In a move aimed at strengthening governance and rationalizing spending, the Saudi Official Gazette published regulations governing the leasing of real estate outside the Kingdom by government agencies.
These regulations, published in the official gazette “Umm al-Qura,” include strict criteria to ensure the optimal use of leased properties, with specific exceptions to meet essential needs in accordance with defined financial guidelines.
These regulations consist of 18 articles, establishing a clear framework to ensure that leasing is limited to actual need and subject to the approval of the General Authority for State Real Estate.
According to Article 2, no government entity may lease property outside the Kingdom unless there is an urgent need to do so and after obtaining approval from the competent authority.
Article 4 specifies the conditions that must be met by properties to be leased, most notably that they must be free of structural defects to ensure their safe and efficient use.
Article 12 also includes an exception to the general rules set forth in Article 6, allowing government agencies to lease properties directly within approved budgetary limits in the following cases:
- Leasing temporary headquarters for diplomatic missions or their affiliated technical offices, as well as providing housing for heads of missions and staff.
- Leasing permanent premises for missions or their affiliated technical offices, provided that the value of a single contract does not exceed 300,000 U.S. dollars annually.
- Securing permanent housing for the head of mission or staff, or providing real estate for support services such as warehouses and parking lots, provided that the value of a single contract does not exceed 50,000 U.S. dollars annually.
Regulations Governing the Leasing of Real Estate by Government Entities Outside the Kingdom of Saudi Arabia
Issued by Board of Directors Resolution No. (Q/2/25/2024) dated 29/05/1446 AH
Article 1:
The following terms and expressions—wherever they appear in these regulations—shall have the meanings set forth opposite them, unless the context requires otherwise:
The Kingdom: The Kingdom of Saudi Arabia.
The Regulations: Regulations Governing the Leasing of Real Estate Outside the Kingdom of Saudi Arabia by Government Entities.
The Authority: The General Authority for State Real Estate.
Government Agencies: Ministries, government agencies, authorities, departments, public institutions, and independent public legal entities wishing to lease real estate outside the Kingdom.
Head of the Government Agency: The minister, the chairman of the board of directors, the chief executive of a government agency that does not have a chairman of the board of directors, or a person authorized by such an official.
Government agency personnel: Anyone who works for the government agency or provides services to it on a permanent or temporary basis, including personnel of diplomatic missions.
Mission: An embassy, a permanent delegation to international or regional organizations, a consulate, or offices of the Ministry of Foreign Affairs abroad.
Head of Mission: The person appointed to serve in this capacity.
Host country: The country in which the property to be leased is located.
Lessor: The owner of the property, or the person who has the right to lease it in accordance with the laws of the host country.
Renewal: An agreement between the parties to the contract to renew a contract that has expired or is about to expire, under the same terms and conditions as the previous contract or with modifications thereto.
Article 2:
No government entity may lease property outside the Kingdom except in cases of urgent need and upon approval by the Authority, subject to the following conditions:
1. The government agency must not already own a property that meets its needs, is suitable for use, and is currently unused.
2. The Authority must not have a property available that meets the government agency’s needs.
3. There must be no vacant space available within state-owned properties in the same city that can be utilized to meet the government agency’s needs, provided that the consent of the government agency currently using the property has been obtained and without disrupting the operations of any other government agency sharing the same property.
4. The government agency must have the necessary financial authorization to lease and use the property.
5. The government agency must obtain approval from the Ministry of Foreign Affairs if it wishes to lease an office or a standalone building outside the mission’s headquarters.
6. A balance must be maintained between the benefits of purchasing and leasing, in accordance with the government agency’s plan for real estate needs outside the Kingdom.
Article 3:
Except as provided for in the regulations regarding their housing, housing for employees of the government agency is not considered a need that justifies leasing; and if the purpose of the lease is to house employees for whom the regulations require housing, the amount paid by the government agency for the lease may not exceed the beneficiary’s cash housing allowance at the time of the lease, extension, or renewal, except as provided for in ownership decrees, orders, or decisions issued in this regard.
