Saudi Arabia opens property sector to foreigners, as agents eye Asians

New market cheaper than Dubai where Indians, Pakistanis and Chinese are top investors

20251015 Laheq condos

Laheq Island is the first residential development at Saudi Arabia's Red Sea tourist destination, with condominiums and villas set for completion in 2028. (Screenshot from Red Sea Global's website)

JENS KASTNER

November 24, 2025 14:05 JST

HAMBURG, Germany -- Saudi Arabia real estate agents will be eyeing wealthy Asians in view of the implementation of a new law allowing foreign, non-Muslim ownership of property from January.

The opening up of the property market is part of Saudi Arabia's Vision 2030 strategy aimed at diversification from oil and the liberalization of its economy and social norms. One of its flagship developments under the new property rule -- passed in the summer -- is the construction of the luxurious Laheq Island project on the Red Sea that will offer 740 residences, two hotels, retail spaces and a marina.

If the experience of its neighbor Dubai in the United Arab Emirates is any indication, Saudi Arabia could be set for a property boom fuelled by foreign investment. Dubai does not publish data on property ownership by nationality but real estate agents point to Indians, Pakistanis and Chinese as the biggest Asian buyers, along with British and Russians. Dubai property prices have surged to around $5,000 per square meter, compared with just $1,000-$2,000 in Riyadh in Saudi Arabia, agents said.

"Asian investors, particularly from Hong Kong, mainland China and Singapore, are drawn to Dubai for its combination of value for money, lifestyle and livability, but I would tell them that Saudi Arabia is one of the most exciting new markets in the region," said Faisal Durrani, head of research Middle East and North Africa at global property agency Knight Frank. "It's still quite affordable compared to other markets in the Gulf."

Under the new rules, expatriates and non-residents will be allowed to own real estate outright or hold other transferable rights in real estate in different types of property within designated zones. Those zones are expected to be announced early 2026, but the holy cities of Makkah and Madinah will only be open to Muslim expatriates.

Non-Saudi residents will be allowed to hold properties in the designated zones and one residential property outside. Current regulations allow expatriates to buy a primary residence but not to rent it out. Property agents pointed to the opportunities the nascent market offers.

"We're still in the early innings of the Saudi housing story, the big structural drivers have only just started to translate into supply and demand and investing today in Saudi Arabia is far from being a late-stage trade," said Erick Knaider, managing partner at Saudi Arabia Sotheby's International Realty.

Designed by architecture firm Fosters + Partners -- founded by acclaimed British architect Norman Foster -- Laheq Island is being developed by Red Sea Global (RSG), a unit of Saudi Arabia's sovereign wealth fund. Scheduled to open in 2028, condo prices in the development start at 5.5 million riyals ($1.47 million).

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The luxurious Laheq Island development was designed by Foster + Partners, which was founded by acclaimed British architect Norman Foster. (Screenshot from Red Sea Global's website)

Apart from Laheq Island, The Line at Neom is another high-profile megacity project that Saudi Arabia has been building as part of Vision 2030. The ambitious project not far from Egypt's Sharm el-Sheikh initially aimed to build a walled city that stretched 170 kilometers across a desert that would provide housing, transportation and amenities for its residents by 2045. But there are reports now that the project has been scaled back drastically due to the complexity of the construction and a lack of investment.

"Projects like Neom and Red Sea real estate ventures will only thrive if they are genuinely populated and activated, not just built," said Yasser Elsheshtawy, non-resident fellow at the Arab Gulf States Institute and adjunct professor at Columbia University's Graduate School of Architecture, Planning and Preservation. "Given their remoteness, few Saudis are likely to live there permanently, making foreign investors and visitors essential."

He added that Asian investors are especially important for the region, with those from Japan, China, India and Southeast Asia investing across the Gulf, as they seek "stable, high-yield markets and long-term access."

For some investors, though, the fact that Saudi Arabia is much more culturally restrictive than Dubai could be a hurdle. Since 2016, the Saudi government has worked to change that perception by opening cinemas, easing regulations, introducing tourist visas and bidding for major global events like the FIFA World Cup 2034 and World Expo 2030 even as it continues to ban alcohol.

Another issue for some investors is the environmental and local impact of such projects. Although the government touts the Neom project as zero-carbon, critics have pointed to construction emissions, displacement of local communities and the degradation of the natural environment.

Furthermore, while property ownership among Saudis is at the heart of Vision 2030 -- a key aim is to increase homeownership among Saudis to 70% by 2030 from 47% in 2016 -- prices for apartments in Riyadh have risen by 96% and villas by 53% since 2019, according to Knight Frank's numbers.

Local salaries have not kept pace with such rises, which in turn led to a slowdown in transactions, with Knight Frank saying that the number of homes sold in Riyadh fell 30% in the last 12 months.

"Record-high land prices, sometimes making up 50-60% of project costs, have pushed developers towards building luxury housing, which created a gap between what is being built and what the average Saudi national can afford," Durrani said.

As such, the Saudi government has to walk a tightrope between its drive to draw foreign investment and meeting local needs, between the environment and innovation.

"Allowing [foreign] ownership is a step toward inclusivity, but Saudi Arabia will need to balance visionary marketing with on-the-ground credibility to attract sustained Asian participation," said Elsheshtawy.

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