Property TypesShopping Mall
Synonyms: Mall، Shopping centre، Retail complex
Last updated: 2026-09-25
Short Definition
A shopping mall is a large enclosed or open-air commercial complex that groups shops, restaurants, cafés, entertainment and services under unified management and operation, with the owner leasing units to commercial tenants under commercial leases.
Overview
A shopping mall is a large enclosed or open-air commercial complex that groups shops, restaurants, cafés, entertainment and services under unified management and operation, with the owner leasing units to commercial tenants under commercial leases. Its success depends on location, tenant mix (especially anchor tenants that draw visitors) and the quality of management and maintenance.
In Saudi Arabia, mall buildings are subject to the Saudi Building Code under the Saudi Building Code Application Law issued by Royal Decree M/43 dated 26/4/1438H; the general building code (SBC 201) devotes Section 402 to covered and open mall buildings, and shops generally fall within mercantile occupancy Group M. The Ministry of Municipalities and Housing has also issued "Requirements for Shopping Malls and Traditional Markets", updated in 2025. Each shop inside a mall needs its own municipal licence through Balady, Civil Defense approval and a commercial registration; the complex's licence does not replace the shop's licence. Tenant leases are documented on the Ejar network as commercial contracts at SAR 200 for the first year and SAR 400 for each additional year, and rent bears 15% VAT when the landlord is VAT-registered. According to an Ejar statement (Okaz, 19 July 2025), a commercial contract loses its executive-instrument status if the parties add new terms, so an ordinary lawsuit is needed in a dispute. In Riyadh, the five-year freeze on annual increases in residential and commercial rents has applied since 25 September 2025.
In practice, occupancy cost in a mall usually consists of base rent plus a service charge for common areas (maintenance, security, cleaning and marketing), sometimes with turnover rent linked to a percentage of the tenant's sales and agreed fit-out periods; these are market practices that vary from mall to mall. The claim that mall rents are "among the highest" is not a rule; they vary widely by mall, the unit's position within it and its size. When a mall is sold, the 5% Real Estate Transaction Tax applies.
⚖️ Legal Basis
Saudi General Building Code (SBC 201), Section 402 on covered and open mall buildings, applied under the Saudi Building Code Application Law issued by Royal Decree M/43 dated 26/4/1438H; the Ministry of Municipalities and Housing's Requirements for Shopping Malls and Traditional Markets; and a separate municipal licence for each shop via Balady. Commercial leases are documented on Ejar (SAR 200 first year, SAR 400 each additional year) and bear 15% VAT; a sale of the mall bears the 5% Real Estate Transaction Tax under the law issued by Royal Decree M/84 dated 19/3/1446H.
💡 Practical Example
A fashion brand leases a 150 m² shop in a Riyadh mall under a 3-year commercial contract documented on Ejar. Base rent is SAR 1,800/m² per year = SAR 270,000, and the service charge is SAR 250/m² = SAR 37,500, totalling SAR 307,500, plus 15% VAT of SAR 46,125, for an annual occupancy cost of SAR 353,625. Ejar documentation fees are 200 + 400 + 400 = SAR 1,000 for the three years. Before opening, the tenant obtains its own municipal licence through Balady and Civil Defense approval. Because the mall is in Riyadh, both parties must respect the annual rent-increase freeze in force since 25 September 2025, and if they add special clauses such as turnover rent, the contract may lose its executive-instrument status.
⚠️ Common Mistakes
- ✗Opening a shop on the strength of the mall's licence — each shop needs its own municipal licence, Civil Defense approval and a commercial registration covering the activity.
- ✗Adding special clauses to a commercial Ejar contract without realising the effect — according to Ejar, commercial contracts lose executive-instrument status when new terms are added, so an ordinary lawsuit is needed in a dispute.
- ✗Comparing rents on base rent alone — the real occupancy cost includes service charges, 15% VAT and any turnover rent.
- ✗Assuming mall rents are always the highest — rent varies by mall, unit position and size, and footfall.
- ✗Signing a turnover-rent clause without a precise definition of sales and an audit mechanism — this leads to calculation disputes.
🌍 International Differences
Mall lease structures are broadly similar worldwide: base rent plus service charges, sometimes turnover rent, with strong attention to tenant mix and anchor tenants. In the UAE, leases are registered in emirate-level systems (such as Ejari in Dubai), and in Turkey shopping centres, known as "AVM", are subject to retail-trade regulations. The Saudi context stands out for documentation on the unified Ejar network, the loss of executive-instrument status for commercial contracts with added terms, and the freeze on annual increases in Riyadh.
FAQs
Which rules govern shopping mall buildings in Saudi Arabia?▾
The Saudi General Building Code (SBC 201) devotes Section 402 to covered and open mall buildings, and the Ministry of Municipalities and Housing issues Requirements for Shopping Malls and Traditional Markets. The code applies under the Saudi Building Code Application Law issued by Royal Decree M/43 dated 26/4/1438H.
Must a mall shop lease be documented on Ejar?▾
Yes. Commercial leases are documented on the Ejar network supervised by the Real Estate General Authority, with a documentation fee of SAR 200 for the first year and SAR 400 for each additional year.
Is VAT charged on mall shop rent?▾
Yes. Commercial rent and the related service charges bear 15% VAT when the landlord is VAT-registered.
What is turnover rent in malls?▾
It is a market practice that links part of the rent to a percentage of the tenant's sales, usually on top of a minimum base rent. The percentages and calculation method are set by agreement between the parties, not by statute.
Can a mall shop lease be enforced directly through the Execution Court?▾
A commercial contract documented on Ejar can serve as an executive instrument, but according to an Ejar statement in July 2025 it loses that status if the parties add new terms, in which case an ordinary lawsuit is required. A new Execution Law was also issued by Royal Decree M/237 dated 3/11/1447H and takes effect around late October 2026.
