How to own a property in Makkah/Medina as Foreigner

Every year, about 20 million visitors flock to Makkah and Madinah, making these cities prime locations for real estate investment. As an expatriate, you’re not alone if you are considering purchasing property in Makkah or Madinah. Many non-Saudi buyers see the cities’ religious significance as a profitable investment opportunity.

As a foreigner, you might wonder: Can I own land in Saudi Arabia? The short answer is yes, but there are rules you must follow.

Foreign Investment in Saudi Real Estate Laws The rules governing property ownership in Saudi Arabia are unique, especially in Makkah and Madinah, which are distinguished by their religious importance. These cities’ real estate markets hold substantial investment value, potentially yielding high returns.

Understanding Foreign Ownership in Makkah and MadinahForeigners looking to buy property in Makkah and Madinah must familiarize themselves with the specific laws and regulations. Here’s a quick breakdown:

Key Takeaways:

• Foreigners often face challenges when trying to purchase property in Makkah and Madinah.
• Non-Saudi buyers need to understand Saudi Arabian property laws.
• The real estate markets in both cities are heavily influenced by their religious significance.
• Despite restrictions, Makkah and Madinah offer lucrative investment opportunities for foreign buyers.
• Saudi citizens can also gain insight into how to acquire property in these cities.

Can Foreigners Own Property in Makkah and Madinah?

Recently, Saudi news sources reported that foreigners can buy property in Saudi Arabia despite several restrictions. While Makkah and Madinah are reserved primarily for Saudi citizens, foreigners can lease property in these cities.

The Saudi Capital Market Authority (CMA) has also introduced new regulations, allowing foreign investors to invest in real estate companies that own property in Makkah and Madinah. Here are the key points to know about these regulations:

Investment Opportunities for Foreign Investors:

• Foreign Participation: Foreigners can invest in the capital of Saudi-listed companies or purchase convertible debt instruments related to property in Makkah and Madinah.
• Ownership Limits: Foreigners can own up to 49% of these companies. However, strategic foreign investors cannot participate under the new regulations.

International Impact of Foreign Investment

The loosening of restrictions for foreign ownership in Makkah and Madinah has garnered significant local and international attention. Experts like Faisal Durrani, Head of MENA Research at Knight Frank, view this shift as part of a broader strategy to open Saudi Arabia’s real estate market to global investment. Ziad El Chiyar, CEO of Dar Global, also supports this move, predicting that lifting foreign ownership limits in the holy cities will dramatically impact the market.

Since the announcement, real estate developers have been preparing to capitalize on the influx of interest from global investors, particularly in pilgrim-related projects. The entry of foreign capital and expertise is expected to elevate the quality of the local real estate market.

This positive shift is reflected in the stock prices of Makkah and Madinah-focused real estate companies. On the day of the announcement, the shares of 13 of 14 real estate companies listed on the Saudi Stock Exchange rose by an average of 3.59%. Companies associated with Makkah and Madinah, such as Taiba Investments Co., Makkah Construction and Development Co., Knowledge Economic City, and Jabal Omar Development Co., saw even bigger jumps—up to 10%. This strong market response reflects the growing potential in the real estate market tied to these two cities’ religious and cultural significance.

Key Regulations for Foreign Ownership

• Approval from MISA: Foreign investors must obtain approval from the Minister of Investment (MISA) before purchasing property.
• Foreign Investment in Listed Companies: Foreigners can invest in Saudi-listed real estate companies that own properties in Makkah and Madinah.
• No Residency Requirement: Foreigners can own property in Saudi Arabia on a foreign ownership residence visa, and there are no additional restrictions on property ownership.
• High ROI Potential: Makkah and Madinah are among the Middle East’s most profitable real estate markets due to strong government backing and a steady stream of pilgrims

Why Makkah and Madinah Are Profitable Investment Destinations?

Real estate investments in Makkah and Madinah are highly lucrative for several reasons, primarily their religious significance, favorable economic conditions, and tourism-driven demand.

Millions of Muslims visit these cities yearly for Hajj and Umrah, resulting in a high demand for accommodation. This consistent influx of visitors makes the real estate market in these cities particularly profitable.

Saudi Arabia’s Vision 2030 plan also includes large-scale development projects in both cities, such as new hotels, metro systems, and other infrastructure, further enhancing the real estate market’s potential.

