Category Archives: Real Estate

Saudi Arabia’s New Real Estate Ownership Law for Non-Saudis: Implications for Businesses and Investors

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Saudi Arabia has introduced a landmark Real Estate Ownership Law for Non-Saudis, approved by Royal Decree M14 and published on 25 July 2025. This legislation represents a significant reform in the Kingdom’s property sector, opening new avenues for investment while maintaining regulatory oversight and strategic safeguards. The law allows non-Saudi individuals, companies, nonprofit organisations and other legal entities to acquire property in Saudi Arabia under a regulated framework. Its introduction aligns closely with Saudi Vision 2030, which seeks to diversify the economy, attract foreign investment and modernise urban development.

 

Overview of the Law

The new law replaces the previous framework that restricted foreign property ownership and imposed capital thresholds and purpose-related limitations. Non-Saudis can now acquire property in specific geographic zones determined by the government. Ownership may include full title or other property rights such as usufruct or easements, provided that transactions are properly registered with the Real Estate General Authority. The law clarifies procedures for registration, rights in rem, and fee structures while imposing compliance requirements that are intended to enhance transparency and legal certainty.

Special restrictions remain in place for the holy cities of Mecca and Madinah. Ownership in these locations is subject to stricter conditions, reflecting the Kingdom’s effort to balance investment liberalisation with cultural and religious considerations. The law is scheduled to come into effect approximately six months after publication, around January 2026.

Objectives and Policy Intent

The legislation serves multiple strategic objectives. Primarily, it seeks to attract foreign direct investment into the Saudi real estate market, thereby supporting economic diversification and stimulating activity in non-oil sectors. By widening the scope of eligible buyers and investors, the law also aims to increase the supply and quality of residential, commercial, and industrial properties.

Furthermore, the law provides a regulated and transparent mechanism for property ownership, thereby boosting investor confidence and reducing legal uncertainty. It is designed to encourage private sector participation, enhance urban planning, and support sustainable development goals. The broader intent is to create a modern, globally competitive real estate market that aligns with the Kingdom’s Vision 2030 objectives.

Implications for Businesses in Saudi Arabia

The new law has several implications for businesses operating domestically. Real estate developers stand to benefit from an expanded pool of potential buyers, including foreign individuals, corporations, and investment funds. This could increase demand for residential and commercial properties and enhance project valuations.

Construction companies, property management firms, brokerage agencies and related service providers can expect increased opportunities as demand rises for new developments, facility management and professional services related to registration and compliance. Real estate investment funds and financial institutions may also find new opportunities to create investment vehicles or expand portfolios that include foreign-owned properties.

Employers and multinational corporations will have more flexibility to acquire office premises, logistics hubs and operational facilities. This supports long-term planning for regional headquarters and business operations while simplifying leasing and rental arrangements.

Implications for Foreign Investors and Global Businesses

For international investors, the law transforms Saudi real estate into a regulated and accessible asset class. Foreign individuals and institutional investors can acquire property with legal certainty, creating opportunities for portfolio diversification, real estate development partnerships, and long-term investment.

Multinational companies will benefit from the ability to own premises for operations, reducing reliance on leasing and improving cost predictability. Additionally, foreign participation can stimulate cross-border capital flows and increase the attractiveness of Saudi Arabia as a destination for expatriate talent and international investors.

However, investors must be mindful of geographic restrictions, especially in Mecca and Madinah, as well as compliance requirements related to registration, title deeds and fee structures. Understanding these rules will be essential to mitigate risk and optimise investment outcomes.

Considerations and Risks

While the law provides significant opportunities, businesses and investors must approach the market with careful planning. Implementation details, including the designation of geographic zones and precise regulatory requirements, will only be clarified in forthcoming regulations.

Compliance obligations regarding property registration, ownership rights and associated fees require careful attention. Noncompliance could result in legal or financial penalties. Additionally, the opening of the market to foreign capital may drive demand and prices, creating potential affordability challenges and market volatility.

For sensitive locations, such as the holy cities, strict rules remain in place, and investors must ensure that acquisitions align with permitted zones and approved procedures. Monitoring the Real Estate General Authority and related official announcements will be critical for understanding practical operational requirements.

Saudi Arabia’s Real Estate Ownership Law for Non-Saudis represents a transformative step for the Kingdom’s property sector. By broadening eligibility, introducing transparency and regulatory clarity, and aligning with strategic economic objectives, the law creates substantial opportunities for domestic businesses, developers, investors and multinational corporations. The legislation is designed to attract foreign capital, encourage real estate development and integrate Saudi Arabia more closely into global investment markets. Success for businesses and investors will depend on understanding the regulatory framework, adhering to compliance requirements and strategically planning for participation in this newly accessible and regulated property market.

