Saudi Arabia’s real estate market is entering a new phase. The Law of Real Estate Ownership by Non-Saudis came into force on 22 January 2026, its Executive Regulations and approved geographic scope have now been issued, and the Saudi Properties platform is operational. Foreign investors therefore have a more structured route to acquire ownership and other real estate rights in designated areas of the Kingdom.
This is only part of the developing opportunity. Saudi Arabia has also strengthened its White Land Fees regime, increasing the potential annual charge on qualifying undeveloped urban land to as much as 10% of its assessed value. The policy is intended to increase the supply of developed land, discourage the prolonged holding of strategically located undeveloped sites and encourage development, sale or other productive use.
These reforms operate from different directions but may have a mutually reinforcing effect. The foreign ownership regime expands the pool of potential investors. The White Land Fees regime increases the economic cost of leaving qualifying urban land undeveloped. Saudi capital markets structures, including regulated real estate development funds, provide potential sources of project equity and governance.
For many privately sponsored projects, however, the remaining constraint is not necessarily land or investment capital. It is credible development and execution capability.
This creates opportunities for international developers, construction companies, development managers, designers, operators and technology providers that can combine technical expertise with an appropriate Saudi investment and project structure.
What has changed under the foreign ownership regime?
The Law of Real Estate Ownership by Non-Saudis represents a material liberalisation of Saudi Arabia’s approach to foreign participation in the real estate market.
Under the previous framework, ownership by non-Saudis was generally restricted and available through narrower approval-based routes. The new regime introduces a rules-based model under which foreign investors may acquire ownership and other in-rem rights within an approved geographic scope, subject to the applicable conditions, ownership limits and registration requirements.
The reform is significant, but the Saudi real estate market remains subject to controls. Each proposed acquisition must be assessed against the approved geographic scope, the eligibility of the acquirer, the permitted property right and applicable ownership, use, registration and licensing requirements.
The Saudi Properties platform operated by the Real Estate General Authority (REGA) is the authoritative starting point for reviewing the approved geographic scope and the conditions applying to particular areas. Its interactive maps identify the relevant zones, permitted ownership percentages, available rights, duration limits and applicable controls.
The designated areas include important urban, tourism, mixed-use and giga-project locations. They are not limited to isolated residential districts. This supports the wider Vision 2030 objective of attracting foreign capital and private-sector expertise into the development of the Kingdom’s cities, tourism destinations and commercial infrastructure.
What rights may foreign investors acquire?
The new Law permits eligible non-Saudis to acquire real estate ownership and other in-rem rights. Depending on the location, asset, acquirer and applicable controls, the available right may include full ownership, usufruct, an easement or another registrable real estate right.
Saudi real estate ownership is more than a contractual leasehold interest but should not be equated with unrestricted common law freehold ownership. It is a statutory right subject to geographic, regulatory and registration requirements that may affect development, financing, operation and exit.
Which acquisition and holding structures are available?
The Law distinguishes between direct acquisition by a foreign company, acquisition through a Saudi company with foreign shareholders, and acquisition through entities regulated by the Capital Market Authority (CMA).
These routes may lead to different regulatory, registration, financing and tax consequences.
- Direct acquisition by a foreign company: A foreign company may acquire ownership or another permitted in-rem right directly as a non-Saudi acquirer. If it has no existing presence in Saudi Arabia, it must first register with the Ministry of Investment (MISA) and obtain the required Saudi identification and registration details. This property-ownership registration should be distinguished from the investment registration and licences required to conduct a business activity in the Kingdom.
- Saudi companies with foreign shareholders: An unlisted Saudi company established under the Saudi Companies Law may acquire real estate within the approved geographic scope, subject to the applicable requirements. It may also be able to acquire property required for its licensed business activities or employee housing outside that scope, subject to MISA approval and the conditions prescribed by the Executive Regulations.
- CMA-regulated structures: Listed Saudi companies, investment funds and licensed special purpose entities are subject to the Capital Market Law and the separate CMA controls applicable to real estate ownership. These structures may be relevant for institutional investment, co-investment platforms, project-specific real estate development funds, portfolio structures and capital markets-backed exits.
The correct structure will depend on more than ownership eligibility. The parties should consider how land, equity, development responsibility, financing, governance, project revenues and exit rights will be allocated.
Why does ownership remain separate from development and operation?
The ability to acquire a property does not, by itself, authorise the buyer to develop or operate a business on it. A foreign investor may satisfy the ownership requirements but still require a MISA registration, commercial registration, municipal licences and other sector-specific approvals before undertaking development or operational activities.
