The real estate sector in Saudi Arabia is governed by a comprehensive regulatory framework overseen by The Saudi Arabian real estate sector receives guidance from a full set of laws which government bodies administer through their regulatory authority. Knowledge about these rules proves necessary for all those involved in real estate investments or development in Saudi Arabia whether domestic or foreign.

Regulatory Authorities

The Real Estate General Authority (REGA) emerged through Council of Ministers Decision No. 239 during the year 1438H. The Real Estate Authority exists to create clear market practices along with investment growth while protecting consumers throughout the real estate sector.

The Authority initiated its transparency enhancement effort through development of price indicators alongside construction progress indicators.

In Saudi Arabia the real estate sector operates under supervision of the government agency KSA Real Estate General Authority (REGA). The Saudi government founded this authority when they launched their economic diversification and development agenda called Vision 2030.

The main duties of KSA Real Estate General Authority (REGA) comprise:

• 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.

REGA operates alongside the Ministry of Housing and municipal authorities together with the Ministry of Investment to achieve real estate regulation objectives in Saudi Arabia. The different entities collaborate together to fulfill their responsibilities in licensing processes together with permitting needs and land administration functions and investment promotion activities.

Licensing and Permits

Real estate developers working in Saudi Arabia need to acquire a necessary Real Estate Developer License that REGA issues as their first step before operations. The license establishes that developers need to uphold required qualifications alongside following applicable 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.

The previous system of land title documentation was based on local notary public office-issued title deeds that lacked centralized recordkeeping. A new system operates with enhanced visibility of land ownership records to ensure protection for transactions.

Real Estate Transactions

A real estate transaction or transfer requires documentation at a notary public office in Saudi Arabia. Real estate brokerage operations along with property valuation services and consumer protection policies follow specified directives within the sector.

Real Estate Investment

Saudi Arabian officials continue to work actively toward stimulating international investments in their real estate market. The real estate promotional initiatives of REGA work alongside their efforts to support international investor participation in Saudi Arabian real estate market.

Non-Saudi investors need to understand ownership restrictions for real estate that currently govern the market.

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 regulatory framework for real estate in Saudi Arabia advances because it supports general economic development goals and diversification. Every entity working within the Saudi real estate market needs a fundamental knowledge and adherence to its governing regulations.

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