Industry News & Insights

Saudi Arabia’s Red Sea development is emerging as the first real-world test of the Kingdom’s newly liberalised foreign property ownership framework, with international investors already completing early transactions following the introduction of new regulations this month.

According to market sources, foreign buyers have begun acquiring residential units at the Red Sea under a unified national system that allows non-Saudis to own property in designated areas. The reform replaces a restrictive ownership regime that had been in place since 2000 and marks a significant shift in how international capital can participate in Saudi real estate.

The new Law on Non-Saudis’ Ownership of Real Estate permits foreign individuals and entities to purchase residential, commercial, industrial and agricultural properties within zones approved by the Council of Ministers, based on recommendations from the Real Estate General Authority. Although the official list of designated areas has not yet been published, large state-backed developments such as the Red Sea are widely expected to be among the first to open to international ownership.

The Red Sea project is one of the most advanced giga-developments in the Kingdom. Led by Red Sea Global, the destination covers approximately 28,000 square kilometres along Saudi Arabia’s north-west coast and includes an archipelago of more than 90 islands. The masterplan targets the delivery of 50 resorts by 2030, comprising around 8,000 hotel rooms and more than 1,000 residential properties.

Phase one of the project is already partially complete, with five of the initial 16 resorts opening since late 2023. These include Six Senses Southern Dunes, the Ritz-Carlton Reserve Nujuma and Shebara, which is owned and operated by Red Sea Global. Additional resorts on Shura Island, the development’s central hub, are scheduled to open through 2025. Key infrastructure, including Red Sea International Airport and Shura Links, the Kingdom’s first island golf course, is already operational.

For international brokerages, the ownership reform represents a fundamental change in market accessibility. Under the previous framework, real estate transactions were largely limited to Saudi nationals, and state-linked developers typically relied on internal sales teams. The new system enables broker participation and global sales mandates, particularly on government-backed developments.

Residential units at the Red Sea typically exceed the minimum value required for Saudi Arabia’s premium residency programme, which grants long-term residency to foreigners who own qualifying property valued at no less than SAR 4 million. As a result, many buyers are integrating residency applications into their acquisition plans.

Foreign demand has varied by region. Investors from South and Southeast Asia have moved more quickly toward completed transactions, while buyers from Europe, the United States and Russia have generally taken longer to assess pricing, regulatory changes and risk exposure.

The policy shift coincides with one of the largest development pipelines globally. Since the launch of the National Transformation Plan in 2016, Saudi Arabia has announced real estate and infrastructure projects valued at approximately $1.3 trillion, with $164 billion in contracts awarded by the end of September 2024, according to Knight Frank. The consultancy estimates that more than one million residential units will be delivered across the Kingdom by 2030, with a significant concentration in Riyadh.

Riyadh’s residential market has experienced strong price growth over the past five years, with apartment prices rising around 75 per cent since 2019 and villa prices increasing by roughly 40 per cent. Transaction volumes rose by more than 40 per cent year on year in 2024, although total transaction value growth has been constrained by affordability pressures.

In contrast, the Red Sea development targets a distinct segment of demand, focused on second homes and lifestyle-driven investments rather than primary residences. Accelerated infrastructure delivery, resort openings and transport connectivity have contributed to growing buyer confidence.

Under the new law, foreign residents may also own one personal residence outside designated zones, excluding Mecca and Medina. Non-residents are restricted to ownership within approved areas once officially announced. All transactions involving non-Saudis must be formally registered and are subject to Saudi Arabia’s real estate transfer tax, with penalties for non-compliance including fines and potential forced sales.

Early transactions have included buyers with links to the UAE, particularly investors already active in Dubai’s property market. As one of the first operational developments to offer clarity on foreign ownership in practice, the Red Sea is increasingly viewed as an early indicator of how Saudi Arabia’s reform agenda is being implemented on the ground, characterised by controlled access, limited supply and high investor interest.