Saudi Arabia Opens Mecca and Medina Real Estate Firms to Foreign Investment
Saudi Arabia has announced a significant policy shift allowing foreign investment in companies listed on its stock market that own real estate in the holy cities of Mecca and Medina. The move, effective immediately, aims to attract international capital to support the kingdom’s Vision 2030 initiative, which seeks to diversify the oil-reliant economy through investments in tourism, technology, and other sectors.
The Capital Market Authority (CMA) outlined that foreign investment would be restricted to shares and convertible debt instruments of listed companies, with ownership by non-Saudis capped at 49%. The CMA stated that this decision seeks to “stimulate investment, enhance the attractiveness and efficiency of the capital market, and strengthen its regional and international competitiveness.”
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The policy does not alter the existing ban on non-Muslims entering Mecca or religious sites in Medina.
Mecca and Medina are central to Saudi Arabia’s economic ambitions, generating significant revenue through religious tourism. In 2019 alone, the annual Hajj and year-round Umrah pilgrimages brought in approximately $12 billion. The kingdom aims to increase the number of pilgrims to 30 million annually by 2030. Major projects, such as the Public Investment Fund-backed Masar initiative in Mecca, include the addition of 40,000 new hotel rooms to accommodate the anticipated influx.
Saudi Arabia’s stock market, the largest in the Gulf region with a market capitalization of $2.72 trillion, has progressively opened to foreign investors since 2015. This latest move builds on previous measures, such as the 2021 decision allowing non-Saudis to participate in real estate funds investing in Mecca and Medina. Shares of companies like Jabal Omar Development Company and Makkah Construction and Development Company surged by 10% following the announcement, reflecting investor optimism.
