Foreign Investment
Synonyms: Foreign Property Ownership، Non-Saudi Real Estate Ownership، Foreign Real Estate Investment
Last updated: 2026-10-05
Short Definition
Foreign investment in Saudi real estate is the ownership of property in the Kingdom, or the acquisition of rights in rem over it such as usufruct, by non-Saudis, whether individuals, companies or funds, directly or through licensed companies and funds, under the Law of Real Estate Ownership by Non-Saudis and the Investment Law.
Overview
Legal Basis
Law of Real Estate Ownership by Non-Saudis issued by Royal Decree No. (M/14) dated 19/1/1447H following Council of Ministers Resolution No. (42) dated 13/1/1447H; it replaces the law issued by Royal Decree No. (M/15) dated 17/4/1421H and applies 180 days after publication. Investment Law issued by Royal Decree No. (M/19) dated 16/1/1446H, supervised by the Ministry of Investment. The Real Estate General Authority (REGA) applies the ownership law and collects the fee, and transactions remain subject to the Real Estate Transaction Tax Law and the Income Tax Law.
Practical Example
A foreign engineer legally resident in Riyadh buys a flat for his own home for SAR 1,200,000 outside the designated zones, using a resident's right to own one property for personal residence. Real Estate Transaction Tax of 5%, i.e. SAR 60,000, is due; the seller is liable for it to ZATCA even if the parties agree the buyer will bear it, and the state-borne first-home scheme does not apply because it is for citizens. The transaction is also subject to the non-Saudi transaction fee, capped by law at 5%, which the implementing regulation set at 2% in Riyadh city, Makkah city, Madinah city and Jeddah Governorate and 0% elsewhere; it is not yet clear which of the two rates applies to a resident's single home outside the zones in Riyadh (SAR 24,000 at 2%, or nothing), so he should confirm it with REGA before completion. His ownership is complete only once the flat is registered in his name in the real estate register. If he wanted a second flat as an investment, it would have to be within the zones open to non-Saudi ownership.
Common Mistakes
- ✗Confusing resident and non-resident rights — owning one home outside the geographic zones is limited to legally resident individuals; anything else must be within the zones.
- ✗Assuming ownership in Makkah and Madinah is either totally banned or fully open — it is limited to Muslim natural persons, with specific rules for companies and funds.
- ✗Leaving the non-Saudi transaction fee (capped by law at 5%; set by the regulation at 2% in Riyadh city, Makkah city, Madinah city and Jeddah Governorate and 0% elsewhere) out of the feasibility study, on top of the 5% Real Estate Transaction Tax.
- ✗Registering property in a Saudi citizen's name on behalf of a foreigner — a non-Saudi's ownership is valid only once registered in the real estate register, and workarounds expose the parties to liability.
- ✗Assuming the state-borne first-home tax scheme covers foreigners — it is limited to eligible citizens.
International Differences
Many countries use a 'permitted zones' model for foreign ownership. In the UAE, foreigners hold freehold title in designated areas such as Dubai's freehold zones. In Turkey, foreigners may own property subject to restrictions on military and security zones and area caps, and ownership is linked to citizenship-by-investment programmes. In Egypt, foreigners may own property subject to limits on the number of units and area. The new Saudi regime is distinctive in giving residents a separate right to own one home outside the zones, in its specific rules for Makkah and Madinah, and in a separate ownership fee, capped by law at 5% and set by the regulation at 2% in Riyadh city, Makkah city, Madinah city and Jeddah Governorate and 0% elsewhere, on top of the 5% Real Estate Transaction Tax.
