What impact could the decision to allow foreigners to buy property in Saudi Arabia have on the Saudi economy?

 

What impact could the decision to allow foreigners to buy property in Saudi Arabia have on the Saudi economy?

Saudi Arabia has decided to allow foreign nationals to buy property in the country, which will come into effect from January 2026.

this decision was taken at a government cabinet meeting chaired by Saudi Crown Prince Mohammed bin Salman on July 8.

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Saudi Arabia has previously allowed foreigners to buy property in the country, but under the new law, people will be given new facilities, however, this time too the Saudi government has decided to place some conditions in this matter.

What is the purpose of this decision of the Saudi government and how will it affect the real estate sector and economic conditions of Saudi Arabia?

 

 Khalid Al-Mubaeed, CEO of Mansat Real Estate and a construction expert, said that the Saudi government’s decision to allow foreigners to buy property is part of the Saudi Crown Prince’s ‘Vision 2030’, which aims to bring capital and foreign currency into the country so that Saudi Arabia can reduce its economic dependence on oil.

The rules, regulations and legal and financial conditions regarding this new decision will be shared on the Saudi government’s official platform ‘Istila’.

According to the conditions that have emerged so far, non-Muslim foreigners will not be allowed to reside in Mecca and Medina.

Khalid Al-Mubaid says he hopes that under this new system, foreigners will be given more facilities, the process of registering property will be expedited, and clear rules and regulations will be laid down.

What is new in this decision?

In the past, foreigners were only allowed to buy residential property in Saudi Arabia. However, according to the new amended law, foreigners will now be able to buy commercial and industrial property in Saudi Arabia.

This means that under this law, foreigners will be allowed to invest in the real estate sector, which will be slightly different from the previous law.

Khalid Al-Mubaid says that the old law had some complicated points and it took months to obtain the permission required to buy residential property under it.

“At that time, there were no clear rules and regulations.”

For example, in the past, foreigners were not allowed to buy property in Mecca and Medina, but perhaps after the new decision of the Saudi government, Muslim foreigners will be allowed to buy property in these two cities.

Under the old law, any foreigner purchasing property had to be a legal resident of the country, while foreigners were also required to obtain a business license.

How will this decision affect Saudi citizens?

Property prices will increase and competition among investors will increase. This will make it difficult for Saudi citizens with low purchasing power to buy property and invest.

In September 2024, the Saudi newspaper ‘Okaz’ reported that apartment rents in Saudi Arabia have been increasing continuously over the past five years.

Quoting data from the Saudi Statistical Institute, Okaz said that residential rents had increased by 10.7 percent in August 2024.

However, construction expert Khalid Al-Mubaeed told BBC Urdu that the government had prioritized the interests of Saudi citizens when making these decisions.

He added that under the new system, some areas would be ‘reserved for citizens only’.

According to the Saudi Press Agency, Minister of Municipal Affairs Majid bin Abdullah also confirmed that under the new system, the interests of Saudi citizens will be prioritized and a mechanism will be created to ensure control over the market and maintain balance in the real estate sector.

What impact will this decision have on the Saudi economy?

The profit earned from the real estate sector in Saudi Arabia accounts for only 6.5% of the country’s GDP.

This raises the question of whether Saudi Arabia really needs to open this sector to foreign investment?

Khalid Al-Mubaid says that ‘the country has now become more attractive and ready’ and that the real estate market now has the ‘capacity to meet the needs of new investors.’

He added that the real estate market directly or indirectly drives more than 80 industries and will provide jobs to a large number of people.

According to Khalid Al-Mubaid, after this new decision, new investments will come in the construction sector and Saudi Arabia’s dependence on oil will decrease.

“This is not just about buying real estate property, it also includes the purchase of a factory.”

According to current conditions, a property buyer must have at least 4 million riyals to obtain residency in Saudi Arabia.