Saudi Arabia allows foreigners to invest in firms with property in Mecca and Medina

The move will allow foreigners to invest in firms whose revenues rely on the Islamic pilgrimage

Saudi Arabia’s market regulator announced on Monday that it would permit foreign investment in publicly listed companies owning real estate in Mecca and Medina, Islam’s two holiest cities. The decision aligns with the kingdom’s broader efforts to attract foreign capital and diversify its economy.

This move enables foreign investors to participate in firms that generate revenue from Islamic pilgrimages, a significant source of income for the oil-rich nation. In a statement, the Capital Market Authority (CMA) said the decision aims to attract foreign capital and boost liquidity for current and future projects in Mecca and Medina.

Saudi Arabia has set an ambitious goal to host 30 million pilgrims annually for Hajj and Umrah by 2030. In 2019, the kingdom earned approximately $12 billion from these pilgrimages, highlighting their crucial role in its economy. Expanding pilgrimage capacity is also a cornerstone of Vision 2030, Saudi Arabia’s economic reform plan to reduce reliance on oil revenue.

On Monday, Saudi Arabia’s benchmark stock index (.TASI) rose by 0.2%, led by a 10% surge in shares of Jabal Omar Development Company and Makkah Construction and Development Company, both of which own real estate in Mecca. The Saudi bourse, the largest in the Gulf region with a market capitalization of 10.2 trillion riyals ($2.72 trillion), has been open to foreign investors since 2015 and has witnessed significant activity with new listings in recent years.

Under the new regulations, foreign investment will be limited to shares and convertible debt instruments, excluding “strategic foreign investors.” Additionally, non-Saudis will be restricted from owning more than 49% of shares in the companies involved. In 2021, the kingdom also allowed non-Saudis to invest in real estate funds focused on properties within Mecca and Medina.