RIYADH: Foreign investors can now invest in Saudi-listed companies that own real estate in Makkah and Madinah, following a historic decision by the Saudi Capital Market Authority (CMA).
Effective immediately, this move is designed to enhance the competitiveness of the capital market and align with Saudi Arabia’s Vision 2030 economic diversification goals, the CMA announced in a press release.
New Investment Rules and Foreign Ownership
While non-Saudis are allowed to buy properties in Saudi Arabia, there have been restrictions in place, especially in the holy cities where ownership has generally been limited to Saudi nationals. However, foreigners have been allowed to lease properties in these cities.
Under the new rules, foreign investments will be limited to shares or convertible debt instruments of listed companies, with non-Saudi ownership, including both individuals and legal entities, capped at 49 percent of a company’s shares.
However, strategic foreign investors will still be prohibited from holding stakes in these companies.
Boosting Saudi Arabia’s Capital Market and Vision 2030 Goals
This development comes amid broader regional reforms, with many neighboring countries already permitting foreign property ownership, particularly in designated areas or free zones under certain conditions.
The CMA stated that the announcement aims to stimulate investment, increase the attractiveness and efficiency of the capital market, and strengthen its competitiveness on both regional and international levels while also supporting the local economy.
The changes are expected to promote foreign direct investment (FDI) in the Kingdom’s capital market, enhancing its regional and global competitiveness.
The CMA added that the move is designed to attract foreign capital and provide the necessary liquidity for current and future projects in Makkah and Madinah through available investment products in the Saudi market, positioning the Kingdom as a key funding source for these unique developmental projects.
Real Estate Sector Growth and Foreign Direct Investment
Strengthening the real estate sector and drawing more FDI is a central objective under Vision 2030, as Saudi Arabia looks to reduce its dependence on oil revenues and diversify its economy.
- The Kingdom aims to attract $100 billion in FDI by the end of the decade, and the CMA has been implementing various reforms and initiatives to make the capital market more attractive.
- These reforms include allowing foreign residents to invest directly in the stock market, enabling non-Saudi investors to access the market through swap agreements, and allowing qualified foreign capital institutions to invest in listed securities.
- the CMA has authorized foreign strategic investors to acquire stakes in listed companies and directly invest in debt instruments.
- In 2021, the CMA also allowed non-Saudis to subscribe to real estate funds investing within Makkah and Madinah’s boundaries, which played a significant role in boosting the appeal of the capital market for both regional and international investors.
- Following the announcement, the share prices of real estate companies listed on Saudi Arabia’s stock exchange surged.
- Knowledge Economic City saw its share price rise by 9.89 percent to SR16.66 ($4.44) by 12:45 p.m. Saudi time.
Jabal Omar Development Co. saw a 10 percent increase in its share price to SR25.85, while Makkah Construction and Development Co.’s stock price rose 9.84 percent to SR106 at 12:45 p.m. Saudi time.
How Batic Law Firm Can Assist You in Real Estate Investment
At Batic Law Firm, we provide expert legal guidance and strategic solutions to help foreign investors navigate the evolving Saudi market. Whether you’re looking to invest in real estate in Makkah and Madinah or explore new business opportunities in line with Vision 2030, our team of experienced attorneys is ready to support your goals. With a deep understanding of Saudi laws and regulations, Batek ensures your investments are secure, compliant, and optimized for success. Trust us to help you unlock the full potential of the Saudi market with professional legal advice and tailored services.
the recent decision by the Capital Market Authority to allow foreign investors to invest in Saudi-listed companies owning real estate in Makkah and Madinah is a significant step towards enhancing Saudi Arabia’s capital market and achieving the goals of Vision 2030. This move will attract foreign investments and support the development of future projects in the two holy cities, strengthening the Kingdom’s competitiveness in global markets.