Saudi Arabia’s 2025 Real Estate and Urban Planning Reforms: New Era in Construction
Saudi Arabia Focus
Euan LloydPartner, Head of Construction & Infrastructure
Leenh AlshehriTrainee Lawyer,Real Estate
Reforms open real estate to foreign investors, expand land and property taxes, and embed national architectural identity
In July 2025, the Council of Ministers approved the Law of Real Estate Ownership and Investment by Non-Saudis. The law allows foreign individuals and entities to own real estate in designated areas, including cities such as Riyadh and Jeddah, subject to regulatory conditions. It is expected to come into force in January 2026 following its publication in the Umm Al-Qura Gazette.
As of the date of publication of this article, the draft implementing regulations have been published on the Istitlaa Platform for public consultation. They set out the conditions for ownership, including eligibility of residents and licensed entities, restrictions on designated zones, the imposition of a disposal fee of up to 5% on transfers, and penalties for violations, including fines of up to SAR 10 million.
This development marks a significant step in opening Saudi Arabia’s real estate market to international investment.
In May 2025, the Saudi Council of Ministers approved Resolution No. 758, introducing significant amendments to the White Land Tax Law, now renamed the “White Land and Vacant Property Tax Law”. The changes expand the law’s application to additional urban zones and reduce the minimum land size subject to tax to 5,000 square meters, including adjacent parcels under common ownership. A separate vacant property tax has also been introduced to address underutilised properties in key areas.
The implementing regulations for the White Land Tax have now been finalized and published. They establish the valuation process, compliance requirements, enforcement mechanisms, and tax rates, which range from 2.5% to 10% annually depending on land priority classification within designated urban zones. The regulations also set out criteria for exemptions, procedures for appeals, and penalties for non-compliance.
As for the implementing regulations for the Vacant Property Tax, they are expected within one year and will take effect upon issuance. These amendments are intended to support development, reduce speculative holding, and increase the supply of serviced land and housing within Saudi cities.
In March 2025, Crown Prince Mohammed bin Salman issued directives to address rising real estate prices in Riyadh by opening large areas of undeveloped land in the northern part of the city. Restrictions on land transactions, including sales, purchases, subdivisions, and building permits, were lifted for two areas totalling 33.2 km², in addition to 48.28 km² of previously released land, bringing the total area available for development to 81.48 km².
The first area, 17 km² near Wadi Hanifa, and the second, 16.2 km² north of King Salman Road, had previously been restricted. The Royal Commission for Riyadh City (“RCRC”) will oversee the development of 10,000 to 40,000 residential plots annually over the next five years, depending on demand.
Plot sales will be capped at SAR 1,500/m² and limited to eligible Saudi citizens, such as first-time homebuyers, over 25 years old or married citizens. To restrict speculation, a 10-year holding period is required, during which the land cannot be sold, leased, or mortgaged, except for financing to build on it. If no development occurs within this period, the plot may be reclaimed with compensation.
These reforms aim to increase housing supply and stabilise the real estate market in Riyadh.
In March 2025, Saudi Arabia launched the “Saudi Architecture Initiative”, introducing national design guidelines to encourage the incorporation of regional architectural styles into new developments.
In March 2025, Saudi Arabia launched the “Saudi Architecture Initiative”, introducing national design guidelines to encourage the incorporation of regional architectural styles into new developments. The initiative outlines 19 styles drawn from the Kingdom’s geographic and cultural heritage. Implementation will begin in key cities, starting with major government and commercial projects in Al-Ahsa, Taif, Abha, and Makkah. Developers will be required to follow one of three typologies: traditional, transitional, or contemporary, depending on the region.
Existing buildings are not currently subject to these requirements. As of now, there is no official indication that retrofit guidelines will be introduced for existing buildings to align with the new architectural styles. However, the possibility of such guidelines in the future cannot be ruled out, particularly considering ongoing efforts to preserve and enhance cultural heritage in various regions.
From a regulatory standpoint, this initiative is being implemented through planning and permitting systems rather than through conventional building codes. Local design requirements are being embedded into city master plans and development regulations, with oversight led by the Ministry of Municipal, Rural Affairs and Housing in coordination with the Architecture and Design Commission and other related authorities.
Design manuals and training resources are being made available to support implementation. Projects in heritage focused areas such as Diriyah, AlUla, and historic city districts will be subject to early stage design reviews to ensure compliance with the applicable architectural style.
Saudi Arabia’s 2025 legal reforms represent a coordinated effort to reshape the construction and real estate landscape in line with Vision 2030. The release of land in northern Riyadh, amendments to the White Land Tax Law, and the approval of real estate ownership by non-Saudis reflect a broader shift toward greater accessibility, investment openness, and urban efficiency. At the same time, the incorporation of architectural identity into urban planning represents a significant step in preserving the Kingdom’s cultural heritage within modern development. These reforms are integral to the broader goals of Vision 2030 and are likely to shape the future of development in Saudi Arabia, balancing growth with cultural preservation.
For further information,please contact Euan Lloyd and Leenh Alshehri.
Published in September 2025
