Saudi Arabia is now allowing foreign investors to invest in publicly listed real estate companies in Makkah and Madinah.
The Capital Market Authority’s new regulations will enable non Saudis to invest in shares of these companies, with ownership capped at 49%.
The move aims to attract foreign investment into companies such as the Jabal Omar Development Company in Makkah and Knowledge Economic City in Madinah to boost developmental projects aligning with Saudi Vision 2030.
Allowing Foreign Investments
The announcement by the Saudi Capital Market Authority on January 27, 2025, to allow foreign investments has opened new horizons for global investors. For the first time, non-Saudi individuals and entities can invest in listed companies that own real estate within the boundaries of Makkah and Madinah.
As the custodian of Islam’s two holiest sites, Saudi Arabia has long maintained strict regulations regarding foreign involvement in these sacred areas. However, the new policy reflects a carefully calibrated balance between preserving the sanctity of these locations and harnessing global capital for economic growth.
Foreign Investment in Makkah and Madinah
The new regulations allow foreign investors to purchase shares or convertible debt instruments in Saudi-listed real estate companies in Makkah and Madinah.
This means that while direct property ownership remains restricted, international capital can now flow into developing and managing real estate projects in these sacred locations.
Safeguarding Local Interests
To balance attracting foreign investment and preserving local control, the CMA has implemented a crucial limitation: non-Saudi ownership in these companies is capped at 49%.
This ensures that the majority stake remains in Saudi hands, addressing potential concerns about foreign influence in these spiritually significant areas.
Strategic Investors
The new policy excludes foreign strategic investors from acquiring shares or convertible debt instruments in these companies.
This exception is designed to maintain certain economic advantages for local entities and prevent potential conflicts of interest arising from strategic foreign ownership.
Rules for Foreign Investment
The Capital Market Authority has laid out a clear framework to govern foreign investment in Makkah and Madinah’s real estate sector. Understanding these rules is crucial for potential investors looking to capitalize on this new opportunity.
Investment Means
Foreign investors are limited to two primary investment vehicles:
- Shares in Saudi-listed real estate companies operating in Makkah and Madinah
- Convertible debt instruments issued by these companies
This structure allows indirect participation in the real estate market without direct property ownership.
Ownership Limitations
There’s a strict cap on foreign ownership:
- Non-Saudi individuals and entities collectively cannot own more than 49% of a company’s shares
- This ensures that control remains predominantly in Saudi hands
Usufruct Rights for Companies
The new regulations also address the operational needs of Saudi-listed companies:
- These companies can acquire ownership, easement, or usufruct rights over properties in Makkah and Madinah
- Such acquisitions are limited to properties used for company headquarters or branch offices
- The property must be fully utilized for the stated purpose
Compliance with Existing Laws
All investments must adhere to:
- The Law of Real Estate Ownership and Investment by Non-Saudis
- Other relevant Saudi regulations governing property and investment
This ensures that the new policy doesn’t conflict with existing legal frameworks.
Opportunities for International Investors
The opening up of Makkah and Madinah’s real estate market presents a unique opportunity for international investors. Here’s what makes this investment avenue particularly attractive:
Demand Driven by Religious Tourism
Makkah and Madinah serve as major pilgrimage destinations for Muslims worldwide. Millions of visitors arrive annually for Hajj and Umrah, creating a continuous demand for accommodation and related services.
This consistent inflow of visitors provides the potential for stable returns on investment, particularly in hospitality-related real estate.
Participation in Iconic Developments
Investors now have the opportunity to be part of some of the most significant real estate projects in the Islamic world.
These include the expansion and modernization of areas surrounding the holy mosques, the development of new accommodations and facilities for pilgrims, and large-scale infrastructure projects designed to support the increasing number of visitors.
Diversification Benefits
For international investors, the real estate market in Makkah and Madinah offers an opportunity to diversify their portfolios by gaining exposure to a distinctive market.
It also allows them to tap into Saudi Arabia’s growing economy and benefit from the kingdom’s strategic initiatives aimed at attracting foreign investment.
Impact on the Saudi Real Estate Sector
The introduction of foreign investment in Makkah and Madinah’s real estate companies is expected to impact the broader Saudi real estate sector significantly.
The influx of foreign capital and expertise may increase competition among real estate companies. This competitive environment could drive innovation in property development, management practices, and customer service, raising standards across the sector.
Acceleration of Development Projects
With access to additional funding sources, real estate companies can accelerate or initiate new development projects. This could lead to a more rapid transformation of the urban landscape in Makkah and Madinah, with potential spillover effects in other Saudi cities.
Aligning with Saudi Vision 2030
The decision to allow foreign investment in Makkah and Madinah’s real estate companies is closely aligned with the objectives of Saudi Vision 2030.
By opening up new investment channels in the real estate sector, Saudi Arabia is taking another step towards reducing its dependence on oil revenues. This diversification is a key pillar of Vision 2030, aiming to create a more resilient and sustainable economy.
The initiative encourages greater private sector participation in the economy, another core objective of Vision 2030. The government is fostering a more dynamic and competitive business environment by allowing foreign investment in listed companies.
