After opening the door to foreign ownership, Saudi Arabia imposes new restrictions.

After opening up to real estate investment for foreigners, Saudi Arabia is changing the rules of the game!

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The newly enacted foreign ownership law now includes new restrictions that limit the ownership rights of certain groups.

How did this happen? And why?

In recent years, Saudi Arabia introduced a new law allowing foreigners to own real estate in specific areas under clear conditions. The aim was to attract investment, increase demand in the real estate market, support economic growth, and diversify non-oil investment sources. However, the law also included regulatory requirements and frameworks to protect the market, such as: specifying the areas where ownership is permitted, the types of properties allowed, specific taxes and fees, and property registration with the relevant authorities.

The new restrictions… why did they appear?

After the law came into effect, Saudi authorities observed that foreign entry into the real estate market contributed to: rising prices for certain property categories, increased demand for real estate in major cities, and increased monopolization by foreign investors at the expense of Saudi citizens. Therefore, new regulatory amendments were issued to balance the effects of the law rather than repeal it.

What restrictions were added?

The new restrictions did not prevent ownership, but they defined new categories, areas, and conditions. Most importantly, they specified the categories of individuals permitted to own property: qualified investors who meet certain criteria, and specific categories of individuals who are not allowed to own property without additional authorization.

The type of property was also restricted, limited to residential units in specific areas, and foreign ownership of certain properties (for example, in city centers or residential complexes outside of investment programs) was prohibited. Furthermore, rental and investment were regulated by mandating property registration on a government platform and setting limits on foreign investment percentages within projects.

Additional approvals are required for large transactions, especially sales exceeding certain limits in value and/or size, which necessitate official approval before completion.

How are these restrictions implemented in practice?

- Through electronic portals belonging to the Ministry of Municipal and Rural Affairs and Housing
- Property registration in the foreign investor registry
- Verification of compliance with conditions
- Prior approval before acquiring ownership

Regulatory bodies also monitor rental rates, ownership periods, and property usage.