Changes to ownership law for non-Saudis make real estate stocks, REITs more attractive: official

Ziad Albassam, board member of Makkah Construction and Development

Saudi Arabia’s decision to allow non-Saudis to invest in listed companies and own real estate in Makkah and Madinah will make these stocks and real estate investment trusts (REITS) more attractive and raise demand for their shares and units, Ziad Albassam, board member of Makkah Construction and Development Co., told Argaam. 

Real estate investors eye growth and profitability. Real estate investment and development in Makkah and Madinah used to record high growth rates with limited returns due to scarcity factors in the central regions of both cities, Albassam added. 

Saudi Arabia previously allowed premium residency holders to own household property in Makkah and Madinah for a maximum lease period of 99 years, he said, adding that the Kingdom’s study for granting the same rights to non-Saudis in Makkah and Madinah is also expected to be in advanced stages. 

“We hope this decision will be issued soon, as it will broadly reflect on direct investments and project development as well as funding mechanisms in both cities,” Albassam indicated. “Financers may seek different types of mortgage loans, which will lead to a qualitative transition in the real estate market in both cities and raise demand significantly for the upcoming development projects.” 

On May 7, 2021, Saudi Arabia’s Cabinet approved exempting all Saudi-listed companies from the prohibition stated in Article No. 5 of the Law on Real Estate Ownership and Investment by Non-Saudis. 

The Capital Market Authority (CMA) also said that all Saudi-listed companies will now be able to invest in real estate located in Makkah and Madinah. Foreigners can also invest in investment funds that own real estate within Makkah and Madinah.