How to Buy Property in Makkah and Madinah as an Expat?

Makkah and Madinah are developing special economic zones to provide foreign investors with real estate investment opportunities. However, foreigners can generally invest through shares in listed companies or bonds rather than directly owning property.

Here’s the typical process for acquiring property:

1. Obtain Approval: You must get approval from the relevant Saudi authorities.
2. Property Registration: Properties must be booked through the Real Estate Registration Authority.
3. Contract Signing: You’ll need to sign a contract with the seller.
4. Verification of Funds: A bank must verify that the funds for the purchase are legitimate.
5. Document Ownership: Collect all necessary documents to prove ownership.

Can a Foreigner Buy a House in Madinah?

Foreigners are not allowed to buy personal property in Madinah directly. However, they can invest indirectly by purchasing shares in listed companies or convertible bonds. Additionally, property leasing is an option for foreign investors. This is part of Saudi Arabia’s Vision 2030 agenda to diversify its economy and increase the number of Hajj and Umrah pilgrims.

How to Settle in Madinah?

Foreigners must follow specific procedures to settle in Madinah. While private property ownership is not permitted, foreign investors can lease properties and indirectly gain access to real estate through business investments or company shares.

Can Non-Muslims Buy Property in Saudi Arabia?

Yes, non-Muslims can own property in Saudi Arabia, but with significant restrictions, especially in Makkah and Madinah, where religious rules apply. Non-Muslims are prohibited from owning property in the central areas of these holy cities, as they are primarily reserved for Muslims. However, non-Muslims can purchase property in other regions of Saudi Arabia under certain conditions.

Prime Investment Locations in Makkah and Madinah

In Makkah:

• Near Masjid al-Haram: Properties close to Masjid al-Haram are always in high tourist demand.
• Aziziyah Area: Popular with Hajj and Umrah pilgrims for accommodations.
• Jabal Omar Project: One of Makkah’s most significant development projects, featuring world-class hotels and shopping malls.
• Qudai Area: A prime location for pilgrims, situated near Masjid al-Haram.

In Madinah:

• Near Masjid al-Nabawi: This area attracts millions of visitors annually and has a high demand for property.
• King Fahad Road: The commercial hub of Madinah, with significant real estate development potential.
• Al Hada Area: A luxurious area for tourists where property values are expected to be appreciated.

FAQ

Can foreigners own property in Saudi Arabia?

Yes, foreigners can own land and real estate in Saudi Arabia despite several conditions and restrictions. These regulations are stringent in the holy cities of Makkah and Madinah.

Is real estate profitable in Makkah and Madinah?

The real estate market in Makkah and Madinah is highly lucrative due to the religious significance of these cities. As places of pilgrimage, there is always a high demand for residential and commercial properties. Infrastructure and other facilities are being developed to meet this demand, and investing in these areas is a great opportunity.

What is the process for a foreigner to buy property in Makkah and Madinah?

The first step for foreigners purchasing property in Makkah or Madinah is to identify the right property and familiarize themselves with the local market. Next, it’s essential to address the legal aspects. Foreigners must adhere to Saudi Arabia’s laws and regulations, which may include obtaining specific permits or licenses. Additionally, the property’s location is crucial; some regions may be off-limits to foreign ownership or have specific regulations related to property transactions.

Can non-Muslims own property in Saudi Arabia?

Non-Muslims can own property in Saudi Arabia, including in Makkah and Madinah. However, they must follow religious restrictions. For example, they are prohibited from entering the central areas of the holy cities. Foreign investors should know these religious rules before purchasing real estate in these regions.

What are the best locations for investment in Makkah?

Properties near significant religious sites, such as the Masjid al-Haram in Makkah, are in high demand. These areas are particularly sought after due to their proximity to pilgrimage locations. Additionally, future development projects in Makkah can significantly impact property values, so investors should stay informed about upcoming developments and market trends.

What are the procedures for buying and selling real estate in Makkah or Madinah?

The first step in purchasing property in Makkah or Madinah is obtaining the necessary permits and licenses. Then, you must provide financial documents and complete the property registration process. Foreigners must follow all legal requirements to avoid any complications related to property ownership. Working with a legal representative can help simplify the process.