Saudi Arabia has approved a landmark law that will allow foreign individuals and entities to own real estate in the Kingdom starting in January 2026. The move replaces a restrictive system in place since 2000 and marks one of the most significant economic reforms under Crown Prince Mohammed bin Salman's Vision 2030 plan .
The "Law of Real Estate Ownership by Non-Saudis" was published in the official gazette, Umm Al-Qura, in July 2025. It will take effect after a 180-day transition period, allowing time for detailed regulations to be finalized . The law introduces a structured framework for foreign ownership, moving away from a patchwork of exceptions and licenses toward a more transparent and regulated market .
A core feature of the new law is its "designated-zone" model. Foreign ownership will not be permitted everywhere. The Council of Ministers, working with the Real Estate General Authority (REGA), will identify specific geographic areas where non-Saudis can acquire property . These zones are expected to include high-demand urban areas in cities like Riyadh and Jeddah, as well as the new giga-projects central to the Kingdom's development strategy .
Outside these designated zones, foreign ownership will generally not be allowed. However, an important exception exists for foreign residents. Non-Saudi individuals legally residing in the Kingdom will be permitted to own one residential property for personal use outside the designated zones, though not in the holy cities of Mecca and Medina .
The law defines "non-Saudi" broadly. It covers foreign individuals, both residents and non-residents, as well as foreign companies, non-profit organizations, and investment funds . Saudi companies that are wholly or partially owned by foreigners also fall under the law's scope .
The types of property rights available have also expanded. Foreign investors can obtain full ownership or other real rights like long-term leaseholds, usufruct rights (the right to use and benefit from a property), and easements. These rights are transferable, providing investors with greater flexibility .
Reflecting their deep religious and cultural significance, the holy cities of Mecca and Medina will remain largely off-limits to foreign ownership. The longstanding prohibition is maintained, but with carefully defined exceptions . Muslim foreign individuals will be allowed to own property in these cities, subject to conditions yet to be detailed in the regulations . Foreign companies, however, are generally prohibited from owning property in Mecca and Medina .
The law grants foreign companies and Saudi companies with foreign shareholders significant rights. They can own real estate necessary for their business activities and for housing their employees . For large-scale development projects, a minimum investment of SAR 30 million (approximately $8 million) and a five-year completion deadline will apply, ensuring projects contribute actively to the economy . Saudi companies listed on the Tadawul stock exchange will have the most flexible rights, able to own property across the Kingdom, including in the holy cities, in line with Capital Market Authority rules .
This reform is a direct component of Saudi Arabia's Vision 2030, a strategic plan to diversify the economy away from oil dependence. By opening the real estate market, the government aims to attract foreign direct investment (FDI), increase the housing supply, and spur broader urban development .
The real estate and construction sectors have recently seen dramatic growth. Their contribution to Saudi Arabia's GDP reportedly doubled from 5.9% in 2023 to around 12% in 2024, and the new law is expected to push this figure even higher . The reform is also seen as a tool to attract and retain global talent by allowing long-term expatriates to put down roots, potentially deepening their commitment to the Kingdom .
Industry experts anticipate a surge of interest. A YouGov and Knight Frank poll cited in one analysis suggested high demand from wealthy Muslims worldwide, with potential investment in Mecca and Medina alone estimated near $2 billion . The Chief Operating Officer of Knowledge Economic City (KEC) in Medina said opening property ownership to foreigners will be pivotal for the city and expects it to boost the sector .
Foreign property ownership will come with specific financial obligations. Investors should expect to pay a real estate transaction tax. While some reports indicate a 5% Real Estate Transaction Tax (RETT) applies to all sales, others suggest foreign buyers may face a combined fee and tax structure totaling around 10% of the property's value . A real estate transfer fee of up to 5% may also apply when a foreign investor sells a property .
The law establishes a strict system to prevent violations. Penalties for providing false information or acquiring property illegally can reach fines of SAR 10 million (about $2.67 million). In severe cases, authorities can force the sale of the property . All acquisitions by non-Saudis must be registered with the national Real Estate Registry to be legally valid, emphasizing transparency and legal certainty .
A Calibrated Step in Economic Transformation
The new property law signals a profound shift in Saudi Arabia's approach to foreign investment. It transitions the country from a historically guarded stance to a calibrated opening designed to harness global capital for domestic growth . The government views this reform not just as a real estate policy, but as a keystone for broader economic change, expecting a multiplier effect on construction, finance, and professional services .
As the January 2026 effective date approaches, the Real Estate General Authority is finalizing the executive regulations. These details, which will be published for public consultation, will provide the crucial final piece of the puzzle. They will map out the designated zones and clarify the exact procedures for foreign investors eager to participate in one of the world's most dynamic real estate markets .