Saudi Arabia Opens Property Market
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Saudi Arabia allows non-citizens to own real estate in Jeddah, Riyadh, and, with conditions, Mecca and Medina, aligning with Vision 2030.
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Saudi Arabia allows non-citizens to own real estate in Jeddah, Riyadh, and, with conditions, Mecca and Medina, aligning with Vision 2030.
Starting January 2026, Saudi Arabia will implement a transformative law allowing non-citizens to own real estate in designated areas of Riyadh and Jeddah, with special regulations for the holy cities of Mecca and Medina. This reform, a cornerstone of the Kingdom’s Vision 2030 economic diversification strategy, aims to attract foreign direct investment (FDI), stimulate real estate growth, and position Saudi Arabia as a competitive player in the Gulf’s property market. The move mirrors policies in neighboring countries like the United Arab Emirates (UAE) and Turkey, while fostering speculation that Qatar may follow suit. This article explores the economic implications of this policy, real estate market dynamics, residency conditions, the role of megaprojects like NEOM, and the competitive landscape in the Gulf region.
Saudi Arabia’s real estate sector is experiencing robust growth, driven by Vision 2030’s focus on urbanization, tourism, and economic diversification. In 2024, the market was valued at USD 72.11 billion, with projections to reach USD 132.65 billion by 2033, reflecting a compound annual growth rate (CAGR) of 7.0%. Riyadh, the capital, has seen residential villa prices climb to an average of SAR 6,000 (USD 1,600) per square meter, while Jeddah’s apartments and villas average SAR 4,000 (USD 1,066) and SAR 5,700 (USD 1,520) per square meter, respectively. The first half of 2024 recorded a 38% increase in real estate transactions compared to the previous year, signaling strong demand.
The new law is expected to further accelerate this growth by opening the market to foreign investors. In Riyadh, property prices surged 40% between 2020 and 2024, though growth has shown signs of moderating. Jeddah’s coastal redevelopment, including the USD 20 billion Jeddah Central project, is driving price appreciation, particularly in luxury segments. Commercial real estate is also thriving, with Riyadh’s Class A office rents rising 20.8% in 2024 and vacancy rates dropping below 2%. The policy’s focus on designated zones ensures controlled foreign investment, with analysts predicting a surge in demand for high-end residential and commercial properties.
Mecca and Medina, traditionally restricted to Saudi nationals, will now allow foreign ownership under specific conditions, such as investments in real estate companies listed on the Tadawul stock exchange. A 2024 Knight Frank report highlighted significant demand from high-net-worth Muslim investors, with 79% expressing interest in properties in these holy cities, often with budgets exceeding USD 4 million. This could unlock USD 2 billion in potential investment, boosting infrastructure for religious tourism, which contributed USD 12 billion to the economy in 2019 with a target of USD 30 billion by 2030.
The property law is a critical component of Vision 2030, Saudi Arabia’s ambitious plan to reduce oil dependency, enhance tourism, and foster a business-friendly environment. Launched in 2016, Vision 2030 aims to diversify the economy through investments in infrastructure, housing, and tourism. The Public Investment Fund (PIF) is a key driver, financing megaprojects like NEOM, a USD 500 billion planned city in Tabuk Province designed to be a global hub for innovation, tourism, and sustainable living.
NEOM, encompassing regions like The Line, Oxagon, Trojena, and Sindalah, is a flagship project. The Line, a 170-km linear city, aims to house 9 million residents with zero-carbon infrastructure, though recent reports suggest a scaled-back first phase of 2.4 km by 2030, with fewer than 300,000 residents. Despite challenges, NEOM’s focus on luxury tourism, such as the Sindalah island resort, and industrial innovation via Oxagon, positions it as a magnet for foreign investment. The project is expected to contribute USD 48 billion to GDP and create 460,000 jobs, aligning with Vision 2030’s economic goals.
Other Vision 2030 initiatives, like the Mukaab in Riyadh’s New Murabba and the Red Sea resorts, are enhancing Saudi Arabia’s appeal as a destination for both residents and investors. These projects aim to retain domestic spending by wealthy Saudis, who have historically invested abroad, particularly in Dubai. By opening the property market, Saudi Arabia seeks to capture this capital domestically while attracting global investors.
Saudi Arabia’s new property law aligns with reforms to ease residency for foreign investors. Expatriates can own one residential property, and the Premium Residency program offers long-term stays without a local sponsor for high-net-worth individuals. This program, coupled with the property law, creates opportunities for foreigners to establish roots in Saudi Arabia, particularly in urban hubs like Riyadh and Jeddah.
Riyadh, as the economic and political capital, offers a vibrant lifestyle with projects like King Salman Park and Qiddiya Entertainment City. Jeddah, with its Red Sea coastline, is a commercial and tourism hub, bolstered by projects like the Jeddah Central redevelopment. Both cities provide access to world-class amenities, from luxury malls to cultural festivals like Riyadh Season, making them attractive for expatriates. Mecca and Medina, while subject to stricter regulations, offer unique opportunities for investors focused on religious tourism, with infrastructure upgrades enhancing livability.
