What does the new Investment Law change in KSA?

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Saudi Arabia's new Investment Law, which came into effect in February 2025, represents the biggest shake-up in the Kingdom's investment rules in 25 years.

For anyone considering property investment in Saudi Arabia, this law changes the game completely. Foreign investors now have opportunities that simply didn't exist before, while the process of buying and owning property has become significantly more straightforward.

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SANDSOFWEALTH

A team specialized in real estate investing in MENA countries (Saudi Arabia, UAE, Egypt, Jordan, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Saudi Arabia. If you'd like to learn more about us, you can check our presentation page.

What exactly is Saudi Arabia's new Investment Law and why should property investors care?

The new Investment Law is Saudi Arabia's most comprehensive reform of foreign investment rules since 2000.

Its main goals are crystal clear: attract more foreign capital, diversify the economy away from oil, and make Saudi Arabia a top destination for international investors by 2030. The government wants to increase foreign direct investment from $19 billion in 2023 to over $100 billion by 2030, with property investment playing a key strategic role.

For property investors specifically, this law removes many of the barriers that previously made Saudi real estate a closed market. Foreign investors can now own 100% of their property investment companies, access previously restricted markets, and enjoy the same rights as Saudi nationals.

The timing couldn't be better for international investors looking to diversify their portfolios into high-growth emerging markets. Saudi Arabia's Vision 2030 program is driving massive infrastructure development, creating unprecedented opportunities in residential, commercial, and mixed-use properties.

It's something we develop in our Saudi Arabia property pack.

When did this law start and what old rules did it replace?

The new law officially came into force in February 2025, exactly 180 days after it was published in August 2024.

It completely replaces the Foreign Investment Law from 2000, which was outdated and restrictive by today's standards. The old law required foreign investors to navigate complex bureaucracy, find local partners, and meet high minimum capital requirements that made small to medium property investments virtually impossible.

The timing is crucial for property investors because as of June 2025, we're now seeing the first wave of foreign investors taking advantage of these new rules. Early movers are already closing deals that would have been impossible just six months ago, particularly in prime locations in Riyadh's financial district and along Jeddah's waterfront.

Market data shows that foreign investment inquiries have increased by 300% since the law came into effect, with property investment leading the charge. Major international real estate firms are now establishing offices in Saudi Arabia, signaling confidence in the new regulatory framework.

The transition period has been remarkably smooth, with the Ministry of Investment providing clear guidance and support to help investors navigate the new system.

Does this law apply to everyone or just foreign investors?

This is one of the biggest changes: the new law applies to both foreign and local investors equally.

The old 2000 law only covered foreign investors, which created an uneven playing field and often led to discriminatory practices. Saudi investors had advantages in terms of financing, property access, and bureaucratic processes that made it difficult for foreigners to compete.

For property buyers, this means foreign investors now compete on equal terms with Saudis. You get the same rights, same protections, and same opportunities. Whether you're from New York, London, or Riyadh, the rules are now the same, creating a level playing field that benefits everyone.

This equal treatment extends to all aspects of property investment, from initial purchase through to eventual sale. Foreign investors can now access the same mortgage products, development permits, and government incentives that were previously reserved for Saudi nationals.

The psychological impact of this change cannot be overstated – foreign investors now feel welcomed and valued rather than merely tolerated.

What are the biggest changes for property investors compared to before?

The five game-changing differences for property investors represent a complete transformation of Saudi Arabia's real estate investment landscape.

First, the elimination of mandatory Saudi partners means you can now own 100% of your property investment company, giving you full control over your investments and eliminating the complexities of partnership agreements. Second, the simplified registration process has reduced what used to take months to just weeks, with online systems replacing mountains of paperwork.

Third, access to Mecca and Medina markets through listed companies opens up two of the most valuable real estate markets in the Islamic world to foreign investment for the first time in history. Fourth, full participation in Saudi REITs allows foreign investors to diversify their property portfolios without the hassles of direct ownership.

Fifth, guaranteed profit repatriation means you can transfer your rental income and sales proceeds out of Saudi Arabia freely, in any currency, without the restrictions and bureaucracy that previously made international investors nervous about committing capital to the Kingdom.

These changes collectively represent the most significant liberalization of property investment rules in the Middle East in decades.

How does the new law change the process for foreigners buying property?

The process has been dramatically simplified and digitized.

Foreign property investors now follow a streamlined five-step process: First, register with the Ministry of Investment (MISA) online, which takes just 3-5 business days compared to the months-long foreign investment license process under the old system. Second, open a Saudi bank account, now possible without a local sponsor, giving you immediate access to the financial system.

Third, choose your investment structure – whether direct ownership, through a company, or via REITs – based on your investment goals and the type of property you're targeting. Fourth, complete the property purchase through standard channels, with all major real estate agencies now equipped to handle foreign transactions smoothly.

Fifth, register your property ownership with the Real Estate General Authority, a process that's now fully digitized and typically completed within 48 hours. The entire process, from initial registration to property ownership, typically takes just 2-4 weeks.

It's something we develop in our Saudi Arabia property pack.

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What specific protections do foreign property investors get now?

The new law provides five ironclad guarantees that fundamentally change the risk profile of investing in Saudi property.

No expropriation means the government cannot seize your property except for genuine public use, and even then, you're guaranteed full market compensation paid upfront. Free fund transfer allows you to send rental income and sales proceeds abroad in any currency without restrictions, eliminating the capital controls that plague many emerging markets.

Equal treatment ensures you have the same rights as Saudi investors in all aspects of property ownership, from purchase through development to sale. Access to international arbitration provides a neutral forum for dispute resolution, crucial for international investors concerned about local court bias.

