Saudi Arabia updating its rules to allow foreigners to buy property in specific zones will encourage long-term expats to invest in homes, boost the real estate sector and benefit businesses from banks to cement companies, analysts said.
Non-Saudis will be able to own property in designated areas in Riyadh and Jeddah, with “special requirements” for ownership in Makkah and Madinah, the state-run Saudi Press Agency said this week.
“This decision could be transformational for long-term non-GCC expatriates, who represent an estimated 40 per cent of the total population, particularly those who have lived in Saudi for many years without the option to buy,” Haider Tuaima, managing director and head of real estate research at ValuStrat, told The National on Thursday.
They would benefit from greater financial security, the ability to build equity over time and “stronger roots” in the community, which would encourage longer stays in the kingdom, he added.
Saudi Arabia's latest move comes after cities such as Dubai, Abu Dhabi and Doha designated areas where overseas investors can buy property.
“We have seen the benefits of allowing foreigners to buy property in Dubai,” Junaid Ansari, director of investment strategy and research at Kamco Invest, told The National. “A similar benefit can be expected for the real estate market in Saudi Arabia, which lags behind Dubai by over 50 per cent in terms of transaction value (year-to-date until May) despite the economic size difference.”
“We believe that regional banks will be more encouraged to expand business in Saudi Arabia, as we have seen in the case of some UAE-listed banks over the last few quarters. Much more sources of funds are needed if the law is implemented on the lines of Dubai.”
The move will ultimately help to create more long-term Saudi residents, with home ownership a key to “creating a sense of belonging” and helping individuals and families to set down roots in the country, Matthew Green, head of research at CBRE Mena, told The National.
The step will “contribute to raising the real estate supply by attracting investors and real estate development companies to the Saudi market”, Majed Al Hogail, Minister of Municipal Rural Affairs and Housing, said in the SPA report.
The updated rules will come into effect in January 2026 and the Real Estate General Authority will be responsible for proposing the areas where non-Saudis can own properties. The authority will present the executive regulations of the system on the Istitlaa platform within the next six months.
The decision is likely to benefit companies who could invest in apartments or villas to accommodate their staff as an alternative to expensive hotel stays. It is also expected to give established expats the opportunity to buy a home in the kingdom.
“This is a very positive step for the Kingdom that would help the government achieve the Vision 2030 targets in terms of population growth and FDI and support local businesses and employment,” Mr Ansari said.
Main sectors to benefit
The new rules will primarily benefit Saudi real estate companies as they open the sector for foreigners to invest, but other related businesses such as banks, consultants, cement companies and construction firms will also benefit, according to analysts.
Banks will benefit through real estate financing and mortgages, Mr Ansari said. “Saudi cement companies had 30 per cent excess capacity with merely 5 per cent exports, so this excess capacity could be better utilised in the local market,” he added.
The move is aligned with Saudi Arabia’s Vision 2030 goals to diversify the economy, attract foreign investment and support jobs.
“This move is likely to attract foreign capital into the real estate and construction sectors and could stimulate job creation and local spending,” Mr Tuaima said.
“This could also benefit the banking sectors, legal and advisory services, as well PropTech and real estate services.”
Win for landowners
The new regulations are a “win-win” as they will help to generate additional wealth for existing Saudi and GCC landowners, Mr Green said. Land values are likely to rise further due to the creation of a larger target market and the potential for generating higher sales values for properties with foreign freehold titles, Mr Green said.
“The move will also help to create a more competitive real estate market, with much of the GCC already offering freehold titles to foreign nationals,” he said.
More broadly, the move is likely to boost Saudi Arabia's GDP and non-oil sector growth, with property accounting for about 6.5 per cent of total GDP in 2024, while growing at 2.5 per cent year-on-year, Mr Green said, citing figures from the General Authority for Statistics.
“It will also help to generate increased employment, with growth in residential construction anticipated as developers look to tap into the global real estate investment market,” he said.
Saudi Arabia has already taken measures to boost its attractiveness as a global investment destination, as part of its Vision 2030 plan.
In January, the kingdom said it would allow foreigners to invest in publicly listed local companies that own property in Makkah and Madinah, in a step aimed at funnelling international capital into the sector.
This month, Saudi Arabia also introduced a work permit classification system that recruiters say will introduce more flexibility in hiring high-skilled expats and attracting global talent.
