Saudi Arabia's Capital Market Authority (CMA) has announced a significant policy shift, allowing foreign investors to invest in listed Saudi companies that own real estate in the holy cities of Makkah and Madinah. Effective from January 27, this move aims to boost foreign capital inflows, enhance market liquidity, and strengthen the Saudi capital market's global competitiveness.
This decision aligns with Saudi Vision 2030, making the capital market more accessible to international investors while ensuring compliance with the Law of Real Estate Ownership and Investment by Non-Saudis.
Key Highlights of the New Investment Regulations
1. Foreign Investment Scope & Limitations
- Foreign investors can purchase shares and convertible debt instruments of Saudi-listed companies that own real estate in Makkah and Madinah.
- Non-Saudi individuals and entities cannot own more than 49% of shares in these companies.
- Strategic foreign investors are not allowed to own shares or convertible debt instruments in these companies.
2. Regulatory Framework & Compliance
The policy ensures that foreign investment does not violate real estate laws related to ownership and usage. Companies must operate within the legal framework governing real estate investments in Makkah and Madinah.
3. Benefits for Saudi Listed Companies
Saudi-listed companies now have the right to own, lease, or acquire usufruct rights over properties for their headquarters or branches in Makkah and Madinah, provided they fully utilize the properties for this purpose.
4. Strengthening Saudi Arabia’s Capital Market
The CMA has introduced several reforms to attract foreign investments, including:
- Allowing foreign residents to directly invest in the Saudi stock market.
- Enabling foreign investors to trade via swap agreements.
- Permitting qualified foreign capital institutions to invest in listed securities.
- Opening doors for foreign strategic investors to acquire significant stakes in Saudi-listed companies.
- Allowing direct investment in debt instruments.
5. Alignment with Saudi Vision 2030
This policy supports the Saudi Vision 2030 objective of transforming the Saudi capital market into a global investment hub. It builds on previous measures, such as the 2021 decision allowing non-Saudis to invest in real estate funds in Makkah and Madinah.
Impact on Foreign Investors & Market Growth
This regulatory shift is expected to:
- ✅ Attract more foreign capital into the Saudi stock market.
- ✅ Provide funding for key projects in Makkah and Madinah.
- ✅ Boost liquidity & investment opportunities in real estate-related securities.
- ✅ Enhance the Kingdom’s position as a competitive investment destination.
Conclusion
By allowing foreign investment in listed companies with real estate assets in Makkah and Madinah, Saudi Arabia is making a strategic move to boost its capital market and attract global investors. This marks a significant step in liberalizing foreign investments while preserving regulatory controls, ensuring a balanced approach to economic growth.
