Dubai: Saudi Arabia’s Capital Market Authority (CMA) announced on Monday a significant policy shift allowing foreign investors to acquire stakes in publicly listed companies that own real estate within the sacred cities of Mecca and Medina. This move is part of the Kingdom’s broader strategy to draw in foreign investments and diversify its oil-dependent economy.
The newly introduced framework permits foreign investors to buy shares in companies whose revenues are heavily tied to Islamic pilgrimage activities—one of Saudi Arabia’s most vital income sources. According to the CMA, this initiative is designed to enhance capital inflow and provide liquidity for both ongoing and future development projects in the two holy cities.
Saudi Arabia has ambitious plans to significantly increase the number of pilgrims visiting Mecca and Medina. By 2030, the Kingdom aims to welcome 30 million annual pilgrims for Hajj and Umrah combined, a steep rise from the pre-pandemic revenue of $12 billion generated from these religious journeys in 2019, as per official data.
The Islamic pilgrimage plays a pivotal role in the Kingdom’s Vision 2030 reform plan, which seeks to shift the economy away from its reliance on oil revenues. Enhancing pilgrimage infrastructure and accommodating more visitors is central to these economic diversification efforts.
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Market reaction to the news was positive. Saudi Arabia’s benchmark stock index rose by 0.2%, with companies like Jabal Omar Development Company and Makkah Construction and Development Company—both holding extensive real estate assets in Mecca—leading gains with a 10% surge in their stock prices.
As the largest stock exchange in the Gulf region, with a market capitalization of 10.2 trillion riyals ($2.72 trillion), Saudi Arabia’s bourse first opened to foreign investors in 2015 to attract international funds. This latest move is expected to further solidify its position as a global investment hub.
The CMA clarified that foreign investments would be limited to shares and convertible debt instruments, explicitly excluding “strategic foreign investors.” Additionally, non-Saudis would be restricted to owning a maximum of 49% of the shares in these firms.
This policy follows a similar decision in 2021, which allowed non-Saudis to invest in real estate funds focused on properties within the boundaries of Mecca and Medina.
With these developments, Saudi Arabia aims to leverage international investments to support its long-term economic goals while ensuring continued growth in its key pilgrimage sector.
(Exchange rate: $1 = 3.7509 riyals)
