Saudi Arabia opens property investments in Mecca and Medina to foreigners

Saudi Arabia is set to begin allowing non-Saudis to invest in publicly-traded companies that own real estate in Mecca and Medina.

According to a statement from the Capital Market Authority, from Monday foreigners will be allowed to purchase shares and convertible debt instruments in firms owning private or public real estate in the holy cities.

This is despite a continuing ban on non-Muslims directly owning property in the cities, which are coveted by many who see them as reliable, stable locations for investment.

Mecca and Medina are hubs for Muslim pilgrims, who flock in their millions to take part in the Hajj and Umrah pilgrimages, providing a regular income to hotels and other services.

Despite a vast global and domestic investment campaign, Saudi Arabia is still dependent on oil revenue to fund its ongoing economic makeover.

The International Monetary Fund has estimated that Saudi Arabia needs oil prices at $96 per barrel to balance its budget, roughly $20 more than where prices currently stand.

The kingdom has also reoriented its spending from overseas into its domestic market.

One indicator of this was that in 2024, the UAE’s Mubadala surpassed Saudi Arabia’s Public Investment Fund (PIF) as the world’s most active sovereign wealth fund.

The PIF’s spending dropping by 37 percent to $19.9bn in 2024 from $31.6bn the previous year, according to a report by the research consultancy firm, Global SWF.

Although Saudi Arabia has seen little direct foreign investment in its projects, international investors have shown a healthy appetite for Saudi debt.

According to Bloomberg, “investor bids for the $12bn bond exceeded $30bn”, and Saudi Arabia sold $17bn of international bonds in 2024, making it second only to Romania amongst emerging markets.