Depending on the project, additional requirements may include zoning and land-use approvals, building permits and municipal approvals, subdivision and infrastructure approvals, authorisations for the sale or lease of units before completion, jointly owned property requirements, environmental and utilities approvals, foreign investment and licensed-activity requirements, and sector-specific operational licences.
Investors should therefore avoid treating foreign ownership confirmation as the final regulatory approval for a project. Ownership, development, construction, financing, sales and operation are separate workstreams that should be mapped together before the parties commit capital or sign definitive documents.
Why do the White Land Fees matter?
Saudi Arabia’s White Land Fees regime applies an annual fee to qualifying undeveloped land within designated urban areas. The White Land and Vacant Property Fees Law, as amended in 2025, permits an annual White Land Fee of up to 10% of the assessed value of qualifying land. The implementing framework allows different rates to be applied according to the location and priority classification of the land.
In Riyadh, the applicable rates are: (a) 10% for maximum-priority land; (b) 7.5% for high-priority land; (c) 5% for medium-priority land; (d) 2.5% for low-priority land; and (e) 0% for land outside the identified priority categories, although such land may still be counted when determining aggregate holdings.
The expanded Riyadh framework provided for invoicing to begin on 1 January 2026. On 8 June 2026, the Ministry of Municipalities and Housing announced that it had commenced issuing more than 60,000 White Land Fee invoices in Riyadh.
The fee does not legally compel a landowner to commence development. It does, however, create a potentially significant recurring cost for holding qualifying land without developing it. Depending on the value, size and classification of the site, the accumulated cost may materially affect the owner’s commercial assessment of whether to retain, sell, contribute or develop the land.
This may encourage affected owners to develop the land themselves, sell it to a domestic or international investor or developer, contribute it to a joint venture or CMA-regulated real estate fund, appoint an experienced development manager, or partner with a developer or construction company to deliver a phased project capable of attracting equity and debt financing.
Landowners and prospective development partners can use the Ministry’s White Land portal as an initial reference point. The portal includes interactive maps showing the relevant geographic bands and classifications. The map should be used for preliminary screening only. Whether a particular parcel is liable for the fee, and at what rate, must be confirmed by reference to the registered landholding, applicable boundaries, aggregation rules, assessment and any available exemption or legal impediment.
Why are private landowners looking for development partners?
A landowner may hold a strategically located and valuable site without having the organisation, technical resources or experience required to deliver a large residential, commercial or mixed-use development.
In some cases, the landowner has an attractive site but lacks an established development organisation. In others, the owner can contribute the land but not all the equity required to construct the project. The challenge is to convert a passive landholding into a properly governed, commercially viable and financeable development platform.
Delivering a modern development requires considerably more than appointing a construction contractor. Relevant capabilities may include feasibility and market studies, environmental impact assessment, project and financing structuring, master planning, design management, value engineering, procurement, regulatory coordination, programme and cost control, authorisations for the sale or lease of units before completion, leasing strategy, facilities planning, technology integration and long-term asset operation. The structure must also allocate development, completion and cost-overrun risks in a manner acceptable to investors and lenders.
Several private landowners have approached our Riyadh team seeking experienced development partners for undeveloped sites. Although these approaches are anecdotal rather than evidence of a market-wide trend, they are consistent with the commercial incentives created by the strengthened White Land Fees regime.
This creates an opportunity for international developers and contractors willing to assume a broader development role rather than pursue only a conventional construction contract.
What role can real estate development funds play?
Saudi Arabia has an established regulatory framework for real estate investment funds, including the updated Real Estate Investment Funds Regulations published in November 2025 and the Instructions of Simplified Investment Funds issued in March 2026. Project-specific private funds can bring together land, investor capital and governance by allowing a landowner to contribute land for fund units or another economic interest, qualifying investors to provide equity and a CMA-licensed fund manager to oversee the investment.
A regulated fund can provide capital and governance but not the development and construction capability needed to deliver the project. The landowner and investors may therefore require an experienced developer or contractor to assume responsibility for design, development management, construction, technology integration and completion.
Why is execution capability important to bankability?
Saudi banks have substantial experience in financing real estate and construction projects. Nevertheless, a lender considering a privately sponsored development will assess more than the underlying value of the land.
A lender is likely to focus on the sponsor’s financial strength, the delivery team’s track record, the project design and budget, the status of key approvals, the equity commitment and projected cashflows, and the allocation of completion, delay and cost-overrun risks. It will also assess the proposed security package and its ability to step in or replace the developer or contractor following default.
As a market observation, banks may be cautious about financing a project led solely by a private landowner without an established development platform or a credible record of delivering comparable projects, reflecting the associated execution, completion, cost and revenue risks.
