The Saudi Capital Market Authority (CMA) has announced that foreigners can now invest in Saudi-listed companies owning real estate in Makkah and Madinah. The decision, effective immediately, marks a pivotal step towards enhancing the Kingdom’s capital market and aligns with Saudi Arabia's Vision 2030 economic diversification strategy.
“Through this announcement, the Capital Market Authority aims to stimulate investment, enhance the attractiveness and efficiency of the capital market and strengthen its regional and international competitiveness while supporting the local economy", said the CMA in a press release.
Previously, ownership of real estate in the holy cities was primarily restricted to Saudi nationals, though foreigners were permitted to lease properties. Under the new regulations, foreign investments are limited to shares or convertible debt instruments of listed companies, with total non-Saudi ownership capped at 49 percent. However, strategic foreign investors are explicitly prohibited from holding stakes in these companies.
The CMA emphasized the broader goals of this initiative, saying, “This includes attracting foreign capital and providing the necessary liquidity for current and future projects in Makkah and Madinah through the investment products available in the Saudi market, positioning it as a key funding source for these distinctive developmental projects".
This move is part of a broader effort by the Kingdom to attract $100 billion in foreign direct investment (FDI) by 2030, aiming to reduce its dependence on oil revenues. Over recent years, Saudi Arabia has implemented significant reforms to open its capital markets to foreign investors. These include allowing foreign residents to invest directly in the stock market, enabling access through swap agreements, and permitting qualified foreign capital institutions to invest in listed securities.
The CMA has previously allowed foreign strategic investors to acquire stakes in listed companies and invest directly in debt instruments. In 2021, non-Saudis were granted access to subscribe to real estate funds investing within Makkah and Madinah, a move that bolstered the capital market’s appeal to regional and international investors.
Real estate companies listed on Saudi Arabia’s stock exchange witnessed significant market activity following the CMA’s announcement. Knowledge Economic City’s share price surged by 9.89 percent to SR16.66 ($4.44), Jabal Omar Development Co. saw a 10 percent increase to SR25.85, and Makkah Construction and Development Co. climbed 9.84 percent to SR106, as of 12:45 p.m. Saudi time.
The CMA highlighted that this landmark decision aims to “strengthen the real estate sector and attract more FDI into the Kingdom”, aligning with Vision 2030’s goal of creating a diversified, sustainable economy.
With regional reforms enabling foreign property ownership in designated areas, Saudi Arabia’s latest policy change reflects its commitment to positioning its capital market as a competitive player on the global stage.