The Saudi Real Estate Refinance Company (SRC), established by the PIF, supports homebuyers by injecting liquidity into the market. By 2020, SRC’s loan portfolio reached SAR 6.5 billion, with a goal to refinance 20% of the residential mortgage market by 2025. These initiatives improve financing access, making property ownership more feasible for both citizens and expatriates.
Saudi Arabia’s policy draws inspiration from neighboring countries like the UAE and Turkey, which have long allowed non-citizen property ownership to drive economic growth. The UAE, particularly Dubai, has set the benchmark, with residential property prices surging 19% in 2024. Dubai’s market for homes priced above USD 10 million now rivals London and New York combined, driven by demand from high-net-worth Saudis, UK citizens, and East Asians. Abu Dhabi has also seen double-digit price growth, reinforcing the UAE’s dominance in the Gulf’s real estate sector.
Turkey offers another model, with its liberal property ownership laws attracting foreign investors, particularly in Istanbul and coastal cities like Antalya. The country’s Citizenship by Investment program, requiring a minimum real estate investment of USD 400,000, has drawn Middle Eastern and European buyers, boosting its market. Turkey’s affordability compared to the UAE, combined with its strategic location, makes it a strong competitor. However, political and economic volatility can deter some investors, giving Saudi Arabia an edge with its stable, state-backed projects.
Qatar, while not yet fully open to non-citizen property ownership, is speculated to follow Saudi Arabia’s lead. Its National Vision 2030 shares similarities with Saudi Arabia’s plan, emphasizing economic diversification and tourism. Qatar’s real estate market, centered in Doha, has seen growth in luxury developments like The Pearl and Lusail City, appealing to expatriates and investors. If Qatar adopts similar policies, it could intensify competition, leveraging its hosting of global events like the FIFA World Cup 2022 to attract capital. However, no concrete proposals have emerged, making Saudi Arabia’s move a first-mover advantage in the region.
The economic rivalry between Saudi Arabia and the UAE, particularly Dubai, is intensifying as both nations vie for regional dominance in real estate, tourism, and finance. Dubai’s established market benefits from a mature ecosystem, with transparent regulations and a cosmopolitan appeal that attracts global investors. Saudi Arabia, however, is leveraging its larger population, strategic location, and Vision 2030 megaprojects to close the gap. The new property law is a direct challenge to Dubai’s dominance, aiming to redirect Saudi capital from abroad to domestic projects like NEOM and Riyadh’s King Abdullah Financial District (KAFD).
While Dubai’s market thrives on its global brand, Saudi Arabia offers untapped potential with lower entry costs in some segments. For instance, Riyadh’s residential prices are more affordable than Dubai’s, where prime properties can exceed USD 10,000 per square meter. Saudi Arabia’s focus on religious tourism, particularly in Mecca and Medina, also taps into a niche market unmatched by the UAE. However, challenges remain, including perceptions of a less open social environment compared to Dubai, despite recent reforms.
The rivalry extends to infrastructure and tourism. Saudi Arabia’s Mukaab and Red Sea resorts compete with Dubai’s iconic Burj Khalifa and Palm Jumeirah. The UAE’s edge lies in its established tourism infrastructure, welcoming 17 million visitors annually, while Saudi Arabia targets 150 million tourists by 2030. Both nations are investing heavily in smart cities and sustainable developments, with NEOM rivaling Dubai’s smart city initiatives. This competition is driving innovation but also straining resources, as Saudi Arabia scales back some NEOM ambitions due to high costs and fluctuating oil prices.
The new property law positions Saudi Arabia as an attractive destination for foreign investors, with opportunities spanning residential, commercial, and tourism-driven projects. The Kingdom’s strategic location, connecting Asia, Europe, and Africa, enhances its appeal as a logistics and trade hub. Projects like Diriyah Gate and the Red Sea resorts offer high-return potential, particularly for early investors, with expected capital appreciation over the next 5–10 years. The commercial sector, with low vacancy rates and rising rents, is particularly promising in Riyadh and Jeddah.
However, challenges persist. The real estate market faces supply constraints, particularly in high-grade office spaces, which could limit transaction activity. NEOM’s scaled-back projections highlight fiscal pressures, with the PIF reporting a 60% profit drop in 2024 due to high spending and global economic challenges. Regulatory details for foreign ownership, especially in Mecca and Medina, remain pending, creating uncertainty for investors. Additionally, Saudi Arabia must address perceptions of a conservative business environment to compete with the UAE’s established appeal.
Saudi Arabia’s decision to allow non-citizen property ownership in Riyadh, Jeddah, and, with conditions, Mecca and Medina, marks a pivotal step in its economic transformation under Vision 2030. The policy is poised to drive real estate growth, attract FDI, and enhance the Kingdom’s global competitiveness. With a projected market value of USD 132.65 billion by 2033, opportunities abound in residential, commercial, and tourism-driven projects. NEOM and other megaprojects underscore Saudi Arabia’s ambition, while the rivalry with the UAE and potential policy shifts in Qatar highlight the dynamic Gulf real estate landscape. For investors, the Kingdom offers a compelling mix of growth potential and strategic reforms, provided regulatory clarity and market stability are maintained.
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