Saudi Arabia is set to allow foreigners to invest in publicly traded companies that own real estate in two of Islam’s holiest cities, Mecca and Medina, as the ultraconservative, oil-rich Gulf kingdom looks to attract more foreign investment.
Foreign companies will now be able to invest in Saudi companies operating in Mecca and Medina, overturning years of policy that may eventually open the door for non-Muslims pic.twitter.com/Y7HJMAXHAe
— i24NEWS English (@i24NEWS_EN) January 28, 2025
The new policy will also allow foreign investment in firms whose revenues depend on the Hajj, an annual Islamic pilgrimage that is also among Saudi Arabia's top revenue sources.
Saudi Arabia’s market regulator, the Capital Market Authority (CMA), released a statement stating that foreigners can purchase shares and convertible debt instruments in firms owning private or public real estate in the two holy cities. This move aims to attract foreign capital and provide liquidity for present and future projects in Mecca and Medina.
However, non-Muslims are still banned from directly owning properties in Mecca and Medina, which are coveted by many because they see them as high-value, stable, and reliable locations for investment.
Guess who will buy it? Jewish investors.
— AFNationalist (@Nationalist715) January 29, 2025
Because of their religious significance as Islam’s two holiest cities, Mecca and Medina have become hubs for Muslim pilgrims worldwide. During the Hajj and Umrah pilgrimages, millions flock to the cities. This provides regular income to hotels and other businesses serving pilgrims and gives them economic significance for Saudi Arabia.
Saudi Arabia plans to welcome 30 million pilgrims annually for the Hajj and Umrah pilgrimages by 2030. According to official data, the country earned about $12 billion from the two pilgrimages in 2019.
The annual pilgrimages play a vital role in Saudi Arabia’s economy, and increasing the number of pilgrims is an integral part of the country’s Vision 2030, a comprehensive economic agenda that aims to reduce its dependence on oil revenues.
The end is near . Subhanallah
— Abdinasir Farah (@abdinasir_ke) January 28, 2025
However, despite its extensive global and domestic investment campaign, the kingdom remains dependent on oil revenues to fund the diversification of its economy.
The CMA said that "strategic foreign investors" would be excluded from the move, and it added that it would still not allow people without Saudi nationality to own more than 49% of shares of the firms involved.
In 2021, Saudi Arabia allowed non-Saudis to subscribe to real estate funds investing within the boundaries of Mecca and Medina.
Aal Saud have sold the ummah to the devils. May Allah SWT forgive us our weakness and inability to throw these bas***** out and protect our sanctuaries. Ya Allah, I am free from this; please don't count me among them.— Nida (@NidasVoice) January 28, 2025
While Saudi Arabia has seen little foreign direct investments in its projects, international investors have shown a healthy appetite for Saudi debt.
Bloomberg said that "investor bids for the $12bn bond exceeded $30bn", and Saudi Arabia sold $17 billion of international bonds in 2024, making it second to only Romania amongst emerging markets.
