Saudi Arabia Opens Investment Opportunities for Foreign Investors in Mecca and Medina Real Estate

In a strategic move aimed at boosting the national economy and attracting foreign investment, the Saudi Capital Market Authority has announced a historic decision allowing foreign investors to invest in Saudi companies that own real estate in Mecca and Medina. This decision is part of efforts to improve the business environment and create promising investment opportunities in the holiest places for Muslims worldwide, while also offering international companies more access to the Saudi market.

Motivations and Objectives of the Decision

Through this decision, Saudi Arabia aims to stimulate foreign direct investment in the Saudi market, particularly in the real estate sector, which is witnessing increasing demand in Mecca and Medina. The goal is to enhance the efficiency of the Saudi financial market and boost its competitiveness both regionally and globally. This move is part of a broader strategy to elevate the economic sector's performance and achieve the objectives of Saudi Arabia’s Vision 2030, which seeks to transform the Kingdom into a leading economic and commercial hub in the region.

Regulations for Investment in Real Estate Companies:

According to the regulations set by the Capital Market Authority, foreign investment is restricted to shares of publicly listed companies in Saudi Arabia that own real estate in Mecca and Medina. Foreign investors must adhere to a limit on ownership, which cannot exceed 49% of the company’s shares. However, there are exceptions for strategic foreign investors who will be allowed to hold ownership only under specific conditions, such as restrictions on acquiring convertible debt instruments or shares.

Investment Opportunities in Mecca and Medina:

This decision allows foreign investors to capitalize on opportunities in the real estate sector within the two holy cities, whether in existing properties or future projects. Saudi Arabia plans to develop a variety of real estate projects, including residential complexes, commercial spaces, and hotels, all designed to meet the needs of pilgrims. It is expected that this decision will have a significant impact on achieving the objectives of Vision 2030, boosting investments in infrastructure, and enhancing the economy of these two cities.

Saudi Efforts to Attract Foreign Investment:

Since 2021, Saudi Arabia has taken several steps to facilitate foreign investor access to the Saudi market. Foreign investors have been allowed to invest directly in the stock market, and new mechanisms like swap agreements have been introduced. These policies are part of Saudi Arabia's broader vision to make its financial market a global destination for investment, thereby supporting the local economy and enhancing financial sustainability.

Historical Decision by the Capital Market Authority

The decision announced by the Saudi Capital Market Authority marks a transformative step in attracting foreign investment, particularly in the real estate sector in Mecca and Medina. With these new policies, Saudi Arabia is opening doors to further international cooperation and providing investment opportunities in some of the world’s most sacred and in-demand locations. The market is expected to see significant growth as more international investors enter the Saudi economy in the

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