Saudi Arabia’s Regulations on Real Estate Investment Funds: Implications for Businesses and Investors

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Saudi Arabia has introduced updated Regulations on Real Estate Investment Funds, marking a significant step in the development of the Kingdom’s real estate and investment sectors. The regulations establish a clear framework for the creation, management and operation of real estate investment funds, providing legal certainty for both domestic and foreign investors. These rules are designed to enhance transparency, protect investors, promote market efficiency, and encourage sustainable growth in the real estate sector.

 

Overview of the Regulations

The Regulations set out detailed requirements for licensing, fund structure, investment limits, governance and reporting obligations. They apply to all real estate investment funds operating within the Kingdom, including those managed by Saudi fund managers and by licensed foreign managers authorised to operate in the market. The aim is to create a regulated environment that supports long-term investment while mitigating risks to investors and the broader financial system.

Funds must be registered with the Capital Market Authority, and managers are required to meet fit and proper criteria. The Regulations define permissible types of real estate assets for investment, the conditions for liquidity management, and the procedures for valuation and reporting. These provisions ensure that fund operations are transparent and that investors are fully informed of risks and returns.

Objectives and Strategic Intent

The primary objective of the Regulations is to strengthen investor confidence in real estate investment funds. By providing a robust legal and regulatory framework, the Kingdom aims to attract capital from both domestic and international investors. The Regulations also support the development of a diversified real estate market, stimulate economic activity in related sectors such as construction and property management, and align with Saudi Vision 2030 by encouraging non-oil investment and private sector participation.

The rules encourage fund managers to operate in a professional and disciplined manner, with clear responsibilities and accountability. Governance provisions require independent oversight and risk management, which help maintain a stable investment environment and enhance the Kingdom’s capital markets’ international reputation.

Implications for Businesses in Saudi Arabia

For domestic real estate companies, the Regulations provide an opportunity to access new sources of capital through professionally managed investment funds. Developers can partner with fund managers to finance projects, expand portfolios, and improve liquidity. The framework also increases competition and incentivises higher standards of property management, transparency, and reporting.

Real estate services, including valuation, property management, brokerage, and advisory services, will experience growing demand as funds require professional support. Legal and accounting firms will play a key role in ensuring compliance with the Regulations, structuring fund operations, and providing ongoing audit and advisory services.

The Regulations also encourage innovation in fund design, allowing for the development of specialised funds targeting specific asset classes or market segments. This can provide businesses with greater flexibility in raising capital for projects ranging from residential developments to commercial properties and mixed-use investments.

Implications for Global Investors and International Market Participants

For foreign investors, the Regulations provide a clear and secure framework to participate in Saudi real estate investment. The licensing and governance requirements ensure that funds operate under internationally recognised standards, giving investors’ confidence in fund management and asset valuation.

International fund managers may establish or manage funds in Saudi Arabia, broadening the pool of investment expertise and bringing global best practices to the Kingdom. These regulations make Saudi Arabia a more attractive destination for cross-border real estate investment, potentially increasing inflows of foreign capital and supporting economic diversification objectives.

The Regulations also facilitate participation by institutional investors such as pension funds, insurance companies, and sovereign wealth funds. By providing a structured and regulated environment, they create opportunities for large-scale investment while maintaining investor protection and market stability.

Considerations and Risks

While the Regulations offer significant opportunities, compliance is critical. Fund managers must adhere strictly to licensing, governance, reporting, and investment restrictions. Failure to comply can result in penalties, suspension or revocation of licences.

Investors should carefully assess the risks associated with fund structures, asset valuations and liquidity conditions. Despite the regulatory protections, the performance of real estate assets may be influenced by market conditions, economic factors, and regulatory changes.

Ongoing monitoring of the Capital Market Authority’s guidance and market developments will be essential for both fund managers and investors to ensure funds operate effectively and in accordance with the Regulations.

The Regulations on Real Estate Investment Funds in Saudi Arabia provide a comprehensive legal and regulatory framework that strengthens the Kingdom’s investment environment. They offer opportunities for domestic developers, fund managers, and service providers, while providing foreign investors with a secure and transparent platform to invest in Saudi real estate. By enhancing governance, transparency, and investor protection, the Regulations support sustainable growth in the real estate sector and contribute to the Kingdom’s broader economic diversification objectives under Vision 2030. The introduction of these rules marks a significant milestone in the professionalisation and internationalisation of Saudi Arabia’s real estate investment market.

Real Estate SPVs and REITs: Legal Considerations in Saudi Property Transactions

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Saudi Arabia’s property market is undergoing a profound transformation, fuelled by Vision 2030 initiatives, giga-projects, and increasing foreign and institutional participation. Real estate has become one of the most dynamic asset classes in the Kingdom, offering opportunities for domestic and international investors alike. Against this backdrop, structuring vehicles such as special purpose vehicles (SPVs) and real estate investment trusts (REITs) has emerged as a key tool in facilitating real estate investment and transactions. However, these structures bring their own legal and regulatory considerations that investors must navigate to ensure compliance and protect value.

