Real Estate Investment Laws in Saudi Arabia: A Guide for Foreign Investors

Introduction

The Saudi Arabian real estate industry has the potential to become a major international investment destination. In July 2025, the Saudi Council of Ministers passed the Law of Real Estate Ownership and Investment by Non-Saudis, which modernizes the 2000 framework and opens specific zones to foreign investors. This legislation revision aims to enhance the non-oil economy, attract international investments, and improve urban development standards. It aligns with Vision 2030, the kingdom’s modernization and diversification plan.

 

Foreign investment is now a key component of Saudi Arabia’s economic policies. However, while international investors—including people, corporations, and institutional entities are increasingly welcome, this burgeoning sector remains highly controlled. To negotiate this changing landscape, prospective foreign purchasers must comprehend legal frameworks, zone-specific licenses, investment thresholds, and the crucial function of attorneys in Saudi Arabia.

Vision 2030 and Real Estate Reform

Vision 2030 aims to diminish Saudi Arabia’s dependence on oil by promoting tourism, infrastructure, and real estate. As part of the drive:

• Several megaprojects are now under construction, including NEOM, The Red Sea, and Qiddiya.
• Between 2023 and 2024, real estate contributed 12% of GDP, up from 5.9%.
• Saudi cities such as Riyadh, Jeddah, Dammam, Mecca, and Medina are set to grow.
• The construction industry is expected to grow at a rate of approximately 5.4% per year until 2029.

 

Saudi Arabia aims to become a worldwide investment hub by allowing foreign ownership in the real estate sector, in addition to premium residency, regional headquarters licensing, and visa reforms.

The New Foreign Ownership Law: Key Features

 

A. Designated Zones for Ownership

The new law allows non-Saudi individuals and corporations to own property in specific zones, particularly in Riyadh and Jeddah. The General Real Estate Authority (REGA) will establish the zones within 180 days of the law’s publication. These zones have not yet been officially announced as of today (July 2025), but are expected to be operational by early 2026.

B. Commercial vs Residential Ownership

• Commercial Properties: Foreign investors (individuals or corporations) can purchase business, office, retail, or industrial properties if the development investment exceeds SAR 30 million (~USD 8 million) and the project is operational within five years.

 

• Residential properties: Foreign individuals with a valid residency permit (iqama) may acquire for personal use, subject to Ministry of Interior permission. Premium Residents have more privileges, although ownership in Mecca and Medina is still restricted. Standard residency applicants face tighter scrutiny, whereas premium residency holders cannot buy in Mecca or Medina but can get long-term usufruct (lease rights).

 

C. Timeline & Regulatory Rollout: 

• January 2026: Initial installation in authorized zones.
• Within 180 days, REGA produces regulations on eligibility, zone definitions, visa links, compliance, and penalties.
• Additional controls will impact market behavior, affordability, anti-speculation, and citizen-priority rules.

 

D. Historical Context and Limited Precedents

Saudi real estate ownership for foreigners has increasingly evolved:

• The Premium Residency Pilot (2019) allows foreigners who fulfill income and investment standards to live, work, and own property and enterprises without a local sponsor.
• Non-Saudis can indirectly own real estate in Mecca and Medina through listed businesses, with a maximum stake of 49%.
• Licensed Developers: Foreign businesses with development licenses can purchase land for their projects.

 

The July 2025 law provides the first comprehensive, systematic, general-regime access for international investors with limited prior ties to Saudi Arabia.

 

Investment Requirements & Conditions

Foreign investors must meet a dual set of legal and procedural conditions:

A. Legal Eligibility

• Individual investors must have either valid residency (iqama) or Premium Residency.
• Foreign enterprises must register, meet FDI licensing standards (via MISA), and adhere to Saudization (local staffing).
• The investment threshold is SAR 30 million for commercial development initiatives.

B. Due Diligence and Zone Approval

Investors should confirm:

• The chosen location falls inside a designated zone.
• The property kind (commercial or residential) is permitted.
• Get pre-approvals from REGA and the Ministry of Interior through online platforms.

 

C. Timeline and ROI commitments

• Commercial investments should be operational within five years.
• Ministry approvals are likely to be accelerated within 5-6 weeks.
• Regulations cover anti-speculation measures, minimum holding periods, and resale limitations.

D. Taxes and Fees 

• In April 2025, the property tax will be cut from 10% to 5%.
• Transfer fees, registration fees, and continuing municipal taxes continue to apply.
• Capital gains may apply upon resale.

