The recent changes in Saudi Arabia’s property laws have positioned the Red Sea region as a pivotal test case for foreign property ownership in the Kingdom. With newly introduced regulations, non-Saudis can now buy real estate in specific areas, and the Red Sea project is leading this transformative shift. This new framework is crucial for attracting international investors, marking a significant step in diversifying the Saudi economy under its Vision 2030 plan.
“We’re already seeing buyers pull the trigger,” Al Ajaji told Arabian Business, referencing the surge of foreign interest in residential units at the Red Sea following the rollout of a unified national policy enabling non-Saudis to own property in designated regions.
The new Law on Non-Saudis’ Ownership of Real Estate became effective this month, replacing a restrictive framework that had existed since 2000. This legislation empowers foreign individuals and entities to acquire residential, commercial, industrial, and agricultural properties within areas specified by the Council of Ministers, based on recommendations from the Real Estate General Authority.
Although the list of designated zones is yet to be officially released, significant state-backed developments like the Red Sea are anticipated to be among the initial locations available for international ownership.
Red Sea Project Sets New Benchmark
The Red Sea is one of the most ambitious projects in Saudi Arabia’s megaproject initiatives. Developed by Red Sea Global, this sprawling destination covers approximately 28,000 square kilometers along the Kingdom’s northwestern coastline and boasts an archipelago of over 90 islands.
By 2030, the project aims to feature 50 resorts, accommodating around 8,000 hotel rooms and over 1,000 residential properties, according to the developer’s projections.
Currently, phase one of the project is partially complete, with five out of the initial 16 resorts having opened since late 2023. Among them are Six Senses Southern Dunes and the Ritz-Carlton Reserve Nujuma, alongside Shebara, a resort run by Red Sea Global.
Future developments on Shura Island, the heart of the project, are planned through 2025. Key infrastructure, including the Red Sea International Airport and Shura Links, Saudi Arabia’s first island golf course, is already operational.
For brokerage firms like Driven, this reform in ownership represents a notable enhancement in market accessibility.
Al Ajaji noted that while his firm has been active in Saudi Arabia since 2019, it faced challenges scaling up under the previous restrictions, where property transactions were primarily limited to Saudi nationals. “That environment was not broker-friendly,” he said. “With government and quasi-government developers such as the Red Sea, we now have mandates for global sales.”
Properties at the Red Sea often exceed the minimum value needed to qualify for Saudi Arabia’s premium residency program, which grants long-term residency to foreigners owning residential properties valued at least 4 million riyals.
“The first thing many buyers do after purchasing is align on how to activate the premium residency,” Al Ajaji explained.
Global Buyers Eye Saudi Opportunities
Initial interest from foreign buyers has varied by region, according to Al Ajaji. Investors from Europe, the United States, and Russia have generally taken a more cautious approach to pricing and risk assessment, while demand from South and Southeast Asia has been quicker to convert interest into purchases.
This policy shift aligns with Saudi Arabia’s broader efforts to advance one of the world’s largest development pipelines. The real estate and infrastructure projects announced since the launch of the National Transformation Plan in 2016 are valued at approximately $1.3 trillion, with $164 billion in contracts awarded by the end of September 2024, according to a recent Knight Frank report.
By 2030, an estimated 1 million residential units are projected to be available, primarily focused in Riyadh, where the government’s Regional Headquarters program is spurring job growth and population increases.
Over the past five years, Riyadh’s housing market has witnessed significant price surges, with apartment prices rising by around 75% compared to 2019 levels, while villas have increased by about 40%, as reported by Knight Frank.
Residential transaction volumes increased more than 40% year-on-year in 2024, though the overall transaction value growth has been steadier, attributed to affordability challenges in some market segments.
The Red Sea project attracts a different market segment, primarily characterized by second-home purchasers rather than individuals seeking primary residences. “This is not competing with Riyadh’s mass housing market,” Al Ajaji clarified. “It is aimed at holiday homes and long-term lifestyle investments.”
Infrastructure development at the Red Sea has accelerated, with several new resorts and islands expected to open this year. Al Ajaji pointed to recent hotel launches and enhanced transport links as key factors driving buyer interest.
Non-Saudis Must Follow Transfer Rules
The new law permits foreign residents of Saudi Arabia to own one personal residence outside designated zones, excluding the holy cities of Mecca and Medina. Non-residents will have the opportunity to own properties only within approved areas upon their release.
Every transaction involving non-Saudis must be registered and will be subject to Saudi Arabia’s real estate transfer tax, with strict penalties for violations, including fines and potential forced sales.
Al Ajaji mentioned that early transactions facilitated by Driven have included buyers connected to the UAE, including individuals residing in or investing in Dubai’s property market. “They are people we already know,” he said. “Either they live in the UAE or they have bought property in Dubai before.”
At this moment, the Red Sea stands as a clear indication of how Saudi Arabia’s foreign property ownership reform is unfolding in practice. “It is limited, controlled, and scarce,” he concluded. “That is why it is drawing attention early.”