Saudi Arabia’s market regulator, the Capital Market Authority (CMA), announced on Monday that it would permit foreign investors to purchase shares in publicly listed companies that own real estate within the sacred cities of Makkah and Madina. This move is part of Saudi Arabia’s broader efforts to boost foreign investment and diversify its economy.
By allowing foreign investment in these firms, the Kingdom hopes to tap into the revenues generated by the Islamic pilgrimages, such as Haj and Umrah, which are among the country’s key economic drivers. With the aim of attracting global capital, the CMA’s decision will help provide liquidity for both current and future projects in Makkah and Madina, two cities central to Islam.
Saudi Arabia has ambitious plans to increase the number of pilgrims visiting these cities annually. By 2030, the country hopes to welcome 30 million pilgrims for Haj and year-round Umrah. In 2019, the Kingdom earned approximately $12 billion from these pilgrimages, and this revenue is vital to the nation’s economy, especially as the country seeks to reduce its dependence on oil revenues under its Vision 2030 reform plan.
Following the announcement, Saudi Arabia’s stock market showed positive movement, with the benchmark index rising by 0.2%. Companies such as Jabal Omar Development and Makkah Construction & Development, which own significant real estate in Makkah, saw their shares increase by 10%.
Under this new framework, foreign investment will be limited to shares and convertible debt instruments, with restrictions in place to prevent foreign investors from owning more than 49% of the companies’ shares. Strategic foreign investors will be excluded from this initiative. This new policy builds on Saudi Arabia’s previous efforts, such as allowing non-Saudis to invest in real estate funds in Makkah and Madina in 2021.
With this step, Saudi Arabia continues its push to attract international capital while simultaneously enhancing its economic diversification plans.
