The Kingdom of Saudi Arabia has taken another step to reshape its investment landscape by passing a law that expands the ability of non-Saudi individuals and entities, resident and nonresident, to own real estate in the kingdom.
The new law, published in the Official Gazette on July 25, 2025, took effect on Jan. 21, 2026. While foreign ownership of property has existed in limited forms for years, the new framework signals a broader liberalization aligned with the kingdom’s economic diversification strategy.
For investors, developers, and family offices, this isn’t simply a regulatory adjustment—it’s a structural shift with long-term implications.
Strategic Implications
The broader availability of ownership rights changes how international capital may approach Saudi real estate.
There’s also a broader message at work: Saudi Arabia is moving toward a more open, investment-friendly environment while maintaining structured regulatory oversight. For foreign investors who previously viewed the Saudi property market as complex or restrictive, the new law may prompt a reassessment.
On the legal side, investors need to carefully plan their investment structures, choice of vehicles, areas in which to invest, eligibility criteria, capital flows and taxation, and contractual protections.
What’s Changed?
Historically, foreign ownership of real estate in Saudi Arabia was tightly controlled. Non-Saudi businesses generally could own property only for specific licensed business activities. Non-Saudi individuals were allowed to buy just one property, and only if they had a residence permit and used it as their home.
Ownership in certain areas was heavily restricted—particularly in the holy cities of Makkah and Madinah.
Although detailed regulations will determine the full practical impact, the new law broadly reflects three important developments:
Expanded eligibility. The law widens the scope of non-Saudi individuals and legal entities that may acquire real estate within geographical zones to be determined. This includes resident and nonresident individuals and businesses. The change signals a policy shift: Foreign real estate ownership is increasingly viewed as an investment tool rather than an exception requiring narrow justification.
Greater certainty for long-term investors. Clarity around ownership rights enhances security of tenure. For international investors—particularly institutional capital, private equity real estate funds, lenders and family offices—legal certainty is critical. The new law reduces ambiguity around whether foreign investors must rely on long-term leases or alternative arrangements, strengthening confidence in direct ownership models.
New disposal fee. The new law creates a fee of 5% of the transaction value upon disposal of real estate involving non‑Saudis. This comes in addition to the existing 5% real estate transaction tax, or RETT, upon purchase.
Careful Navigation Required
Despite the liberalization, foreign ownership remains subject to conditions. Investors should be mindful of several considerations.
Restricted zones: Certain areas, particularly in Makkah and Madinah, are under special rules reflecting religious and policy sensitivities. Investors must assess whether ownership is permitted outright or subject to alternative structuring.
Licensing and regulatory compliance: Foreign companies typically require appropriate licensing through Saudi investment authorities. Real estate ownership may hinge on maintaining such licenses and complying with sector-specific regulations.
Use restrictions: Ownership rights may be tied to the approved purpose of investment. For example, property acquired for commercial operations needs to align with licensed business activities.
Other Considerations
Real estate investment in Saudi Arabia may trigger certain taxes throughout the investment cycle: purchase, operation, sale. These taxes include RETT, income tax and/or Zakat, withholding tax, and value-added tax.
The interaction between ownership structures and tax treatment requires careful planning, particularly for cross-border investors.
Saudi Arabia’s new real estate ownership law represents more than a technical adjustment. It reflects a deliberate policy choice to deepen foreign participation in one of the kingdom’s most important economic sectors.
The opportunity is clear: a large, fast-growing market with ambitious development projects and increasing legal certainty for foreign capital. The challenge lies in navigating the regulatory and tax framework carefully and strategically.
With the right guidance and timing, investors who enter early may be able to secure key positions in the kingdom’s real estate market.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Xavier Segui is a partner at NAX Law.
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