Saudi Arabia Opens Doors to Foreign Investment in Makkah, Madinah Real Estate Companies
In a significant move to attract overseas capital, Saudi Arabia has announced that it will allow foreign investors to purchase shares and convertible debt instruments in publicly-traded companies that own real estate in the holy cities of Makkah and Madinah, Bloomberg reports.
The change, effective immediately, marks the first time such investments are permitted and is part of the kingdom’s broader push to diversify its economy under its Vision 2030 plan.
The Capital Market Authority (CMA) confirmed that foreign investors can now buy shares in Saudi-listed firms with real estate holdings within the boundaries of the two sacred cities. This includes both public and private properties. While the new rules provide unprecedented access, there are some limitations. Foreign ownership of any individual company’s listed shares cannot exceed 49%, and exceptions are in place for strategic foreign investors.
The announcement sent ripples through the Saudi stock market, with several real estate companies experiencing significant gains. Jabal Omar Development Co. saw its share price jump as much as 10% at the opening bell. Taiba Investments Co., Emaar Economic City, and Makkah Construction & Development Co. also witnessed positive movement on the news.
This move is the latest in a series of reforms aimed at making Saudi Arabia a more attractive investment destination. The kingdom has been actively streamlining investment laws and relaxing restrictions on foreign ownership in the stock market as part of its Vision 2030 initiative. A key goal of this plan is to increase the number of pilgrims and visitors to Makkah and Madinah. Saudi Arabia is actively expanding these cities with the aim of accommodating 30 million foreign worshippers annually by 2030.
Despite these new opportunities, the restriction on direct property ownership for non-Muslims within Makkah and Madinah remains. While Saudi Arabia has gradually allowed foreigners to own real estate in other regions, the holy cities remain exclusively for Muslim ownership.
Foreigners can still obtain long-term residency in Saudi Arabia by investing 4 million riyals (approximately $1.1 million) in residential real estate. This rule was implemented a few years ago, further signaling the kingdom’s commitment to attracting foreign investment. Makkah and Madinah are particularly coveted investment locations because of the continuous and strong demand created by the Hajj pilgrimage.
Hotel operators and apartment owners in the holy cities enjoy substantial returns due to the religious obligation for every able-bodied Muslim to perform the Hajj once in their lifetime, driving a consistent influx of pilgrims. Some funds from Islamic majority countries have even secured long-term leases on residential apartment buildings specifically to accommodate pilgrims from their regions.
