What entity types and acquisition structures do investors typically use for real estate investment in Saudi Arabia?
Investment opportunities in Saudi Arabia can be categorised into two main parts: one for domestic investors within Saudi Arabia, and another for foreign investors entering the market, who must navigate the framework of the foreign investment law when investing in real estate.
Typically, real estate investments in Saudi Arabia can be structured in several ways, including joint ventures, limited liability companies (LLCs), joint stock companies, and real estate funds.
Real Estate Funds have been regulated by the Capital Markets Authority in Saudi Arabia for over 15 years and serve as a popular investment structure. These funds are particularly beneficial for developers who want to retain a degree of control over their projects while allowing investors to take a more passive role. Additionally, hybrid structures are common, where joint ventures collaborate with real estate funds to co-invest in underlying real estate assets.
There are also cases where developers enter private real estate funds directly and are appointed as development managers to oversee the project. Alternatively, developers may enter the market through the Ministry of Investment (MISA), which offers licenses to allow 100% foreign ownership of real estate developments. For a project valued at over 30 million SAR and completed within five years, developers can set up their investment under either an LLC or a joint stock company.
