Saudi Arabia allows foreigners to invest in Makkah, Madinah property

Saudi Arabia’s Capital Market Authority (CMA) has announced a groundbreaking policy allowing foreign investors to invest in real estate companies operating in the holy cities of Makkah and Madinah.

This initiative, effective immediately, is designed to attract foreign capital, boost the Saudi capital market, and support ongoing and future development projects in the two sacred cities.

This decision is part of the CMA’s “Controls for the Exclusion of Companies Listed in the Saudi Stock Exchange (Tadawul) from the Meaning of the Phrase (Non-Saudi)” under the Law of Real Estate Ownership and Investment by Non-Saudis.

Key details of the investment policy

Under the new regulations:

• Foreign investment is limited to shares and convertible debt instruments of Saudi-listed companies owning real estate in Makkah and Madinah.

• Non-Saudi investors (both individuals and institutions) can collectively own up to 49 percent of a company’s shares.

• Strategic foreign investors, however, are excluded from owning shares or convertible debt instruments.

The policy enables foreign investors to participate in the economic growth driven by development projects in the holy cities, while ensuring compliance with local laws, including the Law of Real Estate Ownership and Investment by Non-Saudis.

Part of Saudi Vision 2030

This move is a strategic part of Saudi Arabia’s Vision 2030, which aims to diversify the economy and make the Saudi capital market more attractive to international investors. By opening up real estate investments in Makkah and Madinah, the CMA seeks to:

• Attract foreign capital to enhance liquidity for development projects.

• Strengthen the capital market’s competitiveness regionally and globally.

• Position the Saudi market as a key funding source for developme

Saudi-listed companies will also be allowed to own or lease properties in Makkah and Madinah for their headquarters or branches, provided the properties are fully utilized for such purposes.

Steps toward economic reform

The CMA has introduced multiple reforms to make Saudi Arabia’s capital market more accessible to foreign investors. These include:

• Allowing foreign residents to directly invest in the Saudi stock market.

• Enabling foreign institutions to invest through swap agreements and other channels.

• Permitting foreign investors to acquire debt instruments and real estate funds.

Notably, in 2021, the CMA allowed non-Saudis to invest in real estate funds operating in Makkah and Madinah, further enhancing financing options for development projects in these cities.