Saudi Arabia’s market regulator said on Monday it would allow foreign investment in publicly traded companies that own real estate within Islam’s two holiest sites, Mecca and Medina, as the Gulf country seeks to attract more investment. .
The move will allow foreigners to invest in companies whose income depends on the Islamic pilgrimage, one of the oil-rich kingdom’s main sources of income.
Saudi Arabia’s market watchdog, the Capital Market Authority (CMA), said in a statement that the move was aimed at attracting foreign capital and providing liquidity for current and future projects in the two cities.
Saudi Arabia has said it aims to welcome 30 million pilgrims for the Haj and the annual Umrah pilgrimage by 2030. In 2019, it earned about $12 billion from the two pilgrimages, according to official data.
The annual pilgrimage plays a vital role in the country’s economy and increasing the number of pilgrims is an integral part of its Vision 2030 economic reform agenda, which aims to wean the economy off oil revenues.
Saudi Arabia’s benchmark index rose 0.2 percent, led by 10 percent gains in both Jabal Omar Development Company and Makkah Construction and Development Company, which have real estate in Mecca.
The exchange, the largest in the Arab Gulf region with a market capitalization of 10.2 trillion rials ($2.72 trillion), opened to foreign investors in 2015 in a bid to attract more funds and has seen an avalanche of new listings in recent years.
The CMA said that under Monday’s move foreign investment would be limited to shares, convertible debt instruments or both, and would exclude “strategic foreign investors”.
The watchdog added that people without Saudi nationality would not be allowed to own more than 49 percent of the shares in the companies involved.
In 2021, it allowed non-Saudis to subscribe to real estate funds that invest within the borders of Mecca and Medina.
