In a major move, the Saudi Capital Market Authority (CMA) has granted foreign investors permission to  invest in Saudi-listed companies that own real estate within the cities of Makkah and Madinah.

 

This initiative is aimed at fostering investment as well as enhancing the appeal and efficiency of the capital market, and bolster its competitiveness both regionally and globally, while also supporting the local economy, said CMA in a statement. 

 

The CMA seeks to attract foreign capital and provide the necessary liquidity for ongoing and future projects in Makkah and Madinah, leveraging the Saudi market’s vast investment opportunities. 

 

These efforts aim to position the Saudi market as a pivotal funding source for significant developmental initiatives in these cities, it stated.

 

According to a statement by the CMA, the approval pertains to the “Controls for the Exclusion of Companies Listed in the Saudi Stock Exchange (Tadawul) from the Meaning of the Phrase (Non-Saudi) in accordance with the Law of Real Estate Ownership and Investment by Non-Saudis."

 

Foreign investment will be restricted to shares of Saudi-listed companies that own real estate in Makkah and Madinah, as well as convertible debt instruments, according to the approved controls. 

 

The total ownership of non-Saudi natural and legal persons has been capped at 49% of a company’s shares. However, strategic foreign investors are not permitted to own shares or convertible debt instruments in these companies, it stated.

 

The approved controls enable non-Saudi investors to benefit from the economic advantages of existing and upcoming projects while adhering to relevant laws, particularly the Law of Real Estate Ownership and Investment by Non-Saudis, whether during the operation or liquidation of these companies, it added.

 

Meanwhile, the CMA has granted listed Saudi companies the right to acquire ownership, easement, or usufruct rights over properties designated for their headquarters or branch locations within Makkah and Madinah. 

 

The entirety of such properties must be utilized for these purposes, as per the exemption regulations outlined in the Law of Real Estate Ownership and Investment by Non-Saudis, said CMA in its statement.

 

According to CMA, it has implemented numerous initiatives to enhance the appeal of the Saudi financial market and promote foreign investment.

 

These include allowing expat investors to participate directly in the Saudi stock market, enabling foreign investors to access the market through swap agreements, facilitating investments by qualified foreign financial institutions in listed securities, permitting strategic foreign investors to acquire strategic stakes in listed companies, and allowing direct investments in debt instruments by foreign investors. 

 

These measures reflect a comprehensive and diversified financial market framework, providing various funding options for projects in Makkah and Madinah, it added.

 

In 2021, the CMA expanded opportunities for non-Saudis by allowing their subscription to real estate funds investing within the two cities. This move further diversified funding channels within the financial market and supported the objectives of Saudi Vision 2030, which seeks to enhance the Saudi financial market’s appeal to both local and foreign investors.

 

The approved controls were finalized following the CMA's publication of the Regulations of Foreign Investors' Ownership of Shares in Saudi Listed Companies that have Investment Properties in Makkah and Madinah on November 15, 2023. 

 

The draft regulations were shared on the Public Consultation Platform (Istitlaa), managed by the National Competitiveness Center (NCC), and on the CMA’s website to gather public feedback before their finalization, it added.-TradeArabia News Service