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5 Things You Need to Know Before Buying Real Estate in Saudi Arabia

Published on September 14, 2024

Saudi Arabia's real estate market is becoming one of the most exciting in the world. With strong economic growth and attractive rental yields, it's no surprise that more and more investors are looking at the Kingdom.

Whether you're thinking about buying a home or investing in commercial property, understanding the rules and regulations is crucial. Here are five essential things to know before you buy real estate in Saudi Arabia.

1. Saudi Arabia's Foreign Ownership Law

Foreigners are welcome to own property in Saudi Arabia, but the process comes with specific rules and regulations. Under Article 5 of the Real Estate Ownership Law, non-Saudis are permitted to buy property within certain designated areas.

You'll also need approval from the Ministry of Investment, especially if your purchase is for investment rather than personal use.

2. Approved Zones for Foreign Ownership

The holy cities of Mecca and Medina are generally off-limits for foreign ownership. But you can purchase property in other parts of the Kingdom, subject to approval.

Saudi Arabia has been actively encouraging foreign investment by creating Special Economic Zones (SEZs) as part of its Vision 2030 initiative.

These SEZs are designed to attract international investors by offering tax incentives and streamlined business processes. They offer great investment opportunities in residential, commercial, and industrial properties.

3. Understand Your Financing Options

You have several options for financing real estate in Saudi Arabia. Depending on your eligibility, local banks and mortgage companies may offer loans covering up to 85% of the property's value. Alternatively, you can explore international mortgage services through overseas banks.

4. Limits on Owning Multiple Properties

There are restrictions on how many properties a foreigner can own in Saudi Arabia. These rules are mainly in place to prevent speculative buying and make sure that real estate investments benefit the local economy.

Typically, you can own one residential property unless you get special permission from the Ministry of Investment. The rules are more flexible for commercial and industrial properties.

5. Fees and Taxes Involved

Saudi Arabia doesn't have an annual property tax, but you will encounter other fees and taxes. The main cost to be aware of is the real estate transaction fee. This tax is usually set at 5% of the property's value and is paid to the government when ownership is transferred.

You should also budget for registration and legal fees and be aware of potential capital gains tax if you sell the property for a profit.

Conclusion

Saudi Arabia's booming real estate market offers incredible opportunities for foreign investors. With major infrastructure projects underway and a thriving economy, now is a great time to invest.

Attending Cityscape Global 2024 is your gateway to discovering real estate investment opportunities in Saudi Arabia. You'll get an up-close look at ground-breaking projects like Neom and have the chance to network with government officials and industry leaders.