Saudi Arabia has just announced a groundbreaking move: foreigners can now invest in companies that own property in Mecca and Medina, Islam’s two holiest cities.
This marks a significant step in the kingdom’s push to attract international investments and diversify its economy beyond oil.
Why This Matters
Mecca and Medina are at the heart of the Islamic pilgrimage, a multi-billion-dollar revenue source for Saudi Arabia.
In 2019 alone, the country raked in $12 billion from pilgrims visiting for Hajj and Umrah. By 2030, the kingdom aims to welcome 30 million pilgrims annually, a key target in its ambitious Vision 2030 reform agenda.
What’s Changing
Saudi Arabia’s Capital Market Authority (CMA) announced the decision, allowing foreigners to invest in shares or convertible debt of listed companies tied to real estate in Mecca and Medina.
However, certain restrictions apply:
- Foreign ownership is capped at 49% for these firms.
- Strategic foreign investors are excluded.
The move builds on previous regulations, such as the 2021 allowance for non-Saudis to invest in real estate funds within these cities.
Boosting the Market
This decision is already making waves. Saudi Arabia’s stock market index rose 0.2%, with real estate giants Jabal Omar Development Company and Makkah Construction and Development Company seeing their shares jump by 10%.
?Why Now
Saudi Arabia’s stock exchange, the largest in the Gulf region with a market value of $2.72 trillion, opened to foreign investors in 2015.
Since then, the kingdom has worked to attract global capital and encourage new listings.
This latest move aims to bring fresh liquidity to current and future projects in Mecca and Medina, ensuring these cities remain economic and spiritual hubs.
The Bigger Picture
This policy aligns with Saudi Arabia’s broader economic goals:
- Reducing reliance on oil revenues.
- Attracting foreign capital.
- Expanding its tourism and real estate sectors.
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By tapping into the global market, Saudi Arabia is not just preserving its heritage it’s positioning itself as a modern economic powerhouse.