The real estate sector in Saudi Arabia is poised for a quantum jump in line with the comprehensive development of the country envisaged by Vision 2030 of the nation. As the country continues its efforts at modernization and infrastructural development, there is vast potential to start a real estate business in Saudi Arabia, offering significant opportunities for foreign investment.
The real estate sector embraces residential and commercial properties, industrial buildings, as well as hospitality and institutional buildings. Major cities such as Riyadh, Jeddah, and Dammam are witnessing rapid growth in the real estate sector.
The country has taken up a few Key Mega Projects in this sector as named below.
- NEOM
- The Red Sea Project
- Qiddiya
Opportunities for Foreign Investors to Start a Real Estate Business in Saudi Arabia
Residential Real Estate
Demand for affordable housing is increasing in populous cities such as Riyadh and Jeddah, especially with the new property law allowing foreign ownership, and a rise in population. Besides, government housing programs will increase demand for mid-tier and high-end projects among Saudi citizens.
Commercial Real Estate
Saudi Arabia’s diversification of its economy has created a demand for office space, retail centers and industrial real estate. Many opportunities for commercial real estate investment arise as the government commits to developing new business districts and Special Economic Zones (SEZ), such as the King Abdullah Economic City (KAEC).
Hospitality and Tourism
The ambitious plans of the Kingdom to draw tourists amounting to 100 million annually by the year 2030 have given rise to a spurt in demand for hotels, resorts and entertainment outlets.
This offers a great opportunity for investors to start a real estate business in the hospitality and tourism industries, especially along places like the Red Sea, and in areas where tourism projects have been initiated.
Eligibility for Real Estate Licensing in KSA
In Saudi Arabia, there are two conditions to obtain a real estate license:
The total cost of the one real estate project (including land and construction) must be 30 million Saudi Riyals or more ensuring that the project contributes significantly to Saudi Arabia’s development.
The investment or business must not be located within the cities of Mecca or Medina, as they are of great religious importance.
Documents Required for Real Estate Licensing in Saudi Arabia
Key documents include:
- Identification Documents: Passport copies for foreign investors, and national IDs for Saudi nationals or GCC citizens.
- Foreign investors need an investment license. Business entities require company registration and a commercial license.
- Power of Attorney
- Proof of Fund
- Title deed or ownership proof
- Land Approval Certificate
Rules & Restrictions for Real Estate Licensing for Investment
- Foreign Ownership: In specific sectors like economic cities or tourism zones with MISA approval.
- Zoning Laws: Properties must comply with zoning regulations for residential, commercial, or industrial use.
- Transaction Fees: A 5% “Real Estate Disposal Tax” applies to property sales.
- Housing Programs: For example, “Sakani” incentivizes affordable housing development.
- Rental Laws: Rental agreements must be registered on the “Ejar” platform.
Steps for Real Estate Investment in Saudi Arabia
Step 1: Market Research and Feasibility Study: to study current market conditions, to identify areas for investing (i.e. Riyad, Jeddah, NEOM, etc) and to choose the type of property (residential, commercial, hospitality, etc).
Step 2: Obtain MISA Investment License (For Foreign Investors) by completing the documentations, providing evidence of financial capabilities, and waiting for approval and licensing.
Step 3: Identify and Acquire the Property: site visits, verifying ownership and legality, and finalizing terms and conditions, with seller and/or developer.
Step 4: Conduct Due Diligence in regard to the title deed to ascertain if it is free of legal issues, zoning laws permit, and to obtain a No Objection Certificate for foreigners.
Step 5: Finalizing the Purchase or Lease
- Signing a sales agreement or lease contract.
- Registering the transaction with the relevant government authority, typically at the Ministry of Justice’s Real Estate Registration Office.
- Paying the necessary fees, including the real estate disposal tax.
Step 6: Business Registration: To conduct business in Saudi Arabia, registering with the relevant ministries is a legal requirement, the process depending on the type of business activity planned.
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Successfully managing the real estate and business environment of Saudi Arabia demands a comprehensive and accurate knowledge of local regulations and laws.
Helpline Group handles all procedures required to make the process of investing in and/or starting a real estate business in Saudi Arabia easy. We provide extensive regulatory advice and assistance in a rapidly growing real estate market in Saudi Arabia.
