Shares of Saudi Arabia’s leading property developers surged this week after the kingdom approved a long-awaited law allowing foreign ownership of real estate in designated zones. This move could significantly reshape the housing landscape and attract billions of dollars in foreign capital.
As reported by Bloomberg, stocks such as Retal Urban Development Co. and Saudi Real Estate Co. gained more than 5% each, lifting the Tadawul Real Estate Management and Development Index to its highest level since May.
The Saudi cabinet on Tuesday approved changes that will permit foreigners to own property in certain areas, including Riyadh and Jeddah, while maintaining “special requirements” for Mecca and Medina, according to the Saudi Press Agency. The Real Estate General Authority will identify and propose these zones. The law is expected to come into effect from January 2026.
Reform with Broad Economic Impact
Quoted by Bloomberg, Junaid Ansari, Director of Investment Strategy and Research at Kamco Invest, said the reform “will likely have a very positive and broad implication for several sectors in the kingdom and the region.” He added that beyond real estate firms, the impact could extend to cement producers and banks, as demand for housing, mortgages, and infrastructure rises.
This move is part of Saudi Arabia’s broader Vision 2030 strategy, which aims to diversify the economy, enhance livability, and make the country a more attractive destination for global investors.
Following a Proven Playbook
Bloomberg notes that Saudi Arabia’s strategy mirrors successful policies from regional peers, such as Dubai, Abu Dhabi, and Qatar, where designated freehold zones have long enabled foreigners to purchase property.
Dubai, in particular, has been a standout success. Since 2002, when it allowed foreigners to own property in select areas, the emirate has experienced a sustained real estate boom, drawing in hundreds of billions of dollars in foreign investment.
Analysts believe Saudi Arabia’s move could trigger similar interest, especially in cities like Riyadh, which is undergoing rapid transformation into a global business and cultural hub.
Gradual Liberalization Already Underway
The kingdom has been making steady progress toward liberalization. Earlier this year, rules were eased to allow foreign investors to own shares in real estate companies operating in Mecca and Medina. However, direct property ownership in those cities remains restricted.
While more detailed guidelines on the new property law are expected in the coming months, market participants are already betting on increased demand. The surge in real estate stocks this week reflects that optimism.
Looking Ahead
As highlighted by Bloomberg, the real estate law could be a catalyst for a new era of transparency, liquidity, and international participation in Saudi Arabia’s property market. With the legal framework being updated and clearer regulations on the horizon, foreign investors may soon find a more accessible and welcoming environment in the region’s largest economy.