Article 4:
The property to be leased must meet the following conditions:
1. It must be free of structural defects.
2. It must meet the licensing requirements of the competent authorities in the host country.
3. Its specifications must be commensurate with the needs of the government entity.
4. The area of the property to be leased must be within the limits of the needs of the government entity seeking to lease it, in accordance with the criteria approved by the Authority.
5. It must be insured by the lessor—if available—in accordance with the laws of the host country.
6. It must not be subject to any violation by a competent authority that affects its use, nor be the subject of a dispute.
7. It must not belong to any employee of the Authority or the government agency, or to a relative up to the third degree, or to anyone who has a direct influence on the leasing process.
8. The property must not belong to any person prohibited from doing business with the Authority in accordance with the regulations, rules, and decisions issued by the relevant authorities in the Kingdom or the host country.
Article 5:
1. The government agency must submit an application to lease a property outside the Kingdom, accompanied by financial authorizations and approvals—if any—in accordance with the form prepared for this purpose, provided that it includes the following:
A. The type of property requested and its location.
B. The purpose of leasing the property.
C. The lease term.
D. The property’s technical and security specifications.
2. The application shall be returned to the government agency for correction or to complete the required documents within (fifteen) business days.
3. The Authority reviews the lease application and issues its decision to approve it after coordinating with other entities seeking to lease in the same city—to avoid competition among them and ensure efficiency in the leasing process—— or reject it, or offer a state-owned property that meets the government entity’s needs, within a period not exceeding (fifteen) business days from the date the application is completed; the Authority may extend this period for a similar duration. If the Authority rejects the application, the decision must be substantiated.
Article 6:
1. Following the Authority’s preliminary approval of the lease application, the government agency shall obtain offers from marketing and brokerage firms and real estate consulting firms, with no fewer than (three) offers, within the limits of its financial allocations. The government entity must exercise the necessary professional diligence when providing the offers. As an exception, the government entity may submit only one offer, accompanied by a justification.
2. The Authority may provide additional offers or alternative offers to those submitted by the government agency, and it may seek the assistance of any experienced and qualified individuals outside its own staff whom it deems appropriate.
3. The Authority shall review the proposals and verify their compliance with the government agency’s needs.
4. Proposals may include basic equipment, furnishings, and technical and security requirements that enable the government agency to utilize the property.
5.- The Authority shall issue its approval of suitable proposals within a period not exceeding (fifteen) business days from the date of receipt of the proposals; the Authority may extend this period for a similar duration, and shall notify the government agency of the decision so that it may complete the regulatory procedures.
Article 7:
1. The government agency shall form a technical committee consisting of no fewer than three members.
2. The committee shall, in coordination with the head of the mission or his or her delegate,- review the approved bids to evaluate them from technical, security, and financial perspectives, ensure their suitability for the government agency’s needs, and recommend the most appropriate bid. The committee shall prepare a report to that effect within a period not exceeding thirty days from the date of its formation.
3. The committee shall negotiate with the property owners to secure the best possible price offer in line with prevailing market rates in the city.
4. The government agency shall submit the report—referred to in paragraph (2) of this article—to the head of the government agency or his or her designee to complete the regulatory procedures.
Article 8:
The government agency shall contact the competent security authorities to ensure that the selected properties do not belong to individuals or entities with whom dealings are prohibited.
Article 9:
1. The contract shall be for a term not exceeding (five) years and shall be automatically renewed for one or more similar terms—subject to the Authority’s approval—for a period not exceeding (twenty) years from the date of the contract’s conclusion, unless one of the parties notifies the other of its intention not to renew at least (sixty) days prior to the contract’s expiration date, subject to the host country’s laws regarding the provisions for notification of non-renewal.
2- As an exception to paragraph (1) of this article, and in cases of necessity as determined by the government entity, and based on reasons acceptable to the Authority, the contract may be renewed for additional terms exceeding (twenty) years, but not exceeding (thirty) years.
3. The government agency shall notify the Authority of its intention to renew or terminate the contract at least (one hundred twenty) days prior to the contract’s expiration date, in accordance with the form provided for that purpose.
