Introduction
In the ongoing transformation journey under Vision 2030, the Kingdom of Saudi Arabia has strategically decided to move regional offices of international companies to the Kingdom. This major move has pought a significant influx of foreign executives and employees, thus posing a thought-provoking query regarding foreign ownership of real estate in Saudi Arabia. Until now, the Saudi landscape has been primarily dominated by national investors due to stringent regulations. However, with a new law under review, the Kingdom is likely to experience an increase in foreign investment in real estate.
Current Regulations and Implications for Foreign Investors
Since 2000, foreign investment in real estate has been governed by the Council of Ministers Resolution No. 89 ("the Law"). The Law permits non-Saudis, both individuals and legal entities engaged in any professional, economic, or craft activity, to own properties necessary for their activities. These properties include accommodation and housing for employees, subject to the Ministry of Investment's approval. Non-Saudi individuals residing legally in the Kingdom can also own real estate for residence, provided they obtain a license from the Ministry of Interior. The process for approval typically takes about 30 days. Despite these provisions, foreign ownership has remained restricted due to the law's limitations and conditions.
The Anticipated New Law and Its Significance
An amendment to the Law was proposed in 2022, aiming to consolidate the first two articles into one clause. The new amendment aims to empower non-Saudis to acquire freehold rights, the right of easement or usufruct on a property, including its investment, according to system regulations. Although the adoption date of the proposed amendments is uncertain, it reflects the Saudi regulator's intention to make the real estate ownership procedure for non-Saudis more streamlined.
The Real Estate General Authority (REGA) CEO Abdullah Alhammad recently revealed that the new law is in its final stages and will be public soon. According to Alhammad, the new law will be poader and more comprehensive, allowing foreigners to buy all types of property, including commercial, residential, and agricultural, as per regulations. Interestingly, the law seems to permit foreign ownership in previously restricted holy cities like Makkah and Madinah.
Impact on the Real Estate Market
This anticipated legislation is set to boost the Kingdom's real estate market, potentially sparking a freehold boom in the Middle East. Analysts predict that this law could heighten the real estate sector's demand, striking a balance in the sector, and moderating escalating real estate prices. Furthermore, this law could significantly augment the potential for foreign investment, aligning with the Kingdom's ambitious plans for real estate development as part of its diversification strategy.
The impact of the new law extends beyond the borders of Saudi Arabia, opening new investment destinations for expats and global investors seeking greener pastures outside traditional markets like the UAE.
Conclusion
The upcoming reform signals the Kingdom's commitment to opening its economy to foreign investments. The anticipated amendments to the foreign ownership law could present a world of opportunities for investors in the Middle East market. Amid the major transformation the Kingdom is currently witnessing, these changes in foreign real estate ownership in Saudi Arabia are a compelling opportunity not to be overlooked.
As we anticipate the intricate details and final form of the new law, it's evident that this is a significant step towards a more inclusive property ownership system in Saudi Arabia. Potential investors are advised to keep apeast of this evolving legal landscape for the promising opportunities on the horizon.
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