 

Process: Step-by-Step Guide

 

A simplified acquisition road map:

• Engage a local law firm—lawyers in Saudi Arabia are critical for navigating complex legislation.
• Determine residence eligibility (iqama or Premium residence).
• Determine whether the property is in the designated zone for commercial or residential use.
• Draft and execute a Sales and Purchase Agreement (SPA) under local legislation (Sharia and FIDIC influences).
• Pre-approval from REGA and the Ministry of Interior requires online filing and paperwork.
• Submit a full title transfer application to the Real Estate Registration Department.
• Pay fees and register title (REGA will issue the title deed).
• Post-acquisition compliance includes Saudization, municipal fees, and operational deadlines.
• Typical timeline: 2-3 months with optimized digital processing.

 

Role of Lawyers in Saudi Arabia

 

Foreigners must seek qualified Saudi legal assistance due to:

• Challenges of two legal systems (Sharia and civil law).
• Identifying eligibility and meeting project thresholds.
• Coordinating with REGA, MISA, the Ministry of Interior, and municipal governments.
• Drafting and revising contracts such as SPAs, development agreements, and commercial leases.
• Ensure regulatory compliance, including Saudization and certificate of occupancy.
• Providing guidance on tax requirements, overseas money transfers, and departure strategies.
• Handling lawsuits in real estate or contractual issues.
• Lawyers in major cities (Riyadh, Jeddah, Dammam) have local experience and regulatory recognition, while global companies often collaborate with local practices.

 

Benefits & Risks for Foreign Investors

 

Benefits

• Access a fast rising market supported by Vision 2030 mega-projects.
• Property taxes and ordinary acquisition fees were reduced by 5%.
• Opportunities include residential, commercial, and mega-project investments (e.g., New Murabba, Jeddah Economic City).
• Obtain a Premium Residency visa by investing in property (up to SAR 4 million).
• Institutional stability is achieved by explicit legislation and standardized contracts.

Risks.

• Geographic restrictions apply to early-phase defined zones, excluding Mecca/Medina.
• High capital requirements, especially for commercial developers.
• Operational risk: sticking to the five-year activation deadline.
• Currency volatility: SAR is pegged to the USD, which reduces risk, but worldwide fluctuations may impair results.
• Regulatory uncertainty is awaiting executive regulations.
• Cultural and legal differences necessitate skilled local legal and advising services.

 

Case Studies and Mega­-Project Opportunities 

NEOM and The Line

Megacities like NEOM’s The Line offer lucrative collaboration arrangements for overseas developers and investors. These developments necessitate compliance with REGA zones and registered access through MISA license.

Red Sea & Qiddiya

Luxury tourism destinations like Red Sea Global and Qiddiya Entertainment City provide significant commercial real estate prospects for investors, especially with integrated hospitality, retail, and mixed-use projects.

New Murabba and Jeddah Economic City

Riyadh and Jeddah urban developments offer residential and commercial investment options for both local and foreign investors³².

 

 

Finance and Banking

Due to limited local mechanisms before 2025:

• Purchases frequently need a complete upfront payment; mortgages are in development.
• Foreign-investor lending is being supported by regional and global banks, including those in Saudi Arabia, the UAE, and the GCC.
• Mortgage instruments are expected to adhere to Islamic finance principles as well as FIDC/commercial requirements.

 

Tips for Foreign Investors.

 

• Begin with legal counsel: Engage firms that specialize in foreign real estate investing.
• Clarify zone status: Prior to signing, confirm that the property is located in a REGA-designated zone.
• Check residency eligibility: Determine whether your investment plan requires standard or premium residence.
• Secure your financial arrangements: Ensure the availability of capital and funding.
• Align with development timescales, particularly the five-year commercial activation criteria.
• Diversify among asset types, including residential, commercial, and mega-project equity.
• Consider forming joint ventures with local developers to lessen capital load and risk.
• Regularly check rules, including REGA recommendations and Riyadh/Jeddah municipal revisions.

 

Conclusion

 

The new 2025 Foreign Ownership Law represents a significant transformation in Saudi Arabia’s real estate sector. Foreign individuals and corporations can gain access to fast-paced urban expansion, premium real estate markets, and mega-projects linked with Vision 2030, but only under certain conditions.

 

However, this possibility is not without its complexities. Residency and investment criteria, geographic constraints, operating deadlines, and developing regulations all contribute to a terrain that is best managed by experienced Saudi lawyers and trustworthy local partners.

For Western developers, institutional investors, and high-net-worth individuals, the time has come. Saudi real estate investment, with careful legal preparation and strategic placement, has the potential to deliver significant returns in one of the Middle East’s most revolutionary economic areas.

As always, every step should be guided by due diligence, both legal and commercial.