An impending landmark law that allows non-Saudi residents to own property in the kingdom will be a game-changer for the Middle East’s property market, prompting more countries in the region to join the freehold boom. The new law, which has been eagerly awaited by the global investor community, is under review and will allow non-Saudi nationals to own property in all parts of the kingdom, including Makkah and Madinah, according to the Real Estate General Authority (Rega).
The reform is expected to kick off a new round of freehold boom in the Gulf region more than two decades after it was trail-blazed in the UAE, property market experts said. According to property market pundits, the recent hike in real estate prices in the kingdom is due to the gap between supply and demand in the real estate market, negatively impacting investors, as land prices significantly increased.
Saudi Arabia is working on real estate projects worth $1.1 trillion to diversify its economy by 2030. It is planning to build over four million residential units and houses in different regions in the kingdom by 2030.
Saudi Arabia, which is on the cusp of a spectacular transition driven by a series of giga-projects, including the ambitious $500 billion Neom, seeks to lower real estate prices by boosting demand and striking an economic balance in the sector. The government aims to inject units at affordable prices and support supply by offering government lands and forming partnerships with the private sector, especially in Riyadh which is witnessing a remarkable rise in prices. The Saudi real estate sector accounts for nearly 5.1 per cent of the kingdom’s GDP and 12.8 per cent of the non-oil GDP.
Currently, land ownership is restricted to Saudis or – subject to certain extra rules – GCC citizens and entities. Non-Saudi, non-GCC ownership is permissible for companies as part of a particular project and requires a foreign investment licence from the Ministry of Investment. Foreign ownership is also permitted when the property is located within one of the four economic cities and is subject to the regulations of those cities and the Special Zones Authority.