Saudi Arabia is gearing up for one of the biggest real estate sector changes. From January 2026, foreigners will be able to purchase property in some areas of the Kingdom. The new law is part of the Vision 2030, which is focused on diversifying the economy, attracting foreign direct investment, and increasing non-oil economic activities. This policy has the potential to shift the real estate market, boost FDI, and offer long-term opportunities. To understand the significance of it, it helps to know the figures behind Saudi Arabia's housing and investment markets.
The New Law in Numbers
It was officially announced in July 2025 in the official newspaper of the Saudi government "Umm Al-Qura". It says that foreigners (people, companies, organizations) can purchase and own property rights in certain parts of the country. The implementation will start 180 days after the date of publication, so that means January 2026 will be the starting point. The law not only allows for ownership, but also for other rights to be held by foreigners, such as leaseholds or usufruct, which give long-term use of property. This is the first instance in Saudi Arabia, which for decades has restricted ownership of property to Saudis and special residents. The Kingdom, by opening the door, marks a paradigm shift in its policies that will change urban centers like Riyadh and Jeddah.
Where Can Foreigners Buy?
Not all cities and neighborhoods will be open. The Cabinet and the General Authority for Real Estate will establish zones for foreign ownership. Analysts believe that Riyadh, Jeddah, and parts of the Eastern Province will be the epicenter of these zones.
Even for the holy cities of Makkah and Madinah the rules are more stringent. Non-Muslims will be unable to own property in these areas. Muslim foreigners can be admitted under certain conditions. The goal is to maintain the sanctity of the two holy cities, while nevertheless permitting some limited investment.
The Existing Size in the Current Market
Saudi Arabia already has one of the biggest property markets in the Middle East. In 2024, real estate transactions in the Kingdom amounted to USD 75.7 billion. This was approximately 20 percent of the total Gulf Cooperation Council (GCC) real estate value, which amounted to USD 383 billion in 2008.
Within Saudi Arabia, the most active cities were Riyadh, Jeddah, and the Dammam Metropolitan Area. The three areas together are responsible for recording sales of real estate valued at SAR 118 billion, or approximately USD 32 billion in 2024. That figure had been obtained from over 102,500 residential transactions. As this indicates, the urban housing market remains strong even before foreign ownership is allowed without restriction.
Demand for New Housing
Growth in population and urbanisation in Saudi Arabia is increasing demand for more dwellings. By 2030, Saudi Arabia, in conjunction with Kuwait and Oman, will need more than 800,000 new housing units. This will require rapid construction to meet growing demands. Just in 2024, prices on homes for sale had dramatic upward movement. The value of transactions in Riyadh, Jeddah, and Dammam increased by around 50 percent in 2023. The steadily increasing demand and prices show why the government desires that foreign investors help increase the supply of housing.
Increasing Foreign Investment
Even before the law is in place, foreign investment in Saudi real estate is increasing. In the first three months of 2025, the Kingdom saw 93,000 property transactions valued at approximately SAR 109 billion or around USD 29 billion. This is an obvious indication that investors are gearing up for the new ownership law. Foreign direct investment into real estate also increased substantially. In 2022, foreign direct investment (FDI) in Saudi Real Estate was only SAR 422.7 million. In 2023, the total value of the regional marketplace swelled by nearly six-fold to SAR 2,509.5 million. This increase indicates an increasing trust in the Saudi property market by international investors.
Forecast for Market Growth
The Saudi real estate market was worth USD 72.11 billion in 2024. Forecasts indicate that it will reach USD 132.65 billion by 2033 with a compound annual growth rate (CAGR) of around 7 percent from 2025 to 2033. The numbers above are based on current growth rates. However, if the market's activity is further enhanced by foreign ownership, then the rate of growth may be even higher than that projected.
Rental Activity & Affordability
In addition, rental prices have been going up. Residential rental prices in Saudi Arabia increased by 10.6 percent in 2024. This causes stress on local residents, particularly for younger families. If foreign buyers tend to only buy properties near city centers, prices may increase more rapidly. In contrast, the government is also working on affordable housing schemes for the citizens. The challenge will be in ensuring that foreign investment helps to expand supply without rendering costs too high for locals.
Opportunities for Institutional Investors
Saudi Arabia is a huge opportunity for foreign investors. The premier districts of Riyadh and Jeddah are being rapidly modernized, as infrastructure including metro lines, airports, and financial districts is under construction. With the ease of ownership now in place, investors can consider property ownership over the long term, instead of simply leasing.
Returns could be strong. The explosive growth of the Saudi population (which will exceed 40 million people by 2030) as well as increasing incomes suggests that the demand for housing will continue to grow. Furthermore, commercial real estate will expand as more multinational companies establish regional headquarters in Riyadh due to favorable government policies.
Comparing Scenarios
So looking at the numbers, we can come up with two possible outcomes. If foreign investment is only moderate (around 5 to 10 percent of market growth), then total real estate value could be about USD100 to USD110 billion by 2033, not too far from the baseline forecast. If foreign capital is stronger, between 20 and 30 percent of growth, the market can reach USD 120 to 140 billion before 2033. This latter scenario would make Saudi Arabia one of the fastest-growing real estate markets in the world.
Risks and Challenges
Despite the optimistic view, there are apparent challenges. Affordability is also one of the biggest issues. With rents already increasing by more than 10 percent in one year, the citizens might feel squeezed if foreign investment causes prices to rise even further.
Another is the complexity of regulatory requirements. Zones and conditions must be defined by Cabinets and overseen by the General Authority for Real Estate. Any delays in the publication of these rules could slow down the pace at which they are put in place.
Supply shortages are also an issue. The country is looking for 800,000 new homes by 2030, but construction output has to rise to hit that target. A shortage of supply would exacerbate shortages instead of addressing them if demand from foreigners outpaces supply.
How Saudi Measures Up to the Region
Saudi Arabia's property sector already makes up a considerable percentage of the GCC total. With USD 75.7 billion worth of transactions in 2024, Saudi accounted for around 20 per cent of GCC activity. This puts it second to the UAE in terms of property market size.
In Dubai, foreign ownership has been permitted for years, and foreigners have taken about 40 percent of property buyers in some areas. If Saudi Arabia is to take the same route, foreign ownership may soon be a major component in the growth of real estate in the Kingdom.
Conclusion
In January, 2026, Saudi Arabia is going to allow foreigners to own property in the country. The sector already dealt with over $75 billion in transactions in 2024 and the market is projected to reach over $130 billion by 2033. Foreign investment grew sixfold from 2022 to 2023, proving that global interest is growing fast.
The opportunity is huge, but so are the challenges. Rising demand, rental inflation and the need for hundreds of thousands of new homes will put the market to the test. If handled right, foreign ownership can bring money and expertise to expand supply, create new zones and support Vision 2030. But if not well managed, it could cost the citizens more in the long run.
Saudi Arabia's move is historic. For the first time there is the possibility for international investors to own real estate directly in one of the fastest growing economies in the world. The next few years will reveal whether the numbers will result in a sustainable growth and a balanced generation and distribution of benefits for citizens and investors.
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