KSA Real Estate: Navigating Regulatory Changes, Capturing Value

Saudi Arabia’s real estate sector witnessed major regulatory reforms in 2025, including the revised White Land Tax (WLT) and a five-year rent freeze in Riyadh. Under the new WLT regime, land plots are categorized into four priority zones, with tax rates ranging from 2.5% to 10% of land value, significantly increasing holding costs for undeveloped land banks and potentially weighing on valuations. At the same time, rent controls may slow income growth for rental-heavy firms, pressuring cash flows, and dividends. However, these reforms are structurally positive in long-term, as they encourage faster development, higher land supply, and more sustainable pricing cycles. Additionally, the Saudi Cabinet has allowed foreign ownership in select areas of major cities, effective January 2026. Accordingly, we believe these developments should support the sector over the medium to long term, and the recent price correction creates selective long-term investment opportunities.