Intellectual property protection safeguards your development plans, architectural designs, and business strategies, encouraging innovation in the property sector. These protections are not just promises – they're codified in law and backed by Saudi Arabia's commitment to international investment treaties.

Can foreigners now invest in previously restricted property markets?

Yes, the new law opens up several previously restricted markets with specific conditions.

The biggest change affects Islam's two holiest cities, Mecca and Medina. For the first time ever, foreigners can invest in property here through listed real estate companies, though foreign ownership in any single company is capped at 49%. This indirect investment model allows international investors to benefit from the strong property markets in these cities while respecting their religious significance.

Other newly opened areas include mixed-use developments in central Riyadh, where foreign investors can now participate in the transformation of the capital's skyline. Beachfront properties along the Red Sea, part of the ambitious tourism developments, now welcome 100% foreign ownership.

NEOM city projects offer the most liberal investment terms, with 100% foreign ownership allowed and special incentives for early investors. Industrial real estate zones, previously restricted to Saudi companies, now welcome foreign investment to support the Kingdom's industrialization goals.

Agricultural land can now be purchased for development under specific conditions, opening opportunities for agri-tourism and rural residential projects.

What specific incentives exist for property investors?

The new law introduces a comprehensive package of incentives designed to attract serious property investors.

Tax holidays of up to 10 years for qualifying residential developments make large-scale projects financially attractive, especially when combined with the Kingdom's already low tax environment. Long-term land leases of 50 years (renewable) in designated investment zones provide security for major developments without the full cost of land purchase.

Fast-track approvals for projects over 100 million SAR can cut months off development timelines, crucial in a fast-moving market. The government's commitment to cover utilities infrastructure for large developments can save millions in upfront costs.

Access to Saudi Real Estate Development Fund loans at just 2-3% interest rates makes financing incredibly attractive compared to international rates. For individual investors, the new "Golden Visa" program offers permanent residency for property investments of 4 million SAR or more.

These incentives stack, meaning a qualifying project could benefit from tax exemptions, subsidized financing, fast approvals, and infrastructure support simultaneously.

What rights are now the same for foreign and Saudi property investors?

The law explicitly guarantees seven key rights that put foreign investors on completely equal footing with Saudi nationals.

Property ownership rights include full freehold ownership in designated areas, eliminating the leasehold-only restrictions of the past. Development rights mean you can build, renovate, and redevelop without discrimination or additional approvals based on nationality.

Rental income rights ensure you keep 100% of profits without any special taxes or fees for foreign owners. Mortgage access from Saudi banks at competitive rates eliminates the financing disadvantage that previously pushed foreign buyers to cash purchases.

Legal recourse through courts and arbitration provides multiple avenues for protecting your rights. Inheritance rights now allow you to pass property to heirs under either Saudi law or your home country's law, providing flexibility for estate planning.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Saudi Arabia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What hasn't changed despite the new law?

Several important restrictions remain in place despite the sweeping reforms.

Direct ownership in Mecca and Medina remains prohibited for non-Muslims – the new law only allows indirect investment through companies. Properties within 100km of international borders still require special security approval, a process that can add months to transactions.

Agricultural land conversion to residential use faces strict environmental and food security restrictions. Real estate brokerage services must still be majority Saudi-owned, though foreign firms can partner with local agencies.

Mortgage limits remain somewhat restrictive, with foreign buyers facing 70% loan-to-value caps while Saudis can borrow up to 85%. These remaining restrictions reflect legitimate security, religious, and economic concerns.

Understanding these ongoing limitations is crucial for investment planning and avoiding disappointment during the property search process.

What details still need clarification from authorities?

As of mid-2025, several implementation details remain unclear despite the law being in effect for four months.

The exact criteria for "strategic locations" where foreign ownership might be restricted haven't been fully defined, creating uncertainty about some prime development sites. How the 49% foreign ownership cap in Mecca and Medina companies will be monitored and enforced needs clarification, particularly for complex ownership structures.

Tax treatment of property held through different structures (direct ownership vs. company vs. REIT) remains ambiguous, making tax planning difficult. Whether short-term rental income (Airbnb-style) counts as commercial activity requiring additional licenses is still being debated.

The specific documentation required for property inheritance by foreign heirs needs standardization across different government departments. The Ministry of Investment has promised detailed implementing regulations by September 2025.

Despite these uncertainties, property transactions are proceeding smoothly, with most investors taking a pragmatic approach and structuring deals conservatively.

What long-term impact will this law have on Saudi property markets?

Based on early indicators from the first four months of implementation, the long-term impact will be transformative.

By 2026, foreign investment in Saudi real estate is projected to reach 50 billion SAR, up from just 12 billion in 2024. Property prices in Riyadh and Jeddah are expected to increase 15-20% due to foreign demand, with premium locations seeing even higher appreciation.

New residential projects worth 200 billion SAR will launch to meet demand, fundamentally changing the urban landscape. The mortgage market will double as foreign buyers enter, bringing more sophisticated financial products and competitive pricing.

By 2030, Saudi Arabia will likely become the Gulf's largest property market for foreign investors, surpassing Dubai. NEOM and Red Sea projects alone will attract over 100,000 foreign property owners, creating new cities with truly international communities.

It's something we develop in our Saudi Arabia property pack.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Saudi Investment Law Profile - Ministry of Investment Saudi Arabia
2. Overview of the Updated Saudi Investment Law - Shura Law Firm
3. Saudi Arabia's New Investment Law - White & Case
4. Real Estate Investments Policies - Stake
5. Foreign Ownership in Real Estate Companies - Middle East Briefing