Saudi Arabia changed its rules on foreign property ownership in January 2026, giving overseas companies much wider scope to own real estate in the Kingdom. For a business establishing locally, the option of owning its premises or other property can now be considered alongside the structure of its Saudi operation.
The route depends on whether the property will be bought directly by a foreign company or through a Saudi company with foreign shareholders, as well as where the property is located. These differences are worth understanding early because they can influence how the wider Saudi structure is put together.
Can a foreigner company buy directly?
A company incorporated outside Saudi Arabia can acquire real estate and other real property rights without necessarily forming a Saudi subsidiary just to hold them.
Buying directly still requires the company to register with the Ministry of Investment, which includes disclosing its direct and indirect ownership. It will also need a legal representative with an identity document recognised under Saudi law and a corporate bank account in the Kingdom.
For a buyer with no existing Saudi presence, registration through the Ministry of Investment comes first, along with obtaining a unified 700 number. Once that is in place, the property application can move through the electronic system operated by the Real Estate General Authority (REGA).
The preparation for a first-time entrant therefore starts before the property transaction itself. Getting the corporate registration in place early means the ownership application can follow once the business is ready to proceed with the purchase.
Where can the company buy?
A foreign company registered in Saudi Arabia can buy within the geographical zones designated for foreign ownership. The rules for each zone set out the locations available, the level of foreign ownership permitted and the property rights that can be acquired.
Makkah and Madinah are treated differently. A foreign company cannot directly own property in either city, while a Saudi-incorporated company with foreign shareholders can own within the designated zones there. This can make the choice between direct foreign ownership and ownership through a Saudi company more significant where property in either city is involved.
Buying through a Saudi company
For a foreign business already operating in Saudi Arabia, the company it has established locally may offer another way to hold the property. An unlisted Saudi company with foreign shareholders can own property within the permitted geographical areas and, in certain circumstances, outside them.
Outside those areas, other than in Makkah and Madinah, the property must be needed for the company’s activities or employee accommodation and Ministry of Investment approval is required.
If the property will be used by the local business, holding it through that company may fit naturally with the way the group already operates. In other cases, direct ownership by the overseas company may be more appropriate.
Looking at the two options early can also avoid an unnecessary reorganisation later if the property is initially acquired through one company and subsequently needs to be moved elsewhere in the group.
Ownership brings ongoing requirements
Property ownership can also create corporate reporting requirements after the acquisition. A foreign company must notify the Ministry of Investment within 15 days if 5% or more of its ownership changes, while certain changes giving another party significant influence over the company can also require notification.
That can become relevant long after the original purchase. A group might bring in an investor or reorganise its ownership for reasons unrelated to Saudi real estate, yet the change can still create a reporting obligation in the Kingdom. The property therefore needs to remain part of the group’s ongoing corporate administration.
The acquisition process itself is handled electronically through REGA’s Saudi Properties system, which is connected with the real estate registry.
What about the 2% fee?
The regulations introduce a 2% fee on certain disposals of real property rights by non-Saudis in Riyadh, Makkah, Madinah and Jeddah. The fee applies to specified disposals rather than every purchase by a foreign company, with zero-rated treatment available for certain transactions.
For a company planning to hold the property for some time, a future sale or transfer can still be considered when deciding how it should be owned. How the asset sits within the group may affect the options available when it is eventually disposed of.
Planning the foreign ownership purchase
How the property will be used will often help determine the most suitable ownership route. A business establishing premises for its Saudi operations, for example, may already be forming a local company that could potentially hold the property. Another group may have a reason to acquire it directly from overseas.
Considering the property while the Saudi corporate structure is being planned allows both decisions to develop together. Any necessary registrations and ownership disclosures can then be dealt with before the transaction has progressed too far.
The new rules give foreign businesses considerably more scope to include property ownership within their Saudi plans. For companies entering the market, that makes the ownership decision part of the wider establishment process rather than something that needs to be considered separately later.
How Sovereign PPG can help
Sovereign PPG supports international companies establishing and operating in Saudi Arabia, including the formation and ongoing administration of Saudi corporate structures.
Where property forms part of those plans, Sovereign PPG can help consider how the proposed ownership fits with the Saudi structure, coordinate the necessary corporate registrations and work with legal and property specialists on the acquisition where required.
