The Saudi Capital Market Authority (CMA) has announced that foreign investors can now invest in Saudi-listed companies that own real estate in Makkah and Madinah. This decision follows the approval of regulatory controls that exempt such companies from the restrictions under the system governing non-Saudis’ ownership and investment in real estate. The change is effective immediately.
Under the new regulations, foreign investors can hold shares or convertible debt instruments in Saudi-listed companies that own real estate in Makkah and Madinah. However, the combined ownership of foreign natural and legal persons in such companies cannot exceed 49% of the total shares. Foreign strategic investors are excluded from this provision and are not permitted to own shares or convertible debt instruments in these companies.
The decision aims to provide foreign investors with economic exposure to real estate projects in the two cities without violating existing laws governing non-Saudi real estate ownership. The new rules also allow listed Saudi companies to acquire ownership, easement, or usufruct rights over real estate for headquarters or branch operations in Makkah and Madinah, provided the properties are used exclusively for these purposes.
Investment objectives
According to the CMA, the move is designed to:
- Stimulate investment in Saudi Arabia.
- Enhance the attractiveness and efficiency of the Saudi financial market.
- Boost regional and international competitiveness.
- Attract foreign capital to support economic development.
- Provide liquidity for existing and future development projects in Makkah and Madinah.
Historical context
The CMA has gradually eased restrictions on foreign investments in Saudi Arabia’s financial markets. Previous measures include:
- Allowing resident foreign investors to invest directly in the Saudi stock market.
- Permitting foreign investors to access the market through swap agreements.
- Allowing qualified foreign financial institutions to invest in listed securities.
- Enabling foreign strategic investors to own shares in listed companies.
- Facilitating foreign investment in debt instruments.
In 2021, non-Saudis were allowed to subscribe to real estate funds investing within Makkah and Madinah. These funds provided a diversified financing channel, supporting real estate development projects in the two holy cities.
The regulatory framework was finalised after a public consultation on November 15, 2023. The CMA collected feedback through the National Competitiveness Center’s Survey Platform and its own website before implementing the rules.
The full details of the controls, including the exemptions for companies listed on the Saudi Stock Exchange, can be accessed through the CMA’s official website.
