RIYADH, 22 February 2005 — The Shoura Council is discussing a draft law to allow foreigners to possess real estate in the holy cities of Makkah and Madinah, council member Osama Kurdi said yesterday. The new law, the provisions of which are being reviewed before a vote is taken, will ease restrictions on foreigners leasing real estate for longer periods in the holy cities.
“The Shoura Council is looking to extend the period of leasing real estate to foreigners from two to 10 years with further provisions for renewal,” Kurdi said. “It’s expected that the council will vote on the law after making necessary revisions in the near future.”
He said it was a significant development as it comes at a time when Saudi Arabia is witnessing a major real-estate boom.
Kurdi did not give specifics of the draft provisions, but it is widely believed that the new law will help the market grow substantially. “The new law, if passed, would boost the real estate market in Makkah and Madinah, and enhance real estate and leasing transactions in off-seasons,” said Saleh Al-Habib, director general of Jewar Real Estate Marketing Co.
According to a Riyadh Chamber of Commerce and Industry report, total investments in the Kingdom’s real estate have exceeded SR900 billion. The holy cities of Makkah and Madinah have become the hottest areas for real-estate investment. Investment in Makkah during the last three decades is estimated at SR400 billion.
On the other hand, real estate business in Madinah has attracted many Saudi investors after the executive committee for developing the central area of the city approved 60 new projects valued at SR60 billion.
“A growing interest on the part of foreign investors is evident — especially after the surge in the number of pilgrims during this decade and after the recent announcement made by Crown Prince Abdullah to carry out an expansion project for housing and prayer facilities in Makkah at a cost of SR35 billion,” said Mowad Al-Hassan, a real estate agent.
He said that the number of pilgrims will exceed 10 million by 2020, which itself indicates how much the lucrative real-estate business may grow in the holy cities.
In the past three decades, the investment in real estate in Makkah was made mainly by Saudi investors or by foreigners and expatriates through Saudi agents.
