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The Saudi Real Estate Authority (REGA) announced a 5% real estate transaction tax for both Saudi and non-Saudi buyers nationwide, effective from January 22, 2026. Non-Saudi transactions in Riyadh, Jeddah, Makkah, and Madinah will incur an additional 2% fee, totaling 7% in these cities. The regulations, published in the Umm Al-Qura Gazette on July 2, outline the legal framework for foreign property ownership, which was approved by the Saudi Cabinet in June 2023. This policy aims to regulate foreign investment in prime real estate markets while generating tax revenue.
The tax changes may dampen foreign demand in key Saudi cities, potentially slowing property price growth in high-demand areas. Investors should monitor how the 7% combined tax in major cities affects transaction volumes and developer pricing strategies. The 5% national tax could also influence Saudi equity markets, particularly real estate developers and construction firms, depending on investor sentiment.
For MENA investors, the policy signals a cautious approach to foreign real estate participation, balancing economic diversification goals with fiscal control. Traders should watch for regulatory updates in Q4 2024 and early 2025, as well as real estate price trends in the four major cities. The effective date of January 2026 provides a window for market adjustments.