These concerns may be addressed by combining the landowner with an experienced international developer or contractor, a CMA-regulated real estate fund or other equity investor and, where appropriate, a professional development manager or operator. A structure that brings together land, equity, delivery capability and clearly allocated project risks is likely to be more bankable than a conventional bilateral arrangement between a landowner and construction contractor.
What might an integrated project structure look like?
An integrated development structure may bring together (a) a Saudi landowner contributing the site, (b) a CMA-regulated real estate development fund or other investor providing equity and governance, (c) an experienced international developer or contractor providing development and construction capability, and (d) a lender providing senior financing once the project is sufficiently established.
The land may be contributed to a fund or special purpose entity, with the parties entering into development management, construction and financing agreements. The international participant may act solely as contractor, but greater value may be created where it assumes a broader role covering feasibility, master planning, design management, procurement, cost and programme control, regulatory coordination and project completion.
International developers and contractors with expertise in smart buildings, connected infrastructure, energy efficiency, modern construction methods and digital project controls may be particularly well placed to perform this role.
The allocation of development profit, construction margin and investment return should reflect each party’s contribution and risk. The landowner provides the site, the fund or investors provide capital, and the developer or contractor provides the capability required to deliver the project.
What should international parties check before committing?
Foreign developers, contractors and investors should undertake project-specific diligence before accepting exclusivity, incurring material design costs or signing binding development documents. Key matters include:
- Land and contribution: Confirm title, boundaries, permitted use, encumbrances and White Land Fee exposure, and agree the land valuation and contribution or transfer mechanics.
- Ownership and investment structure: Determine whether the project should be held through a Saudi company, joint venture, CMA-regulated fund or special purpose entity, and confirm the applicable foreign ownership, investment and securities requirements.
- Development approvals: Identify the planning, subdivision, building, environmental, infrastructure, sales, leasing and sector-specific approvals required and allocate responsibility for obtaining them.
- Development and construction risk: Allocate responsibility for feasibility, design, procurement, construction, delay, defects, cost overruns, commissioning and completion, supported where appropriate by guarantees, performance security and step-in rights.
- Funding and bankability: Establish the land, equity and debt contributions, project cashflows and cost-overrun support, and engage lenders early to ensure that the project documents and security package are bankable.
- Governance: Define the approval rights of the landowner, investors, fund manager, developer and lenders and establish workable decision-making and deadlock procedures.
The land contribution, investment, construction and financing documents should be negotiated as an integrated package. Misaligned conditions and risk allocations may prevent the project from reaching financial close or proceeding efficiently to construction.
What taxes and fees should be considered?
Saudi real estate projects may involve real estate transaction tax (RETT), VAT, income tax, zakat, withholding tax and other transaction or fund-level taxes, requiring transaction-specific tax advice. RETT generally applies at 5%, while the foreign ownership regulations currently impose a separate 2% disposal fee on certain dispositions by non-Saudis in Riyadh, Jeddah, Makkah and Madinah. The two charges should not be treated as a universal 7% rate, as their application and exemptions may differ.
White Land Fees are separate and should be addressed when valuing or contributing affected land, including responsibility for outstanding and continuing amounts.
How Bird & Bird can help
These developments create opportunities beyond the conventional tender market for international developers and contractors capable of combining technical delivery with disciplined project structuring. Success will nevertheless depend on careful site selection, realistic valuation and demand assumptions, aligned stakeholders and a bankable allocation of development risk.
Bird & Bird can support Saudi landowners, international investors, developers, contractors, fund sponsors and lenders with foreign ownership and market-entry advice, land title and White Land Fee diligence, joint venture and fund structuring, land contribution and development arrangements, construction and project agreements, financing and security, technology integration, project governance and exit planning.
Our Team
For further information on foreign real estate ownership, White Land Fees, private real estate development structures, Saudi real estate funds, joint ventures, construction and development agreements, project financing, smart-building projects or investment in Saudi Arabia’s real estate market, please contact Simon Shooter and Peter Koh.
Disclaimer
This publication is intended as a general overview of legal, regulatory and commercial issues affecting real estate investors, landowners, developers, contractors, fund sponsors and lenders in Saudi Arabia. It does not constitute legal, tax, investment or technical advice. Specific advice should be obtained in relation to any proposed acquisition, land contribution, development, investment structure, fund, financing arrangement, approved-zone analysis, White Land Fee assessment, tax matter or project.
For further information, please contact:
Simon Shooter, Partner, Bird & Bird
simon.shooter@twobirds.com
