Last week, Saudi Arabia quietly crossed a historic threshold. With the new Foreign Ownership of Real Estate Law coming into force, the Kingdom has formally opened its real estate market to foreign investors across all asset classes and, in principle, across the entire country. This is not just another regulatory reform, it is a structural shift that fundamentally reshapes how capital can enter, deploy, and exit Saudi real estate.

As Bilal Ambikapathy, Partner at Wisefields, explains:

“This is a law that has been anticipated for more than a decade. Its significance really cannot be underestimated. This is the beginning of the full opening of the Saudi real estate market to foreign investors.”

From Restriction to Access

Under the previous regime, foreign ownership of real estate in Saudi Arabia was tightly constrained. Ownership was generally limited to property ancillary to a licensed business, a single residential unit for resident individuals (subject to approvals), or large-scale development projects exceeding SAR 30 million. Indirect exposure through private real estate funds was possible, but narrow in scope. The new law marks a decisive departure from that model.

Foreign investors may now acquire real estate interests across commercial, residential, industrial, agricultural, hospitality, and logistics sectors, with geographic scope extending across the Kingdom, subject to forthcoming implementing regulations and zoning maps.

As Bilal Ambikapathy, Partner at Wisefields, explains:

“The entire market has now been opened. This allows systematic investment not only by institutions and companies, but by individuals as well, regardless if resident in the Kingdom or not.”

Saudi Arabia is already the largest construction market in the region. This reform positions it to become the Middle East’s largest investable real estate market.

Who Can Own? A Level Playing Field for Investors

One of the most striking features of the new law is its breadth of application. It allows ownership by:

•Non-resident individuals (subject to digital identification and KYC)

•Resident individuals, including premium residency holders

•Foreign companies with Saudi subsidiaries (wholly owned or joint ventures)

•Companies already operating in the Kingdom

•GCC investors, whose existing preferential rights are preserved

In practice, the law places investors on an equal footing while expressly “grandfathering” enhanced rights previously enjoyed by GCC nationals and premium residency holders.

“It’s fair to say that the law treats investors on an equal basis,” says Bilal. “But where greater rights previously existed, such as for GCC nationals or premium residency holders, those rights are preserved.”

The law also expressly recognises the jurisdiction of the Capital Market Authority (CMA) over real estate funds, preserving parallel routes to investment through regulated fund structures, especially in Makkah and Madinah.

Makkah and Madinah: A Transformational Shift

Perhaps the most consequential, and closely watched, aspect of the law is its treatment of Makkah and Madinah.

For the first time, foreign Muslim individuals may own real estate in the holy cities, and companies may invest in real estate assets, including hotels and other hospitality-led projects, within designated zones.

“This is groundbreaking,” Bilal explains. “Foreign investors invest in markets they know, and the world knows Saudi Arabia in many aspects because of Makkah and Madinah.”

Early market signals suggest strong interest from pilgrims, religious travel operators, and Muslim investors globally. The anticipated release of geographic zoning maps will clarify where ownership is permitted and whether interests will take the form of freehold or long-term usufruct rights.

This change is already reshaping development patterns. Historically, hotels dominated Makkah and Madinah due to restrictions on sale. That is beginning to change.

“We’re anticipating hotel residences, branded residences, and long-stay apartments being developed for sale,” Bilal notes. “It’s shifting the entire development landscape.”

Gateway Cities: Riyadh and Jeddah in Focus

While Makkah and Madinah attract global religious capital, Riyadh and Jeddah play distinct and complementary roles.

Riyadh continues to function as an international investment hub, familiar to GCC and institutional investors. Jeddah, by contrast, has always been a strategic gateway city, both geographically and commercially, into the holy cities.

“Jeddah will be a very interesting opportunity for the broader investment community,” Bilal explains, “particularly as the gateway into Makkah and Madinah.”

Property Rights, Residency, and Legal Protection

The foreign ownership regime sits within a broader framework designed to protect property rights and investor confidence.

Saudi Arabia now operates a centralised, digitised land registry, delivering registered title and indefeasibility of ownership as cities transition into the new system. This is complemented by a modernised expropriation law that limits compulsory acquisition strictly to defined public purposes, with compensation protections.

For individual investors, ownership can also unlock residency rights. Under the premium residency programme, purchasers of completed, unencumbered property valued above SAR 4 million may qualify for permanent residency for the duration of ownership.

“This opens the door to second homes, retirement planning, and long-term residence,” says Bilal, “particularly in cities like Makkah and Madinah.”

Even below that threshold, visa-on-arrival regimes allow property owners from eligible countries to access and use their assets with ease.

Institutional Capital, Yield, and Exit

For institutional investors, the law removes a critical historical limitation: the inability to acquire income-generating assets.

“You’re no longer limited to development-only exposure,” Bilal explains. “You can now acquire yielding assets, enter joint ventures, and structure exits through trade sales, listings, or REITs.”

This reform aligns closely with broader fiscal and planning policies, most notably the White Land Tax, which has recently been increased and scaled in Riyadh. The result has been rapid land price correction and increased pressure on landowners to develop or divest.

“It’s forcing landowners to act,” Bilal notes. “And that’s creating real opportunities for developers and joint venture partners at far more attractive entry points.”

A Defining Moment for Saudi Real Estate

The new foreign ownership law represents a defining moment for Saudi Arabia’s real estate market. It enables direct ownership, structured investment, yield-driven strategies, and clearly defined exit routes, all underpinned by a strengthening property rights framework.

“All of this is now possible,” Bilal concludes. “Develop to sell, develop to lease, develop to operate, or acquire yielding assets. This is a very powerful moment in time for the market.”

As implementing regulations and zoning maps are released, the next phase will be about execution. But the direction is clear: Saudi Arabia is now fully open for global investment.

Bilal Ambikapathy

Partner

+966 56 4088 719

+973 3947 8355

+971 585 3947 83 [email protected]