Key Updates to the Law Regulating Non-Saudi Real Estate Ownership in Saudi Arabia

Overview:

Saudi Arabia has brought into force the Law Regulating Non-Saudi Real Estate Ownership, issued under Royal Decree No. (M/14) dated 19/01/1447 AH. The new law introduces substantive reforms aimed at expanding foreign ownership opportunities in the real estate sector, while preserving regulatory oversight and addressing jurisdiction-specific considerations.

Set out below are the key updates introduced by the new legal framework.

Expansion of Permitted Ownership Scope:

The law grants non-Saudis the right to own real estate and acquire real rights in rem within the Kingdom, subject to geographical areas designated by the Council of Ministers. This approach provides a controlled mechanism for expanding foreign ownership while enabling the government to manage urban development and mitigate potential market impacts.

Ownership of a Private Residence Outside Designated Areas:

Non-Saudi natural persons who are legally resident in Saudi Arabia are permitted to own one property designated for private residential use outside the approved geographical zones. This provision introduces additional flexibility for resident expatriates, while maintaining regulatory safeguards over residential ownership.

Special Regime for Makkah and Madinah:

The law establishes a specific regulatory regime for real estate ownership in the Holy Cities of Makkah and Madinah. Under the updated framework, non-Saudi Muslim natural persons may own real estate or acquire other real rights in rem in these cities, subject to prescribed conditions. Ownership remains restricted to Muslims, reflecting the cities’ unique religious and regulatory status.

Implications for Investment and Development:

These reforms represent a significant development in Saudi Arabia’s real estate regulatory landscape. By broadening ownership rights, the law enhances market attractiveness and supports the Kingdom’s investment objectives, while maintaining sovereign control over real estate ownership and ensuring alignment with Sharia and regulatory requirements.

Conclusion:

The new law marks a material shift from the previous ownership model, which was largely tied to economic or professional activity, toward a more flexible and investment-oriented framework. While expanding access to real estate ownership for non-Saudis, the legislator has retained clear regulatory and geographic controls to ensure a balanced approach between market openness, legal certainty, and national interests.