Saudi Arabia lets foreign investors buy into real estate companies that own properties in Makkah and Madinah, causing stock prices to rise

Saudi Arabia lets foreign investors buy into real estate companies that own properties in Makkah and Madinah, causing stock prices to rise

Saudi Arabia’s Capital Market Authority (CMA) has allowed foreign investors to buy shares in public companies that own properties in Makkah and Madinah. This move is aimed at attracting more investment and has caused the stock prices of some real estate companies to rise.

Foreign investments in holy cities

The Capital Market Authority (CMA) said that the goal of this move is to attract foreign investment and provide funds for both current and future projects in Makkah and Madinah.

Starting today, foreign investors can buy shares, convertible debt, or both, in companies listed on the Saudi stock exchange that own real estate in these two cities.

However, the CMA said that “strategic foreign investors” will not be allowed to invest, and foreign ownership of any company’s shares cannot exceed 49%.

In 2021, the CMA allowed non-Saudis to invest in real estate funds that focus on properties in Makkah and Madinah, but they were not allowed to directly invest in company shares or debt.

Share prices increase

After the announcement, shares of several real estate companies went up. Jabal Omar Development Co.’s shares increased by 10% when the market opened in Saudi Arabia.

Taiba Investments Co., Emaar Economic City, and Makkah Construction & Development Co. also saw gains of 8.7%, 3.4%, and 9.8%, respectively.

Big number

Foreigners can get long-term residency in Saudi Arabia by investing at least $1.1 million (SAR 4 million) in residential properties, a rule introduced a few years ago. Other GCC countries like the UAE and Oman also allow foreigners to own residential property.

Tangent

However, non-Muslims are not allowed to own property in the holy cities of Makkah and Madinah, even though Saudi Arabia has started allowing foreigners to own property in other areas of the country.

Pilgrimage

Saudi Arabia plans to welcome 30 million pilgrims each year for Hajj and Umrah by 2030. In 2019, these pilgrimages brought in around $12 billion in revenue, according to official data.

The pilgrimage is an important part of Saudi Arabia’s economy, and increasing the number of pilgrims is a key part of the Vision 2030 plan, which aims to reduce the country’s dependence on oil money.

The country is working on many expansion projects in Makkah and Madinah to meet the goal of accommodating the planned number of foreign pilgrims.

Published: 28th January 2025

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