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Saudi Arabia approves new real estate ownership law by non-Saudis
- Saudi Arabia published Royal Decree No. (M/14) on 25 July 2025 in the Official Gazette, approving the "Real Estate Ownership Law by Non-Saudis."
- The new law repeals the previous Non-Saudi Real Estate Ownership and Investment Law, as well as any provisions that contradict it.
- The law will enter into force 180 days from the date of its publication in the Official Gazette.
- Investors should review the provisions of the law and prepare for its implementation.
Executive summary
Published in the Official Gazette on 25 July 2025, Royal Decree No. (M/14) dated 19/01/1447 H (corresponding to 19 January 2025) approves the Real Estate Ownership Law by Non-Saudis (Law). The Law introduces a structured framework that enables non-Saudi individuals and entities, whether residents or nonresidents, to own and invest in real estate within designated geographic areas across the Kingdom. This reform aligns closely with Saudi Arabia's Vision 2030 goals by attracting foreign capital, expanding the real estate market and spurring urban development, all while maintaining essential regulatory safeguards. It marks a significant policy shift toward a more open and accessible real estate sector for non-Saudi investors.
The Law will take effect 180 days after its publication in the Official Gazette.
Detailed discussion
Background
On 19 January 2025, the Council of Ministers of Saudi Arabia issued Royal Decree No. (M/14), approving the issuance of the Real Estate Ownership Law for Non-Saudis.
Subsequently, Ministerial Resolution No. (42), dated 8 July 2025, repealed the previous Law on Ownership and Investment of Real Estate by Non-Saudis issued by Royal Decree No. (M/15), dated 19 July 2000.
The approval of the Law is a significant development in Saudi Arabia's approach to foreign investment in real estate.
Key provisions of the Law
Ownership rights
The Law allows non-Saudis to own real estate or acquire rights in kind within geographic areas specified by the Council of Ministers. The types of ownership permitted for non-Saudis under the Law include:
- Ownership right, which is the legal right to own real estate
- Other real rights such as usufruct right (the right to use and benefit from property), easements and similar rights
Eligible non-Saudis permitted to own property under the Law
- Non-Saudi natural persons (whether or not residing in the Kingdom)
- Non-Saudi companies (whether or not operating within the Kingdom)
- Diplomatic missions and international organizations (based on reciprocity and subject to approval by the Ministry of Foreign Affairs)
- Non-Saudi nonprofit entities
- Saudi companies with non-Saudi shareholders
Geographic scopes and locations permitted for non-Saudi ownership
Upon approval by the Council of Ministers, the Real Estate General Authority (REGA) will publish the Geographic Scope Document for Real Estate Ownership, outlining areas in which non-Saudis may own real estate in Saudi Arabia. This document will include maps of specific locations and permitted ownership limits. For Makkah and Madinah, ownership is permitted under special conditions for Muslim natural persons only, according to specific regulations.
Regulatory framework
- Mandatory registration: All real estate purchases or rights acquisitions by non-Saudis must be registered with the competent authority and recorded in the Real Estate Registry to be legally effective.
- Transfer fees: A fee of up to 5% will be imposed on the value of the rights disposed of by non-Saudis.
- Penalties: A fine may be imposed not exceeding (5%) of the value of the right in-kind that is subject to a violation, not exceeding 10 million Saudi Riyals (SAR10m). Additionally, any property acquired by using false or misleading information may be sold via public auction.
Implications
Non-Saudis should stay informed regarding the detailed Implementing Regulations expected to be published within 180 days of the Law's publication in the Official Gazette. These regulations will clarify registration procedures, fee structures, geographic boundaries of permitted zones and conditions on property rights. Additionally, all non-Saudis planning to invest in real estate in Saudi Arabia must consider the applicable real estate transaction tax and corporate income tax, in addition to the transfer fee. It is essential for non-Saudis to familiarize themselves with the tax system in Saudi Arabia to facilitate compliance and plan their investments.
For additional information concerning this Alert, please contact:
Ernst & Young Professional Services (Professional LLC), Riyadh
- Asim Sheikh, Global Compliance and Reporting
- Ahmed H. Akeel, Global Compliance and Reporting
- Nitesh K. Jain, Global Compliance and Reporting
- Atif Khan, Global Compliance and Reporting
- Esraa Albuti, Global Compliance and Reporting
- Ahmed Mubarak, Global Compliance and Reporting
- Hosam Abdulkareem, International Tax and Transaction Services
- Imran Iqbal, Global Compliance and Reporting
- Mirza Ashraf, Global Compliance and Reporting
- Wissam Merhej, International Tax and Transaction Services
- Carl Suchtelen, Global Compliance and Reporting
- Suleiman Mohammed, Global Compliance and Reporting
- Billy Thorne, International Tax and Transaction Services
- Carsten Kuhlmann, International Tax and Transaction Services
- Ricardo M. Cruz, Saudi Arabia International Tax and Transaction Services and Transfer Pricing Leader
- Mohammed Bilal Akram, Indirect Tax
- Peter Dylewski, Indirect Tax
Ernst & Young Professional Services (Professional LLC), Jeddah
- Hussain Asiri, Global Compliance and Reporting
- Amro El Fadly, Global Compliance and Reporting
- Asem Habis, Global Compliance and Reporting
- Sarah A Barasheed, Global Compliance and Reporting
- Ayman Abu El lzz, Global Compliance and Reporting
- Ahmed Mubarak, Global Compliance and Reporting
- Dana D. Dandashi, Global Compliance and Reporting
- Adrian Smith, Indirect Tax
- Mohsin Rehmani, Indirect Tax
Ernst & Young Professional Services (Professional LLC), Al Khobar
- Syed Farhan Zubair, Global Compliance and Reporting
- Ali K. Khamis, Global Compliance and Reporting
- Waqas Khan, International Tax and Transaction Services
- Eman K Salem, International Tax and Transaction Services
- Patrick D Santos, International Tax and Transaction Services
- Bilal Mian, Global Compliance and Reporting
- Javed Aziz, Global Compliance and Reporting
- Haytham Hassan, Global Compliance and Reporting
- Miranda Bass, International Tax and Transaction Services
- Patrick Oparah, International Tax and Transaction Services
Ernst & Young LLP (United States), Middle East Tax Desk, New York
- Yuriy Melnyk
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor