RIYADH. In a landmark move to boost foreign investment and strengthen its capital market, the Saudi Capital Market Authority (CMA) has announced that foreign investors can now invest in Saudi-listed companies owning real estate in the holy cities of Makkah and Madinah, effective immediately. This decision marks a significant step in the Kingdom’s efforts to attract global capital, enhance market efficiency, and support its ambitious economic diversification goals under Saudi Vision 2030.
The new regulations, approved under the “Controls for the Exclusion of Companies Listed in the Saudi Stock Exchange (Tadawul) from the Meaning of the Phrase (Non-Saudi),” allow foreign investors to own shares and convertible debt instruments in companies with real estate assets in the two cities. However, ownership is capped at 49% of a company’s shares, with strategic foreign investors excluded from participating.
A Strategic Move to Unlock Investment Potential
This initiative is designed to tap into the vast investment opportunities in Makkah and Madinah, two of the most significant religious and cultural hubs in the world. By opening these markets to foreign capital, the CMA aims to provide liquidity for ongoing and future projects, positioning the Saudi financial market as a key funding source for large-scale developmental initiatives.
“This decision reflects our commitment to enhancing the competitiveness of the Saudi capital market on a regional and global scale,” said a CMA spokesperson. “By attracting foreign investment, we are not only supporting the local economy but also creating a more dynamic and diversified financial ecosystem.”
The move is expected to benefit both foreign investors and Saudi-listed companies. Foreign investors will gain access to the economic advantages of real estate projects in Makkah and Madinah, while Saudi companies will benefit from increased liquidity and expanded funding options.
Balancing Opportunity with Regulation
While the new controls open the door to foreign investment, they also ensure compliance with Saudi Arabia’s Law of Real Estate Ownership and Investment by Non-Saudis. Foreign investors are restricted to owning shares in listed companies and convertible debt instruments, with a clear cap on total ownership to maintain control within the Kingdom.
Additionally, the CMA has granted listed Saudi companies the right to acquire ownership, easement, or usufruct rights over properties designated for their headquarters or branch locations in Makkah and Madinah. These properties must be used exclusively for business purposes, ensuring alignment with the Kingdom’s regulatory framework.
Building on a Legacy of Market Reforms
This announcement is the latest in a series of reforms by the CMA to enhance the appeal of the Saudi financial market. Over the years, the authority has introduced measures such as allowing resident foreign investors to participate directly in the stock market, enabling foreign investors to access the market through swap agreements, and permitting qualified foreign financial institutions to invest in listed securities.
In 2021, the CMA took another significant step by allowing non-Saudis to subscribe to real estate funds investing in Makkah and Madinah. These efforts have collectively diversified funding channels within the Saudi financial market, aligning with the broader objectives of Saudi Vision 2030 to attract both local and foreign investment.
The newly approved controls were finalized after a thorough consultation process. Draft regulations were published on the Public Consultation Platform (Istitlaa), managed by the National Competitiveness Center (NCC), and on the CMA’s website to gather feedback from stakeholders. This transparent approach underscores the CMA’s commitment to creating a regulatory environment that balances investor interests with national priorities.
What This Means for Investors and the Kingdom
For foreign investors, this decision represents a unique opportunity to participate in one of the most lucrative real estate markets in the world. Makkah and Madinah, home to millions of pilgrims annually, offer unparalleled potential for growth and returns.
For Saudi Arabia, the move is a strategic step toward achieving its Vision 2030 goals. By attracting foreign capital, the Kingdom aims to fund transformative projects, enhance its global competitiveness, and solidify its position as a leading investment destination in the Middle East.
As the Saudi financial market continues to evolve, the CMA’s latest initiative is a testament to the Kingdom’s commitment to innovation, transparency, and economic diversification. With the doors now open to foreign investment in Makkah and Madinah, the future of Saudi Arabia’s real estate and capital markets looks brighter than ever.