The real estate sector in Saudi Arabia is a vital component of the country’s economic landscape, and it is governed by a comprehensive regulatory framework overseen by various government authorities. This article aims to provide an in-depth overview of the regulatory landscape, the key governing bodies, and the critical regulations those investors, developers, and professionals must navigate when operating in the Kingdom’s real estate market.

The real estate sector in Saudi Arabia is governed by a comprehensive regulatory framework overseen by various government authorities. Understanding these regulations is crucial for domestic and foreign real estate investors, developers, and professionals in the Kingdom.

Regulatory Authorities

The Real Estate General Authority (REGA) was established by the Council of Ministers Decision No. 239 of the year 1438H. The purpose of the Authority is to enhance transparency, stimulate investment and provide consumer protection in the real estate industry.

The Authority has already started working on enhancing transparency by developing price indicators (selling and rental) and other indicators about construction progress.

The KSA Real Estate General Authority (REGA) is the government agency responsible for regulating and overseeing the real estate sector in Saudi Arabia. It was established as part of the Kingdom’s Vision 2030 economic diversification and development plan.

The key responsibilities of REGA include:

• Developing policies, regulations, and standards for the real estate industry;
• Issuing licenses and permits for real estate activities and projects;
• Overseeing the registration and documentation of real estate transactions;
• Promoting investment and development in the real estate sector; and
• Protecting consumer rights and ensuring transparency in real estate dealings.

In addition to REGA, other key authorities involved in real estate regulations include the Ministry of Housing, municipal authorities, and the Ministry of Investment. These entities play complementary roles in areas such as licensing, permitting, land administration, and investment promotion.

Licensing and Permits

For real estate developers operating in Saudi Arabia, obtaining a mandatory Real Estate Developer License from REGA is a prerequisite. This license ensures developers meet the necessary qualifications and comply with relevant regulations.

Beyond the developer’s license, various other permits are required for real estate projects. These permits are obtained through the relevant municipal and government agencies depending on the nature and location of the development.

Land Ownership and Registration

Saudi law recognizes both freehold ownership of land as well as leasehold interests. The Real Estate Registration Law No.91 of the year 1443H was issued to establish a formal land titling and registration system, which is being implemented by REGA.

Before this reform, land ownership was recorded through title deeds issued by local notary public offices, without a centralized registry. The new system aims to bring greater transparency and security to land ownership and transactions.

Real Estate Transactions

All real estate sales and transfers in Saudi Arabia must be documented through the notary public office. Additionally, the real estate sector is subject to specific regulations governing brokerage, property valuations, and consumer protection.

Real Estate Investment

The Saudi government has been making concerted efforts to attract foreign investment in the real estate sector. This includes initiatives led by REGA to promote investment opportunities and facilitate the participation of international investors.

Regulations also exist around the ownership of real estate by non-Saudis, which prospective investors should be aware of.

Nationality Restrictions on Land Ownership

There are distinct regulations for two groups of foreign nationals in Saudi Arabia:

According to the Royal Decree No. 22 of the year 1432H citizens of the Gulf Cooperation Council (GCC) countries, which include Oman, UAE, Kuwait, Bahrain, and Qatar, as well as companies in the GCC that are wholly owned by GCC citizens, are now able to own and lease real estate in Saudi Arabia on the same basis and with the same rights as Saudi citizens. However, this is subject to the following limitations:

• They can now own and lease real estate in Saudi Arabia on the same basis as Saudi citizens, with some limitations:
• The land must be developed or used within 4 years of registration.
• The land cannot be disposed of for 4 years from registration or until it is used/developed, whichever is earlier.

However, ownership of real estate in the holy cities of Makkah and Medina is still restricted to Saudi nationals only.

Foreigners of any other nationality, non-GCC companies, and companies owned by non-GCC foreigners there are significant restrictions on their ability to own freehold title to land in Saudi Arabia.

They can lease land, except in Makkah and Medina, but ownership is limited to specific circumstances:

• Resident foreigners can own property solely for their own residence, with a permit;
• Foreign companies with business licenses can own real estate for their business and employee housing;
• Foreign companies can invest in and develop real estate worth over SAR 30 million, if completed within 5 years; and
• Diplomatic missions and some international organizations can own land for official premises and employee housing.

Conclusion

The real estate regulatory landscape in Saudi Arabia is evolving to align with the Kingdom’s broader economic diversification and development goals. Understanding and complying with these regulations is essential for all stakeholders operating in the Saudi real estate market.