient manner, Commerce Minister Majid Al Qasabi told Al Arabiya. Meanwhile, Economy Minister Faisal Al Ibrahim said the reforms would “enable the private sector to participate in quality development, creating housing and infrastructure with high urban standards.”

What’s next? The Kingdom is giving itself 60 days to amend the White Land Tax Law — aimed at encouraging faster development on vacant land, and 90 days to issue fresh regulations that will govern the landlord-tenant relationship.

REMEMBER- The Kingdom’s real estate price index rose 2.3% y-o-y in 2024, while apartment prices rose 10.6% and villa prices rose 6.3%. The rise in housing costs, particularly rent, was the primary driver behind the rise of the Kingdom’s annual inflation last year, reaching a peak of 2.0% in November.

ALSO- Riyadh’s real estate prices have been driving investors to its peripheries: Investors have started shifting focus to the capital’s outskirts on the back of real estate prices climbing to record highs in the capital city due to a demand-supply gap, fueled by population growth far outpacing urban expansion — which has been significantly ramped up under Vision 2030.

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