Saudi Arabia Allows Foreigners to Invest in Real Estate Companies in Mecca and Medina

Saudi Arabia's Capital Market Authority (CMA) announced on January 27, 2025, that it will allow foreign investors to invest in publicly traded companies that own real estate in Mecca and Medina, two of Islam’s holiest cities, reports Reuters.

The move aims to attract foreign investment and provide liquidity for current and future projects in these cities. Businesspeople from other countries will now be able to invest in companies whose revenues rely on Islamic pilgrimage, one of the kingdom’s main non-oil revenue sources.

Saudi authorities have stated their goal to welcome 30 million pilgrims annually by 2030 for Hajj and Umrah. According to official figures, Hajj revenues reached approximately $12 billion in 2019. The annual pilgrimage plays a crucial role in the country's economy, and increasing the number of religious visitors is an integral part of the Vision 2030 reform program, which seeks to reduce the kingdom’s dependence on oil revenue.

The report also notes that Saudi Arabia's Tadawul All Share Index (TASI) rose by 0.2%, driven by a 10% surge in shares of Jabal Omar Development (4250.SE) and Makkah Construction and Development (4100.SE)—companies that own real estate in Mecca. Saudi Arabia’s stock exchange is the largest in the Arabian Gulf region, with a market capitalization of SAR 10.2 trillion ($2.72 trillion). It first opened to foreign investors in 2015 to attract more capital and has since seen a wave of new listings.

Saudi Arabia's Capital Market Authority clarified that foreign investments will be limited to shares, convertible debt instruments, or a combination of both, while excluding “strategic foreign investors.” Non-Saudi citizens will not be allowed to own more than 49% of the shares in relevant companies.

Previous Efforts to Attract Foreign Investment

Earlier, the kingdom introduced a range of investment-based premium residency programs that include real estate and business investments.

To qualify under the business investment program, an applicant must invest at least SAR 7 million ($1.9 million) in the economy within two years and employ at least 10 Saudi nationals.

For the real estate investment route, a minimum investment of SAR 4 million ($1.1 million) is required. The property must be purchased outright, without a mortgage or financing, and must be an existing building—developments or projects under planning are not eligible. An official valuation from accredited Saudi appraisers is also required.

Residency is valid only as long as the applicant retains ownership of the property.

Saudi Arabia also offers residency options for entrepreneurs, talented individuals in sports, culture, and arts, as well as experienced professionals in science, healthcare, management, and research. Holders of premium residency visas benefit from:

Exemptions from financial levies typically imposed on expats and their dependents.
Permanent residence eligibility for children under 25 years old and parents.
Special entry/exit lanes at ports and airports.
Right to own real estate in the country.
Ability to sponsor family members for visitor visas.
Premium residency holders can apply for temporary residency (1–5 years) or permanent residency, depending on the category and fee paid. For instance:

A one-year renewable residency permit costs SAR 100,000 ($27,000), decreasing by 2% each renewal.
Permanent residency costs SAR 800,000 ($216,000).
New Investment Law and Regulatory Changes in 2025
The Centuro Global portal notes that 2025 will bring further changes with the introduction of a new investment law aimed at liberalizing the regulatory environment. While business operations in the kingdom are expected to become easier, certain investment restrictions will remain.

One of the most significant changes is the abolition of the current foreign investment license (MISA or SAGIA). Instead, investors will be required to register with the Ministry of Investment under a streamlined process. The law also introduces legal guarantees against expropriation, ensuring that investments cannot be confiscated without due process and fair compensation.

Foreigners will be allowed to invest in any sector not on the restricted list. However, the new list of prohibited activities has not yet been published. In 2024, restricted sectors included:

- Exploration, extraction, and production of oil and petroleum products (except certain mining-related services).
- Manufacturing of military equipment, explosives, and protective gear.
- Military services, security, and detective services.
- Employment agencies and recruitment services.
- Hajj and Umrah-related tourism services.
- Midwifery, nursing, physiotherapy, and para-medical services.
- Commercial fishing.

Previously, investments in Mecca and Medina were also prohibited, but this restriction is now being lifted.

Compliance and Legal Risks

Despite the easing of investment laws, the new regulations introduce stricter penalties for violations, ranging from fines to license revocation.

Saudi Arabia’s economy is thriving, but foreign investors must be aware of strict regulations, particularly those related to religion and local customs. According to U.S. News, based on a 2023 global survey, Saudi Arabia ranks second among the most religious countries in the world reports.