Omar Alrasheed Law Firm
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
A non-Saudi investor, either natural or legal person, licensed to practice any professional, vocational, or economic activity may acquire real estate necessary for practicing that specific activity, and includes real estate required for residential purposes (both investors and employees).
Furthermore, non-Saudis legally residing in Saudi Arabia can own real estate for their private residences, although they are not allowed to own or benefit from real estate in Mecca or Medina except because of inheritance. Non-Saudis have a right of ownership if the real estate is endowed to a specific Saudi entity, in accordance with the provisions of Sharia, and if it is stipulated in the endowment document that the relevant endowment entity has the right to practice trusteeship over the endowed property.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
No blanket restrictions. However, relevant laws and regulations, like the Finance Companies Control Law and its Implementing Regulations, require financing companies to verify the credit record of foreign entities to confirm their solvency, repayment capacity, credit conduct, etc.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
A Real Estate Transaction Tax (the “RETT”) is 5% of the real estate value. The RETT (to be paid by the seller) is imposed on several kinds of transactions, including selling, renting real estate for more than 50 years, and wills.
If a real estate transaction involves a real estate broker, a fee of 2.5% of the transaction price (the price of selling or renting the real estate) will be paid to the real estate broker.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
The applicable 5% RETT – based on the real estate value at the time of the transaction – is paid by the seller.
Regarding rental of real estate, authentication fees are required to be paid by the lessor on its Ejar Platform (a governmental platform). Authentication fees are nominal: (i) SAR 125 for a residential lease agreement the first year, and SAR 250 annual renewal thereafter; (ii) SAR 200 for a commercial lease agreement the first year, and SAR 400 annual renewal thereafter.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
There are no tax breaks for foreigners to buy real estate. However, owning real estate with a value of SAR 4 million, or more may qualify the foreigner owner for premium residency, which has several benefits that a foreign real estate owner may enjoy. The benefits include: 1- reside in Saudi with family members including parents, spouse, and children under 25; 2- flexibility to move from one establishment to another; 3- exit and return to Saudi without visa requirements; 4- entitlement to obtain visit visas for relatives; 5- exemption from the fees imposed on expats and their family members and companions; and 6- own and usufruct real estate.
There is a tax incentive for multinational companies that establish their regional headquarters in the Kingdom of Saudi Arabia. The tax incentive includes a 0% rate for (i) corporate income tax, and (ii) withholding tax related to the approved regional headquarters activities.
How is the ownership of Real Estate evidenced in your jurisdiction?
Upon the offer and acceptance of a real estate transaction, the seller and buyer proceed to finalize the transfer of the real estate to the buyer at the Notary Public (Kitabat Al-Adl). The ownership of real estate is evidenced by registering the real estate in the Real Estate Registry (the “RER”).
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
While the identity of real estate owners can be kept confidential from the public, it must be provided to the Notary Public for purposes of the RER; i.e., it cannot be held by a holding company or corporate shell without providing the RER the ultimate owner. Furthermore, the Beneficial Owner Rules (“BOR”), which came into force on April 3, 2025, pursuant to Ministerial Decree No. 235 on February 12, 2025, require companies, except joint stock companies listed in the capital market, to disclose the beneficial owner’s information to the Ministry of Commerce. Under the BOR, a real person is deemed a beneficial owner if he/she i) owns at least 25% of the capital either directly or indirectly; ii) controls at least 25% of the entire voting rights in a company, either directly or indirectly; iii) is entitled to appoint or remove the company’s manager, most of the board of management, or its president, directly or indirectly; iv) is able to influence the company’s business or decisions, directly or indirectly; and v) is a legal representative of a legal person meets the criteria set forth in i, ii, iii, iv.
The identity can also be revealed to the government, interested parties, and the people who are interested in purchasing real estate, which can be done by checking ownership documents of that property upon the ownership transfer process.