Saudi allows worldwide Muslims to buy properties in holy cities

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• Mecca and Medina real estate developers expect to benefit
• Dar Al Arkan saw its profit surge 675% in Q1 2022

A new ruling allowing Muslims from around the world to buy property in Islam’s holiest cities could be a “game changer” for Saudi Arabia’s real estate market, according to insiders.

Ziad El Chaar, vice chairman of Dar Al Arkan Real Estate Development, Saudi Arabia’s largest listed developer, told AGBI: “One of the main developments we’re going to see is a law that would allow all Muslims around the globe to own properties in Mecca and Medina, the two holiest places for Muslims.”

Previously only Saudis could buy in Mecca and Medina, but the Capital Market Authority announced it would soon allow non-Saudis to invest in real estate funds that invest wholly or partly in the two cities.

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The upcoming new law expands the scope of ownership for non-Saudis, who will get a 99-year lease on properties.

“Many real estate developers are gearing up to take advantage of this,” said El Chaar. “It will bring international investors to Saudi Arabia. This is why we geared up quickly and launched a project in Mecca called Dar Al Mashaer.”

Located in the heart of Mecca, Dar Al Mashaer is only a 10 minute drive from the Masjid al-Haram and Jamarat Bridge, and is a seven-tower development over an area of 6,300 square metres.

It will comprise of 314 two, three and four-bedroom apartments, together with six penthouses with private swimming pools.

The project is due to be delivered next year, between March and June 2023, El Chaar said.

The development includes a mosque on site and provides shuttle buses to and from Masjid al-Haram, which is known as the Great Mosque of Mecca.

“Dar Al Mashaer is part of the kingdom’s Vision 2030 economic diversification mandate and the growing real estate development industry in Saudi Arabia,” said Yousef Bin Abdullah Al Shalash, chairman of Dar Al Arkan. 

“The launch of Dar Al Mashaer offers an exclusive investment opportunity and the fulfilment of a dream to own a property in Islam’s holiest city.”

Saudi Arabia welcomed close to one million pilgrims this year, mostly from abroad, to Mecca and Medina, with hotel occupancy doubling year-on-year according to analysis from Colliers International.

Hajj season is a major source of tourism for the kingdom, and the two cities represent the biggest leap in year-on-year hotel occupancy rates in 2022 across the Gulf region, Colliers said.

“Many real estate developers in Saudi expect to benefit once this law is introduced, which we are expecting will be very soon,” El Chaar said.

“This will be a big game changer because the real estate market in Saudi so far is 100 percent local, so this will open up for international investments.”

El Chaar, former managing director of Dubai real estate developer Damac Properties, added that the new regulation could also spur agreements to allow Saudi nationals to purchase properties in other countries. 

“We know that the law is being drafted, and there are considerations around how to deal with nationals of each country to make sure there’s also reciprocation, so that Saudis can also buy in these countries.”

Dar Al Arkan saw its profit spike by 675 percent during the first quarter of 2022.

The firm’s profits hit SAR221 million ($59 million), compared to SR29 million during the same period last year, it said, attributing its performance mainly to higher property sales and reduced operating expenses and finance costs.