Industrial Property

An industrial property is land or a building used for manufacturing, assembly, workshops and related storage, usually in an industrial city or industrial zone, whose operation requires an industrial licence, environmental approvals and stricter safety rules than commercial property. It includes factories, workshops, industrial warehouses and undeveloped industrial land. In Saudi Arabia, the Saudi Authority for Industrial Cities and Technology Zones (MODON), whose organisational regulation was issued by Council of Ministers Resolution No. 235 dated 27/8/1422H, develops and manages industrial cities and makes industrial land available to investors, typically on lease rather than by sale, while municipalities also plan industrial and crafts zones within cities. A factory obtains its industrial licence from the Ministry of Industry and Mineral Resources and is subject to the Environment Law, Royal Decree M/165 dated 19/11/1441H (in force since 13 January 2021), which requires environmental permits for activities with an environmental impact; the National Center for Environmental Compliance (NCEC) monitors and inspects compliance. The Saudi Building Code SBC 201 places factories in occupancy group F and high-hazard activities in group H, and MOMAH's requirements direct high-hazard storage into MODON areas, like heavy industry. Industrial property follows its own logic: value depends on the permitted category (light or heavy industry), availability of power, water and gas, access to highways and ports, floor load capacity and clear height. When a privately owned industrial building is leased, the rent is treated as non-residential and carries 15% VAT if the landlord is VAT-registered, while a sale is subject to the 5% Real Estate Transaction Tax. It should not be assumed that any industrial plot suits any activity: industrial and environmental licences and Civil Defense approvals depend on the nature and hazard level of the activity.