Saudi Gazette report

RIYADH — Saudi Arabia’s Capital Market Authority (CMA) has allowed the financial market institutions to accept subscriptions of non-Saudis in the real estate fund that invests part or all of its assets in a real estate located within the boundaries of the cities of Makkah and Madinah, the authority said in a statement on Monday.

The authority stressed the necessity of financial institutions to adhere to the provisions of the law that allows non-Saudis to own and invest in real estate of investment funds located within the boundaries of Makkah and Madinah, or when liquidating those funds.

The authority said that the decision would contribute to relying on the financial market as a diversified financing channel, as well as strengthening the pillars of the Saudi Vision 2030, which aims to make the Saudi financial market attractive to local and foreign investment and able to play a pivotal role in developing the economy and diversifying its sources of income.

The CMA’s move aims to activate the role of investment funds as a tool for financing within its strategic plan. It also hopes that the funds would contribute to financing many vital activities in the economy, such as the real estate and financial sector and the sector of small and medium companies, in addition to other activities such as refinancing businesses.

Head of the Capital Markets Funds Sector at Alawwal Capital Alaa Al-Ibrahim said that this decision would have positive impact on real estate funds of all kinds.

Speaking to Al-Arabiya channel, he said that many investors want to invest in real estates in Makkah and Madinah, and the decision removed a major obstacle for residents in the Kingdom and those abroad to invest in these funds.

“The decision is not considered as a first step to allow non-Saudis to own shares in real estate companies that target the two holy cities. I do not think this is because the fund manager has all the powers and authority to direct investments in the fund and lead the fund,” he said.

Al-Ibrahim said the decision also shows the issue of non-Saudi ownership of real estate in the event of the fund being liquidated.

“In the event of any liquidation, the non-Saudi investor must receive the liquidation value in cash and does not own the property in-kind contribution.”

He expected that CMA would set controls that would allow companies listed on the Saudi market that target the two holy cities, and there may be a special regulation for public joint stock companies and investors to invest in these companies.

Al-Ibrahim does expect CMA would allow investment by non-Saudis directly in these companies in the near future.

“The companies that have projects in the two cities can benefit indirectly, as they can cooperate with companies listed in CMA by establishing real estate funds that own assets in Makkah and Madinah to attract non-Saudi investors,” he added.