In a landmark decision, the Saudi Capital Market Authority (CMA) has announced that foreigners can now invest in Saudi-listed companies that own real estate in Makkah and Madinah. This decision, effective immediately, aims to enhance the competitiveness of the Kingdom’s capital market and aligns with Saudi Arabia’s Vision 2030 economic diversification goals.
Previously, while non-Saudis could purchase properties in the Kingdom under specific restrictions, real estate ownership in the holy cities of Makkah and Madinah was largely limited to Saudi nationals. Foreigners, however, were allowed to lease properties in these areas. The new regulations permit foreign investments specifically in the form of shares or convertible debt instruments of listed companies owning real estate in the holy cities.
Restrictions on Foreign Investments
The CMA’s guidelines impose a cap of 49% on total foreign ownership, which includes both individuals and legal entities. Additionally, strategic foreign investors are prohibited from holding stakes in these companies, ensuring that the control remains primarily local.
This decision aligns Saudi Arabia with other countries in the region, many of which allow foreigners to own properties, though often within designated free zones or under specific conditions.
Boosting the Real Estate Market
According to the CMA, this move aims to stimulate foreign direct investment (FDI), enhance the attractiveness of the capital market, and support Saudi Arabia’s regional and international competitiveness. “This includes attracting foreign capital and providing liquidity for current and future projects in Makkah and Madinah,” the CMA noted in a statement. These developmental projects are part of broader efforts to position the Saudi market as a key funding source for significant infrastructure and real estate initiatives.
Vision 2030 and Economic Diversification
Strengthening the real estate sector is a core focus of Vision 2030, a comprehensive program designed to diversify Saudi Arabia’s economy and reduce its dependence on oil revenues. The Kingdom aims to attract $100 billion in FDI by 2030 and has implemented a series of reforms to make the capital market more accessible and appealing to both regional and international investors.
Some of these initiatives include allowing foreign residents to invest directly in the Saudi stock market, enabling non-Saudi investors to access the market through swap agreements, and permitting qualified foreign institutions to invest in listed securities. The CMA has also allowed foreign strategic investors to acquire stakes in listed companies and directly invest in debt instruments.
Notably, in 2021, the CMA authorized non-Saudis to subscribe to real estate funds investing within the boundaries of Makkah and Madinah. This decision played a significant role in attracting foreign investors to the Saudi capital market.
Market Reaction to the Announcement
The CMA’s decision has already had a notable impact on the stock market. Following the announcement, the share prices of several real estate companies listed on the Saudi stock exchange saw a significant surge.
- Knowledge Economic City experienced a 9.89% increase in its share price, closing at SR16.66 ($4.44).
- Jabal Omar Development Co. saw its stock rise by 10%, reaching SR25.85.
- Makkah Construction and Development Co. witnessed a 9.84% increase, with its shares closing at SR106.
Global Investment Appeal
This move reflects Saudi Arabia’s commitment to becoming a global investment hub by opening up its markets to international investors. Real-time news about these reforms highlights the Kingdom’s determination to align its economic strategies with global best practices.
By integrating foreign investments into its real estate and capital markets, Saudi Arabia is setting the stage for long-term economic growth and global relevance. The announcement has also gained attention in technology news today, as the integration of digital platforms is expected to streamline investment processes and provide transparency for investors.
This progressive shift signifies a broader trend of economic liberalization in Saudi Arabia, further reinforcing its position as a leader in the Middle East’s financial and real estate markets.
