The amendments made by the Council of Ministers to Article 5 of the Regulation on Real Estate Ownership and Investment by Non-Saudis exempted banks and mortgage finance companies licensed by the Saudi Arabian Monetary Authority (SAMA) from the prohibition on owning real estate in Makkah and Madinah, provided that such ownership is limited to real estate acquired for the purpose of financing Saudi nationals, as well as real estate designated for their headquarters or branch offices or necessary for the conduct of their business, in accordance with regulations established by the Saudi Arabian Monetary Authority. Article 5 also exempts listed companies whose business does not involve real estate transactions, limiting this to real estate designated for their headquarters and branches and necessary for their operations, provided that it is utilized.
According to the second paragraph, which interprets the phrase ”non-Saudi” in Article 5 of this regulation, a natural person who does not hold Saudi nationality by any means other than inheritance is prohibited from acquiring ownership, easement, or usufruct rights over real estate located within the boundaries of the cities of Makkah and Madinah, An exception to this is the acquisition of ownership rights if accompanied by the endowment of the owned property in accordance with Sharia rules to a specific Saudi entity, provided that the endowment stipulates that the competent endowment authority has the right of supervision over the endowed property in accordance with the regulations.
Article 5 also prohibits any non-Saudi company, or any company established by, co-founded by, or in which a person with natural or legal person status who does not hold Saudi nationality holds shares, from engaging in such activities.
The Economic Committee of the Shura Council announced its approval of the Cabinet’s amendments to Article 5 of the Law on Non-Saudis’ Ownership and Investment in Real Estate, and confirmed in a report that these amendments do not affect the substance of the Shura Council’s decision issued on this matter more than two years ago, with the exception of the amendment adding another entity to the categories exempted from the provisions of this article, namely real estate finance companies licensed by the Saudi Arabian Monetary Authority, and their ownership of real estate for the purpose of financing Saudi nationals, as well as real estate designated for their headquarters or branch offices or necessary for the conduct of their business, in accordance with regulations established by the Authority.
The Economic Committee affirmed its understanding of this addition, given the role of these companies in real estate financing for Saudi nationals, their need for such financing, and the need not to deprive them of the possibility of owning homes, considering that this is their right, just like other Saudi nationals; they are Saudis and do not pose any issue that might conflict with the objectives and goals for which the system of non-Saudi ownership and investment in real estate was established, especially since this is governed by the regulations set by the Saudi Arabian Monetary Authority.