Article 10:
1. The head of the government entity or his or her delegate shall sign the contract in accordance with the approved budget allocations.
2. The government entity shall be responsible for managing the contract and paying its value.
3. The contract amount shall be paid in equal installments at the beginning of each contractual year of the contract term, or as specified in the contract terms.
4. The government agency shall provide the Authority with a copy of the contract, as well as any amendments, renewals, or terminations thereto, in accordance with the regulations.
5. The government entity or its authorized representative shall prepare a report upon receipt and handover of the property; in accordance with the form provided for that purpose, which shall include the condition of the property and its fixtures, and the government entity shall provide the Authority with a copy of these reports within (ten) business days from the date of receipt or handover of the property.
Article 11:
The government agency may provide temporary premises for the mission or its affiliated technical offices, or housing for heads of missions or staff, and may make use of the options available in the host country, such as offices, furnished residential units, hotel apartments, and hotels, provided that the property is furnished and ready for use, for a period not exceeding one (1) year, which may be renewed for a similar period upon approval by the head of the government agency, within the limits of the agency’s financial appropriations.
Article 12:
Without prejudice to the provisions of the regulations, and as an exception to Article (6), a government agency may directly lease real estate within the limits of its financial appropriations in the following cases:
1. Temporary headquarters for missions or their affiliated technical offices, or housing for heads of missions or staff.
2. Permanent headquarters for mission offices or affiliated technical offices, provided that the value of any single contract does not exceed three hundred thousand (300,000) U.S. dollars annually.
3. Permanent housing for the head of mission or staff, or for support services such as warehouses, parking lots, and the like, where the value of each individual contract does not exceed (50,000) fifty thousand U.S. dollars annually.
Article 13:
1. Without prejudice to the provisions of the regulations, two or more government entities—after obtaining the Authority’s approval—may lease a single property that meets their needs in the host country, in accordance with the form prepared for that purpose.
2. The government entity shall be responsible for the lease application procedures, provided that the application specifies the required area for each government entity.
3. The government entity occupying the largest portion of the leased property shall be responsible for managing the lease agreement, as well as for the costs of utilities, building operations, and maintenance. If the leased areas are equal, responsibility shall fall on the entity that leased the property first.
4. Each government agency shall bear the costs of the property’s basic fixtures, utilities, and similar expenses in proportion to its area [utilized area ÷ total area] × total costs.
Article 14:
1. Upon concluding the contract, the government entity must ensure that it complies with the regulations, does not conflict with the laws of the host country or prevailing customs, and includes the following:
A. A provision whereby the lessor undertakes to perform corrective and renovation maintenance on the basic fixtures of the leased property at his own expense, and the lessor shall not be compensated or receive an increase in rent for performing such remedial maintenance work that limits the use of the property during the term of the contract.
B. A provision granting the lessor the right to terminate the contract in the event of force majeure or emergency circumstances.
C. A provision requiring the lessor to bear the costs of marketing and brokerage.
D. A provision stating that the law shall be applicable.
2. The government agency may bear—in accordance with the laws of the host country and prevailing customs—- the security deposit and any fees or taxes arising from the contract, unless exempted therefrom under international agreements and treaties to which the Kingdom and the host country are parties.
3. The government entity may acquire ownership of the property through a lease-to-own arrangement, in accordance with the procedures governing the acquisition of real estate outside the Kingdom.
Article 15:
The government entity leasing the property shall submit a periodic report to the Authority on the condition of the leased property, in accordance with the form prepared for that purpose.
Article 16:
The procedures stipulated in these regulations may be carried out electronically.
Article 17:
The Authority shall issue the forms necessary for the implementation of the provisions contained in the regulations.
Article 18:
These regulations shall be published in the Official Gazette and shall take effect on the date of their publication.
These regulations reflect the Kingdom’s commitment to achieving greater efficiency in the leasing of government real estate abroad by establishing clear standards that limit financial waste, while taking into account the necessary exceptions to ensure the continuity of diplomatic operations and related services.