Saudi Transformation Awaits
As this new chapter in Saudi Arabia’s economic development unfolds, it will be fascinating to observe its impact on the real estate market, the broader economy, and the kingdom’s position in the global investment landscape.
This bold move could well set the stage for further economic reforms and investment opportunities in the years to come, solidifying Saudi Arabia’s role as a key player in the global economy.
Redefining Real Estate Projects in Makkah
Jabal Omar Development
The Jabal Omar Development Project, an 8 Billion SAR project, is a one-of-a-kind initiative focused on revitalizing the urban area to offer high-quality lodging and facilitate religious, social, and business amenities and resources for both tourists and inhabitants of the sacred city of Makkah Al-Mukarramah.
By 2030, Jabal Omar Development Company plans to run 15 hotels across 230,000 square meters of area. These hotels will offer a direct view of Al Masjid Al Haram, providing guests with a convenient and spiritually enriching experience.
Jumeirah Jabal Omar Hotel
The Jumeirah Jabal Omar Hotel in the Holy City of Makkah, the first hotel in Saudi Arabia by the Jumeirah Hotel group from Dubai, has been officially announced to be open.
Located in the second phase of the Jabal Omar development, the hotel is positioned in the heart of Jabal Omar near the Grand Mosque, Al Masjid Al Haram.
Featuring more than 1000 rooms and suites, some offering direct views of the haram, the hotel strives to provide extraordinary experiences to pilgrims on their Hajj and Umrah journeys.
Address Hotel Jabal Omar
The 5-star Address Jabal Omar Makkah Hotel provides a luxurious stay, dining options, and other amenities, making it a spiritual sanctuary in the center of Makkah. Just 1640 feet from Masjid Al Haram, the hotel offers a fitness center, private parking, a shared lounge, and a restaurant for its guests.
The 5-star Address Hotel in Jabal Omar Makkah has also revealed Sky Musallah, the highest prayer room in the world, located within a sky bridge.
It has earned a Guinness World Record at an impressive 483 meters above sea level. The Sky Musallah offers stunning panoramic views of Al Masjid Al Haram, The Holy Kaaba, and Makkah City.
The sky bridge connects the two twin towers of The Address Jabal Omar Hotel, spanning the 36th to 38th floors, and has a capacity of 520 people. It is a remarkable lookout point for guests staying at this iconic and centrally located hotel in Makkah.
Renowned Hotels in Jabal Omar Makkah
- Jabal Omar Hyatt Regency Makkah Hotel
- Hilton Suites Makkah Hotel
- Conrad Makkah
- Hilton Makkah Convention Hotel
- DoubleTree by Hilton Makkah Jabal Omar Hotel
- Jabal Omar Marriott Hotel Makkah
Masar Makkah Destination
The hotel landscape in Makkah is about to undergo a significant transformation with a massive investment of $666.6 million into the highly anticipated Masar Destination.
The Masar Destination, owned by Umm Al-Qura for Development and Construction Co., has partnered with the General Authority of Awqaf to bring over 1,000 new upscale hotel rooms to the sacred city of Makkah.
The centerpiece of this project is the Residential Towers, which showcase the ambitious vision of Masar Destination.
In September 2023, Umm Al-Qura announced a collaboration with Scope Properties to construct Residential Towers in Makkah, a project worth $240 Million (SAR900 million).
Thakher Makkah City
The Thakher project, a $7 Billion project, boasts a team of top-tier urban planners and designers, transforming the rugged hills of the Holy City into a highly accessible, diverse, and hospitable destination, which aims to host 30 million Umrah performers and six million pilgrims by 2030
Spanning 320,000 square meters and situated just 1km from Masjid al-Haram in Makkah, the completed Thakher Makkah will feature approximately 100 land plots designated for hotels, residences, commercial spaces, and service-related establishments.
Redefining Real Estate Projects in Madinah
The Knowledge Economic City Project
The KEC project, within which Marriott’s new hotels will be situated, is a cornerstone of Madinah’s urban development strategy. Spanning an impressive 6.8 million square meters, KEC is envisioned as a world-class destination that seamlessly blends various elements of modern urban living.
The project encompasses not just hospitality facilities but also residential areas, retail spaces, commercial zones, and provisions for high-quality education and healthcare services.
One of the most exciting aspects of the KEC project is its connectivity. The development will be linked to the Haramain Train Station, which connects Madinah with other major cities like Jeddah and Makkah via a high-speed railway.
The Islamic World District
The Islamic World District (IWD), where Marriott’s new hotels will be located, is a particularly significant component of the KEC project. Covering 1 million square meters, it is designed to support two significant pillars of Saudi Vision 2030: the Pilgrim Experience Program and the Quality of Life Program.
This district is set to feature a museum, cultural center, and plaza dedicated to showcasing the rich diversity of Islamic cultures from around the world.
Once finalized, IWD will introduce around 18,000 hotel rooms, addressing Madinah’s accommodation challenges and fulfilling the objectives of the Pilgrim Experience Program. The development also aligns with the Kingdom’s bold aim to welcome 30 million pilgrims, Umrah performers, and tourist.
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