If you are a foreign investor considering entering the real estate market in Makkah or Madinah, it is crucial to understand that Saudi regulations still treat real estate within the two holy cities with particular sensitivity. However, at the same time, the Kingdom has begun opening well-studied investment pathways aimed at attracting high-quality capital, in line with the objectives of Saudi Vision 2030.
Although the original legal principle restricts non-Saudis from owning real estate within the boundaries of Makkah and Madinah, recent legislative developments have introduced regulated exceptions. These exceptions allow specific categories of investors to enter this market according to precise controls that balance the sanctity of the location with promising economic opportunities.
This approach is based on Royal Decree No. (M/94) of 1439 AH, which reaffirmed the principle of restricting non-Saudi ownership of real estate within the two cities, while organizing cases of exception and permitted investment mechanisms.
The most prominent investment pathways currently available to foreign investors include:
Investment via Listed Companies and Real Estate Funds Foreign investors can now enter the real estate market in Makkah and Madinah indirectly through companies listed on the Saudi Capital Market (Tadawul) or through Real Estate Investment Traded Funds (REITs). This pathway is considered one of the most stable and regulated options, especially for investors wishing to benefit from real estate growth without entering into direct individual ownership.
However, this type of investment is subject to specific regulations, most notably that the combined ownership of non-Saudis must not exceed a certain percentage in some cases, along with specific restrictions regarding foreign strategic investors.
Ownership for Muslim Natural Persons The system has witnessed a significant development by allowing—in principle—the possibility for non-Saudi Muslims to own real estate within Makkah and Madinah. However, the practical implementation of this pathway remains linked to the issuance of detailed regulatory controls and decisions by the Council of Ministers, which will determine the geographic scope, types of real rights, and permitted ownership mechanisms.
This means that the market may see a future expansion in direct ownership opportunities for non-Saudi Muslim individuals within a special regulatory framework.
Corporate Ownership of Activity-Related Real Estate The regulations also allow companies with foreign investors to own the real estate necessary to conduct commercial activities or to house employees and workers, even within Makkah and Madinah. This is contingent on the property being directly linked to the company’s operational activity and not for the purpose of speculation or pure real estate investment.
This option is vital for international companies looking to establish operational headquarters or projects related to the Hajj and Umrah sector, hospitality, and services.
The Role of Banks and Real Estate Finance Companies Furthermore, regulations have allowed banks and real estate finance companies to own properties within Makkah and Madinah for financing purposes. However, this pathway remains restricted by special guidelines, most notably that real estate financing in this context is often limited to Saudi citizens.
Regarding legal protection, foreign investors in the Kingdom enjoy significant guarantees stipulated in the Investment Law. These include protection from expropriation except by a judicial ruling, the freedom to transfer profits and funds, and equal treatment between local and foreign investors. Additionally, international investment agreements signed by the Kingdom enhance the level of legal security by providing dispute resolution mechanisms, including international arbitration in certain cases.
Conclusion In summary, real estate investment in Makkah and Madinah is no longer entirely closed to foreign investors as previously perceived. Instead, it has become available through organized and well-studied investment channels. With ongoing legislative and regulatory updates, future opportunities appear promising, especially for investors seeking to enter one of the most unique and significant real estate markets in the region.