Saudi Arabia has approved a landmark new law regulating real estate ownership by non-Saudis, published on July 25, 2025 in the official gazette. This Law of Real Estate Ownership by Non-Saudis will take effect 180 days after publication (anticipated in January 2026). It introduces a more structured framework that enables foreign individuals and entities whether residents or abroad to own and invest in real estate within specially designated zones across the Kingdom. This reform aligns closely with Saudi Arabia’s Vision 2030 goals by attracting foreign capital, expanding the real estate market, and spurring urban development, all while maintaining regulatory safeguards. The new law also replaces the previous 2000 Law of Real Estate Ownership and Investment by Non-Saudis, marking a significant policy shift toward opening the real estate sector.
Below is an overview of the key provisions of the law, what changes it brings to the market, and how investors can take advantage of the opportunities it creates.
Who Is a “Non-Saudi” Under the New Law?
Under the new framework, "non-Saudi" is defined broadly to include anyone without Saudi citizenship, as well as foreign legal entities. This means not only resident and non-resident foreign individuals, but also foreign companies, non-profit organizations, and other foreign entities fall under the law’s purview. The Council of Ministers retains flexibility to expand this definition by formal decision, ensuring that various types of foreign investors or organizations can be accommodated as needed under the regulations.
Where Can Non-Saudis Own Property?
The law adopts a designated-zone model for foreign real estate ownership. The Council of Ministers, in coordination with the Real Estate General Authority and other bodies, will identify specific geographic zones where non-Saudis are permitted to acquire property or property rights. These zones are expected to include high-demand urban areas (for example, parts of major cities like Riyadh and Jeddah). Outside of the approved zones, foreign ownership will generally not be allowed, except in specific cases.
Importantly, sensitive cities and regions such as Makkah and Madinah remain largely off-limits to foreign ownership under the new law. The longstanding prohibition on non-Saudis owning property in these two holy cities is maintained, with only narrow exceptions. The new law allows Muslim foreign individuals and foreign-owned Saudi businesses to acquire limited ownership and property rights in Makkah or Madinah, under certain conditions to be detailed in the regulations.
What Types of Property Rights Can Non-Saudis Acquire?
Foreign investors may obtain a range of real estate rights under the new law. This includes full ownership of property, as well as lesser real rights such as long-term leaseholds, usufruct rights (the right to use and benefit from property), easements, and similar interests. In essence, non-Saudis can own real estate outright or hold other transferable rights in real estate, depending on their needs and the nature of the property.
All such acquisitions will be subject to conditions and limits set by regulators. The Council of Ministers is tasked with stipulating maximum ownership shares that foreign persons or entities can hold in designated zones, and may also impose time limits on usufruct or lease terms. These controls will ensure that foreign ownership remains within bounds considered economically and socially appropriate for each area and property type. Details on these limits are expected in a forthcoming resolution of the Council of Ministers.
Implications for Foreign Residents and Businesses
- Foreign Residents: Non-Saudi individuals who are legally residing in Saudi Arabia will be permitted to own properties within the designated zones, as well as one residential property in the Kingdom for personal use, outside of the designated zones. Muslim resident expatriates are now allowed to purchase property within the designated zones in Makkah and Madinah, subject to certain restrictions and conditions. The new law now offers foreign residents a chance to buy a home in Saudi Arabia, which was previously difficult under older rules.
- Foreign Companies and Investment Funds: Foreign-owned business entities enjoy broader real estate privileges to support their operations. Both listed and unlisted foreign companies, as well as licensed investment funds and special-purpose vehicles, are allowed to acquire real estate necessary for their business activities and to house their employees. Notably, these entities can purchase property within the designated zones and even in Makkah and Madinah; provided the acquisition serves approved purposes (such as establishing offices, commercial facilities, or staff housing) and complies with any conditions set by regulators. Listed companies and regulated investment vehicles must still adhere to Saudi Capital Market Authority regulations when acquiring property, but the new law broadly empowers corporate investors to own real estate assets in ways not previously possible.
