Arab News, Tuesday, Mar 28, 2023 | Ramadan 6, 1444
New law allowing foreigners to buy all kind of properties in KSA soon: Top official
Saudi Arabia: Saudi Arabia is
planning to relax its property ownership laws for foreigners as the Kingdom eyes
attracting investments into the real estate sector as part of its strategy to
diversify its economy.
The new law that will allow foreigners to buy all
kinds of real estate properties is “in its final stages and will be made public
in a short period,” revealed the Kingdom’s Real Estate General Authority chief
Abdullah Alhammad.
This comes after Saudi Arabia issued a directive
in 2021 allowing non-Saudis, legal residents of the country to buy single
property with some conditions.
But the REGA CEO pointed out that the new law will
be “broader and more comprehensive than the current law” for real estate
ownership, as foreigners will be able to buy any kind of property including
commercial, residential, and agricultural in accordance with the regulations.
The earlier law had prohibited foreigners from
buying properties in holy cities, but Alhammad said, “the initial reading of the
law shows that it allows foreigners to own property everywhere in the Kingdom,
including Makkah and Madinah.”
He clarified that any concerns about the negative
effects of foreign ownership of the property were monitored in
advance while solutions were developed for all problems and unacceptable
practices.
Saudi Arabia is looking to transform its real
estate sector by bringing in new laws while making the
sector attractive to foreign investors as the Kingdom eyes to improve the
sector’s contribution to the national gross domestic product.
The Kingdom’s latest move can open up new
investment destinations for expats and global investors looking for green
pastures, away from traditional markets, including the UAE.
Amid rising urbanization, Saudi Arabia’s
major cities including Riyadh and Jeddah have been chronically under-supplied –
something that industry reports suggest is driving property prices high, making
it unaffordable to many.
Saudi Arabia’s Real Estate General
Authority acknowledged that real estate prices in Saudi Arabia are high on a
supply-demand imbalance.
Expressing concern about the rising property
prices, the REGF chief said high prices negatively impact the real estate
sector.
He pointed out that the majority of people looking
for real estate today lack the means to buy and the price of the property today
is more than the purchasing power, making it challenging to find a suitable
property.
“The investors were also affected by the high
prices of the real estate,” noted Alhammad.
He explained that the landowners are unable to
make easier transactions due to the high prices of the land. "When the landowner
wants to sell, he reduces prices to be able to sell it.”
According to Alhammad, the real estate market is
an open market subject to supply and demand.
The authority’s chief also noted that the
initiative to impose taxes on white lands was taken in 2017.
White land is basically vacant land that is
allocated for residential, or commercial residential use, and located within the
urban boundary limits in the Kingdom.
In 2016, Saudi Arabia decided to capitalize
on undeveloped land in urban areas, which makes up 30 percent of those
areas. The government decided to impose a 2.5 percent tax, based on land
value, on landowners who had purchased plots but left them undeveloped.
By way of imposing the White Land Tax,
the government wants to increase the volume of plots available for development
in urban areas.
REGA chief added that the Ministry of Municipal
and Rural Affairs started working on plans to boost or raise the efficiency of
fees by an additional 10 percent.