Saudi Arabia New Property Law Opens Real Estate Market to Foreigners

Saudi Arabia new property law will open its real estate market to foreign ownership in January 2026, aiming to boost FDI and support Vision 2030 goals. The reform marks a pivotal shift, unlocking access to a high-growth sector amid rising demand, investment, and urban expansion.

Saudi Arabia has announced that it will allow non-Saudis to own property in designated areas of the Kingdom starting January 2026 (hereinafter referred to as the “new property law”).

The decision, approved by the Saudi Cabinet, marks a decisive step in the country’s ongoing efforts to attract foreign direct investment (FDI) and diversify its economy beyond oil. It also reflects the ambitions of Vision 2030, the Kingdom’s strategic framework aimed at transforming Saudi Arabia into a global investment hub.

The new property law forms part of a broader real estate reform agenda designed to expand property supply, foster international developer participation, and unlock new capital flows into the Kingdom’s urban centers.

Key highlights of the new property law

Saudi Arabia’s new property law introduces a structured framework for foreign ownership of real estate in the Kingdom, marking a historic shift in national property policy. Some important features of the law include:

• Effective date: The law will come into force in January 2026, following its formal publication in the official gazette.
• Geographic scope: Foreign nationals will be permitted to purchase property within designated areas, with initial focus on major urban hubs such as Riyadh and Jeddah. Ownership in Mecca and Medina will remain subject to additional regulatory controls and specific conditions.
• Strategic objectives: The legislation aims to increase real estate supply and housing availability, attract global real estate developers and institutional investors, stimulate foreign direct investment as part of broader economic diversification goals.
• Safeguards and controls: While liberalizing property ownership, the law incorporates strict procedural controls to protect the interests of Saudi citizens and ensure the reform aligns with national priorities.
• Executive regulations timeline: Within 180 days of publication, the Real Estate General Authority will release detailed executive regulations through the “Istitlaa” public consultation platform. These will define: eligible property zones; foreign ownership procedures; investor qualifications and compliance mechanisms.

Economic drivers behind the reform of Saudi Arabia real estate market

In 2024, the real estate sector’s contribution to the national economy nearly doubled, rising from 5.9 percent of GDP in 2023 to approximately 12 percent—a remarkable increase that  shows the sector’s growing importance in the Kingdom’s non-oil economy.

This expansion has been supported by an ambitious legislative agenda designed to streamline regulations and enhance investor confidence. Over the past year alone, more than 20 new real estate-related rules were enacted to facilitate development and improve market transparency. These reforms have addressed some major challenges in project licensing, foreign participation, and market liquidity, laying the groundwork for the broader liberalization of property ownership.

According to CBRE Middle East, the tangible impact of these reforms is evident in the surge in project activity. In 2024, Saudi authorities issued 192 new real estate project licenses and an additional 3,800 construction permits—a 59 percent increase in Q4 alone. This acceleration reflects strong domestic demand and growing international interest in the Saudi property market.

Complementing this growth is the sharp uptick in foreign investment activity. Over 130 foreign real estate investment licenses were issued in 2024, signaling heightened confidence among global investors.

By institutionalizing access for foreign investors, the government aims to unlock new capital inflows, expand housing and commercial infrastructure, and consolidate real estate as a long-term pillar of Saudi Arabia’s diversified economic model.

Market trends and real estate performance

Residential sector growth

Saudi Arabia’s residential property market continues to experience strong growth, fueled by rapid urban expansion, favorable demographics, and government-backed housing initiatives. Urban centers, particularly Riyadh, Jeddah, and Dammam, are seeing a rise in demand for housing, driven by population growth, rising incomes, and increased domestic and international migration to urban hubs.

This growing demand is reflected in property pricing and mortgage activity. In 2024, the value of new residential mortgages rose by 17 percent year-on-year, pointing to expanding homeownership and robust buyer sentiment. Residential prices have climbed steadily, particularly in Riyadh, where average villa prices now approach SAR 6,000 (US$1,599.75) per square meter. Jeddah’s residential market shows a similar trajectory, with apartment values averaging around SAR 4,000 (US$1,066.47) per square meter and villa prices nearing SAR 5,700 (US$1,519.72) per square meter.

Office and commercial real estate

Saudi Arabia’s commercial real estate market, particularly in Riyadh, is also showing strong performance as corporate demand surges. Office space in the capital has become increasingly scarce, with prime districts operating near full occupancy by the end of 2024. This scarcity is driving rental growth and signaling a broader shift in the Kingdom’s business environment.

Rental rates in Riyadh’s office sector rose by 18 percent over the past year, while Jeddah and Dammam also experienced healthy increases of around 10 to 12 percent. The limited availability of high-grade office space has begun to constrain transactional activity, prompting developers to fast-track commercial construction pipelines.

Implications for foreign investors and developers

For foreign investors and real estate developers, Saudi Arabia’s new property law unlocks access to one of the Middle East’s most dynamic and fast-appreciating markets. With majorurban centers experiencing rising prices, growing rental yields, and strong demographic fundamentals, the opportunity for long-term returns is compelling.

Foreign participation will be permitted both through direct real estate ownership in designated zones and indirectly via equity stakes in listed property firms, especially in previously restricted areas like Mecca and Medina. These dual pathways offer flexibility and reduce entry barriers, particularly for institutional investors.

The new property law complements the Premium Residency program and builds on Saudi Arabia’s growing network of RHQ (Regional Headquarters) licenses, which continue to attract multinational firms to Riyadh. As more companies relocate executive operations to the Kingdom, demand for both residential and commercial real estate is expected to accelerate further, deepening the market and enhancing returns for early entrants.

Looking ahead

Saudi Arabia’s decision to open its real estate market to foreign ownership represents a watershed moment in the country’s economic transformation. By institutionalizing access for non-Saudis, the Kingdom is not only diversifying its economy but also laying the foundation for a globally integrated, investment-friendly property sector.

In the short to medium term, market attention will focus on the rollout of executive regulations and the finalization of eligible geographic zones. However, early indicators—including investor response, licensing growth, and rental trends—suggest strong momentum and readiness to absorb foreign capital.

Over the long term, the reform is set to position real estate as a central pillar of the non-oil economy, catalyzing urban development, boosting foreign direct investment, and reinforcing Saudi Arabia’s emergence as a premier global investment destination.

Also read: Saudi Arabia and Indonesia Strengthen Trade Ties with US$27 Billion in New Agreements 

• Previous Article UAE Data Protection Obligations and Cross-Border Data Transfer for Businesses
• Next Article