Prime Highlights:
Foreigners can now invest in Saudi-listed companies owning real estate in Makkah and Madinah, opening new avenues for investment in the Kingdom’s capital market.
Foreign investors can acquire shares or convertible debt instruments in these companies, with ownership capped at 49% of the total shares. Strategic foreign investors are excluded from holding stakes.
The decision aligns with Saudi Arabia’s Vision 2030 program, aimed at economic diversification and reducing dependence on oil revenues by attracting more foreign direct investment (FDI).
Key Background:
In a significant move aimed at boosting foreign direct investment (FDI) and strengthening the capital market, Saudi Arabia has announced that foreigners can now invest in Saudi-listed companies owning real estate in Makkah and Madinah. This landmark decision, issued by the Saudi Capital Market Authority (CMA), marks a step toward achieving the objectives of the Vision 2030 program, which focuses on economic diversification and reducing dependence on oil revenues.
The new regulation, which is effective immediately, permits foreign investors to buy shares or convertible debt instruments in companies that own real estate in these two holy cities. However, non-Saudis are subject to restrictions, with ownership in such companies capped at 49 percent of their total shares. Foreign strategic investors are prohibited from holding stakes in these companies.
While non-Saudis have long been able to lease properties in Makkah and Madinah, this move opens the door for greater participation in the real estate sector. It also aligns Saudi Arabia with regional trends, as several neighboring countries have permitted foreign ownership of properties under certain conditions, often in designated areas or free zones.
The CMA emphasized that the change aims to enhance the competitiveness of the capital market, attract foreign capital, and provide the necessary liquidity for major real estate developments in Makkah and Madinah. This initiative is part of Saudi Arabia’s broader strategy to stimulate FDI and position the country as a key player in the global investment landscape.
As a result of the announcement, the share prices of several real estate companies listed on the Saudi Stock Exchange saw significant gains, including Knowledge Economic City, which rose by 9.89 percent, and Jabal Omar Development Co., which increased by 10 percent. This development is expected to bolster the Kingdom’s real estate sector and play a vital role in achieving the Vision 2030 goal of attracting $100 billion in foreign investments by the end of this decade.
