Saudi Arabia Opens Real Estate Market to Foreign Buyers in 2026

Saudi Arabia's Landmark Real Estate Law Takes Effect in 2026

Saudi Arabia has enacted a significant new law, the Law of Real Estate Ownership and Investment by Non-Saudis, which will come into effect on January 22, 2026. This law marks a pivotal moment for the Kingdom as it opens its real estate market to foreign investors, allowing them to own property through the Saudi Properties portal. This legislation offers pathways for both direct ownership and fund-based structures, even in the traditionally restricted areas of Makkah and Madinah. The reform is a strategic move to attract international developers and enhance project quality, supporting Saudi Arabia's Vision 2030 goals to diversify the economy and boost non-oil GDP. According to Semafor, this initiative is expected to reshape the landscape of the Saudi real estate market significantly.

Impact on Riyadh's Residential Market: 1.5 Million New Units Needed

Riyadh is anticipated to be the first city to experience the effects of this new law due to its already robust residential market. According to Gulf News, the capital city is projected to require 1.5 million new residential units by 2030, with half of these needed in Riyadh itself. This demand is driven by the city's growing population and economic opportunities. In 2025, villa prices in Riyadh increased by 11%, showing a strong upward trend in property values. The new legislation is expected to accelerate this momentum, offering foreign buyers a chance to participate in the burgeoning market. RealEstateAbroad.com analysis suggests that strategic investments in this area could yield substantial returns as the market evolves.

Royal Decree No. M/14 and Its Implications for Makkah and Madinah

The new law, enacted through Royal Decree No. M/14, opens unprecedented opportunities for foreign ownership in the holy cities of Makkah and Madinah. Traditionally, these areas have been off-limits to non-Saudis for property ownership. However, the reform allows for new investment pathways, including direct ownership and fund-based structures. This development is expected to attract significant interest from Muslim investors worldwide, seeking to own property in these culturally significant locations. According to Latham & Watkins, this strategic move could lead to increased tourism and economic activities, further boosting the non-oil GDP as part of Vision 2030.

Riyadh's Five-Year Rent Freeze and White Land Tax: Countermeasures to Rising Prices

The Saudi government has implemented several measures to control rising real estate prices, including a five-year rent freeze in Riyadh and the introduction of a white land tax. The rent freeze aims to stabilize rental costs, making the housing market more accessible to residents. Concurrently, the white land tax is designed to prevent land hoarding and encourage development in urban areas. These initiatives are part of a broader strategy to balance market growth with affordability. According to Gibson Dunn, these measures, coupled with the new law, are expected to create a more dynamic and competitive market environment.

Foreign Investment and Its Role in Enhancing Project Quality

By allowing foreign ownership, Saudi Arabia aims to attract international developers known for their expertise and quality. This influx of foreign investment is expected to enhance the quality of real estate projects across the Kingdom. According to Ken Research, international developers are anticipated to bring innovative construction techniques and sustainable practices, aligning with the Kingdom's Vision 2030 objectives. This strategic move is likely to increase competition among developers, driving better project outcomes and offering a wider range of options for buyers.

Future Implications of Saudi Arabia's Real Estate Reforms

Looking forward, the opening of Saudi Arabia's real estate market to foreign ownership is expected to have far-reaching implications. The move will likely propel the Kingdom towards becoming a hub for international real estate investment, fostering economic diversification beyond oil. RealEstateAbroad.com analysis indicates that this reform could pave the way for more comprehensive economic and legal reforms, further enhancing the investment climate. Investors are encouraged to stay informed about the evolving regulatory landscape and explore opportunities in key urban centers like Riyadh, Makkah, and Madinah. As the market opens up, strategic investments in these areas could offer significant returns as part of a diversified portfolio.