- Diplomatic and International Organizations: Foreign diplomatic missions and international organizations accredited in Saudi Arabia are explicitly allowed to own premises for official use (such as embassy or consulate buildings, and residences for diplomats). These acquisitions are subject to approval by the Saudi Ministry of Foreign Affairs and require reciprocity (i.e., Saudi Arabia’s own missions in the respective country should be afforded similar rights). This provision codifies a practice of allowing embassies and international bodies to secure their own real property in the Kingdom for operational needs.
Practical Steps and Obligations for Foreign Buyers
- Mandatory Registration: All real estate purchases or rights acquisitions by non-Saudis must be registered with the competent authority and recorded in the national Real Estate Registry to be legally effective. In other words, a property transaction is not valid until proper registration is completed. Ensuring timely registration is therefore critical it protects the buyer’s rights and confirms compliance with the law’s procedures.
- Transfer Fees and Taxes: The new law authorizes the Real Estate General Authority to levy a real estate transfer fee on disposals of property by non-Saudis, up to a maximum of 5% of the property’s value. This fee would apply, for example, when a foreign investor sells a property. Investors should factor this cost into their financial planning, alongside any other applicable taxes or transaction levies in Saudi Arabia. At present, Saudi Arabia imposes a 5% real estate transaction tax on most property sales, which would presumably accompany the new foreign transfer fee cap.
- Enforcement and Penalties: The law establishes a strict compliance regime to prevent abuses. Violations can result in hefty fines of up to SAR 10 million (~USD 2.67 million) per offense. In severe cases such as if a foreigner obtained property using false information or under prohibited circumstances authorities may order a forced sale of the property. Oversight will be handled by a specialized committee under the Real Estate General Authority, which is empowered to investigate breaches and impose penalties. Decisions of this committee can be appealed to the administrative courts within 60 days, providing legal recourse for aggrieved parties.
Next Steps and Opportunities
- Review Current Real Estate Holdings and Plans: Companies and investors should evaluate their existing real estate portfolio and future plans in Saudi Arabia in light of the new law. Identify which assets or planned projects might now be permissible (or restricted) under the designated zone system. Ensure any ongoing property arrangements will comply with the new ownership framework and registration requirements once the law takes effect.
- Monitor Implementing Regulations: Stay alert for the detailed Implementing Regulations that will be issued within 180 days of the law’s publication (expected by January 2026). These regulations (an initial draft of which was published for public consultation purposes), together with the accompanying Council of Ministers’ resolution, will elaborate on procedures for registration, fee mechanisms, the exact geographic boundaries of allowed zones, and conditions on various property rights. Reviewing these details will be crucial for navigating the new system. Consider engaging local counsel or advisors to track regulatory developments and guide compliance as rules are clarified.
- Explore New Investment Opportunities: Perhaps the most exciting aspect of the reform is the opening it creates for new investments in Saudi real estate. Foreign investors can start exploring opportunities in residential, commercial, and mixed-use projects across the Kingdom’s emerging zones. This includes potential participation in Saudi Arabia’s ambitious development initiatives under Vision 2030. The expanded rights for non-Saudis if carefully implemented are expected to increase market liquidity and spur development in key cities. Investors should be proactive in identifying high-potential areas (e.g., parts of Riyadh, Jeddah, or new economic cities) where foreign ownership is permitted, and in forging partnerships or strategies to capitalize on the liberalized framework. With proper due diligence and adherence to the upcoming regulations, foreign companies and investment funds can take advantage of this historic opening to establish or grow their footprint in Saudi Arabia’s real estate sector.
Abdullah AlHuwayshan (White & Case, Associate, Riyadh) and Bayan Al-Bogami (White & Case, Trainee Associate, Riyadh) contributed to the development of this publication.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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