The Saudi Capital Market Authority (CMA) has announced that foreigners can now invest in companies listed on the Saudi stock exchange that own real estate in the holy cities of Makkah and Madinah. The move, effective immediately, is part of Saudi Arabia's Vision 2030 initiative to diversify its economy and enhance the competitiveness of its capital market.

Previously, non-Saudis were allowed to lease properties in Makkah and Madinah but faced significant restrictions on ownership. Under the new guidelines, foreign investments will be limited to shares or convertible debt instruments of listed real estate companies, with non-Saudi ownership capped at 49 percent of a company’s shares. However, strategic foreign investors remain prohibited from holding stakes in these companies.

“This initiative aims to attract foreign capital, provide liquidity for developmental projects in the holy cities, and position Saudi Arabia as a key player in the global capital market,” the CMA stated in its press release.

The reforms are expected to stimulate foreign direct investment (FDI) and strengthen the Kingdom’s real estate and capital markets. Vision 2030 targets attracting $100 billion in FDI by 2030 as part of efforts to reduce dependence on oil revenues.

The decision builds on earlier initiatives, including allowing foreign residents to invest in the stock market, permitting qualified foreign institutions to invest in listed securities, and enabling non-Saudis to subscribe to real estate funds investing in Makkah and Madinah.

The announcement had an immediate impact on Saudi Arabia’s stock market. Knowledge Economic City’s shares surged by 9.89 percent to SR16.66, Jabal Omar Development Co. rose by 10 percent to SR25.85, and Makkah Construction and Development Co. climbed 9.84 percent to SR106.