Saudi Arabian developers’ shares jumped the most in four months as the kingdom began implementing new laws allowing foreigners to own a wider range of local real estate assets, including in the holy cities of Mecca and Madinah.
The Tadawul Real Estate Management & Development Index rose 4.5% on Sunday, with every one of its 17 members in the green. Makkah Construction & Development Co. led with gains of about 10%, followed by Dar Al Arkan Real Estate.
The sectoral rally helped to lift the broader Saudi equity benchmark for a third session and put the index, which is coming off of its worst annual performance in a decade, on course for a gain in January.
The moves follow an announcement by Saudi regulators on Jan. 22 that the Gulf nation is now accepting applications for foreigners interested in owning local property. That includes in Riyadh and Jeddah, in addition to Mecca and Madinah, where ownership had mostly been limited to Muslim citizens and Saudi companies.
“This is a market that’s hungry for good news,” said Fadi Arbid, founding partner and chief investment officer at Amwal Capital Partners. “Obviously the opening of the market for real estate, especially in Mecca and Madinah, is a good thing.”
While there were few new details around the foreign ownership rules, the most recent Saudi statement indicates that the kingdom is proceeding with plans to allow foreign ownership of residential, commercial, agricultural and industrial properties. Under the new law, non-Saudis can also acquire land.
Saudi Arabia approved an overhaul of its property ownership law in July as it aims to draw an influx of foreign buyers into the Gulf’s largest economy, while accelerating a build-up of infrastructure needed to help diversify the economy away from oil.
The kingdom is also due to open its equity market to all types of non-Saudis starting Feb. 1.
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