 

SPVs in Real Estate Transactions

SPVs are commonly used in real estate to isolate risks, ring-fence assets, and streamline ownership structures. In Saudi Arabia, they are often incorporated to acquire, develop, or holding a specific real estate asset. This allows investors to separate liabilities associated with the project from their wider business, enhancing both risk management and financing flexibility.

An SPV can also facilitate joint ventures, particularly where foreign investors seek to partner with Saudi entities. By confining rights, obligations, and cash flows within a dedicated vehicle, the SPV simplifies governance and exit options. However, investors must ensure that the SPV is adequately licensed and complies with foreign investment restrictions. Approvals from the Ministry of Investment of Saudi Arabia (MISA) may be required where non-Saudi investors hold equity.

Legal and Regulatory Framework for SPVs

The incorporation of SPVs is governed by the Saudi Companies Law, which sets out requirements for shareholding, governance, and reporting. Investors must also consider:

  • Licensing: Foreign investors require MISA approval for direct or indirect ownership of real estate assets, except where exemptions apply.
  • Sector-Specific Restrictions: Certain property types, such as land in Makkah and Madinah, are subject to foreign ownership limitations.
  • Financing and Security: Mortgages and security interests must be registered with the Unified Real Estate Registry and the Ministry of Justice to be enforceable.
  • Tax and Zakat: SPVs are subject to corporate tax where foreign-owned and to zakat where Saudi- or GCC-owned, with implications for structuring joint investments.

SPVs therefore offer flexibility, but their establishment and operation require careful attention to licensing, ownership, and regulatory compliance.

REITs as a Structuring Tool

REITs, introduced into Saudi Arabia in 2016, provide a regulated framework for collective investment in income-generating real estate. They allow investors to access real estate markets without directly owning or managing assets, offering liquidity through public listing on the Saudi Stock Exchange (Tadawul).

REITs are governed by the Capital Market Authority (CMA) and must meet detailed requirements, including:

  • Diversification: Limits on concentration of assets and obligations to invest primarily in developed, income-producing properties.
  • Distribution: Mandatory annual distribution of a significant portion of net income to unitholders.
  • Transparency: Strict disclosure requirements, including valuation standards, periodic reporting, and governance obligations.
  • Leverage: Restrictions on borrowing to mitigate systemic risks.

These requirements make REITs attractive to institutional investors seeking regulated exposure to Saudi real estate. However, compliance with CMA rules and ongoing reporting obligations can present operational challenges, particularly for sponsors unfamiliar with capital markets regulation.

Key Legal Risks in Structuring

When deploying SPVs or REITs in property transactions, investors must navigate several legal risks:

  • Foreign Ownership Restrictions: Limitations on property ownership in certain regions may restrict structuring options.
  • Regulatory Approvals: Both MISA and CMA approvals may be required, depending on the structure and asset class.
  • Taxation: Cross-border transactions can give rise to withholding tax on dividends, royalties, or management fees; double taxation treaty protections should be considered.
  • Governance Risks: Poorly drafted shareholders’ agreements in SPVs or inadequate compliance frameworks in REITs can create disputes or regulatory penalties.
  • Exit Strategy: For SPVs, clarity around share transfers and valuation mechanisms is critical, while for REITs, liquidity is tied to market conditions and regulatory requirements.
Dispute Resolution and Enforcement

Dispute resolution in real estate SPVs and REITs often centres on shareholder disagreements, financing arrangements, or regulatory compliance. Arbitration is commonly used, and Saudi Arabia’s adoption of the New York Convention ensures the enforceability of arbitral awards, subject to Sharia principles. For REITs, disputes may also involve regulatory enforcement actions by the CMA, requiring sponsors and managers to adhere strictly to compliance obligations.

Strategic Opportunities

The growing use of SPVs and REITs reflects Saudi Arabia’s maturing investment ecosystem. SPVs offer bespoke, flexible ownership and financing structures, while REITs provide transparency, liquidity, and regulated access to the property market. Both are instrumental in unlocking capital, attracting foreign participation, and facilitating investment in landmark developments and income-producing portfolios.

As Saudi Arabia continues to reshape its real estate sector, SPVs and REITs are becoming indispensable structuring tools for both local and international investors. However, they present distinct legal and regulatory challenges that must be managed carefully to ensure compliance, protect investment value, and achieve strategic objectives. By anticipating these challenges at the outset of a transaction, investors can successfully harness these vehicles to participate in one of the region’s most dynamic property markets.