RIYADH: Saudi Arabia’s gradual opening of investment channels into Makkah and Madinah is drawing interest from developers and institutional investors seeking exposure to what could become one of the Kingdom’s largest long-term real estate opportunities.
The move comes as authorities seek to attract capital while preserving the religious significance of Islam’s holiest cities.
It follows a series of Vision 2030-linked reforms, including the Capital Market Authority’s 2025 decision allowing foreign investors to invest in Saudi-listed companies with exposure to real estate in Makkah and Madinah. In January, the Real Estate General Authority’s updated framework governing foreign property ownership came into force.
“I see the decision to broaden foreign ownership opportunities in Makkah and Madinah coming at a pivotal moment in Saudi Arabia’s transformation agenda,” Robert Coulson, executive adviser for real estate at Accenture, told Arab News.
While direct ownership in Makkah and Madinah remains restricted to Saudi companies and Muslim individuals, broader investment access is already reshaping how international investors view the market.
“For international investors, this is not merely a market opening; it is an opportunity to participate in one of the world’s most important faith-based urban transformations under the stewardship of the Custodian of the Two Holy Mosques,” he added.
The changes come as Saudi Arabia accelerates efforts to expand religious tourism and accommodate rising pilgrim numbers. According to the General Authority for Statistics, 1.7 million pilgrims performed Hajj this year, while the Kingdom aims to attract 30 million Umrah pilgrims annually by 2030.
Hospitality capacity is also expanding rapidly. Real estate consultancy Knight Frank estimates Saudi Arabia currently has around 171,650 hotel rooms, with another 94,500 rooms under construction or in advanced planning stages.
Projects across the holy cities are increasingly being designed around globally investable models focused on recurring income and integrated operations. (SPA)
Those fundamentals are helping position Makkah and Madinah among the world’s most resilient long-term real estate investment destinations, according to industry experts.
Coulson said Makkah and Madinah are increasingly being viewed not simply as religious destinations, but as “globally investable urban ecosystems” supported by one of the world’s most stable demand drivers.
“The global Muslim population is projected to approach 3 billion over the coming decades, while rising middle classes across Southeast Asia, Africa, the Gulf, and South Asia are increasing pilgrimage participation and hospitality spending,” he said.
“That creates one of the most durable demand profiles in global real estate.”
Analysts expect hospitality to attract the first major wave of foreign capital as Hajj and Umrah volumes continue to grow.
Yazan Al Shouly, partner for real estate, hospitality and leisure at PwC Middle East, said hotels, serviced apartments and branded residences are already drawing heightened investor attention.
“Hospitality is expected to attract the strongest level of foreign investor interest initially, particularly as demand continues to be linked directly to the growth in Hajj and Umrah activity,” Al Shouly told Arab News.
But industry executives say the opportunity extends beyond hospitality.
“The real long-term opportunity is not five-star hospitality,” Coulson said. “It is the scaling of a complete pilgrimage ecosystem to include dignified lodging, seamless mobility, accessible healthcare, and digitally connected services that enhance the spiritual journey.”
Ali Raza, chairman of Haytham & Company, said the appeal of Makkah and Madinah lies in the resilience of their demand fundamentals rather than the real estate itself.
“In these cities you’re not really buying real estate,” Raza told Arab News. “You’d be buying a claim on one of the most resilient demand flows on earth.”
He added: “Pilgrimage is an obligation, not a consumer choice, so the demand floor doesn’t behave like ordinary tourism.”
Developers are already adjusting strategies as larger pools of institutional capital prepare to enter the market.
These cities carry immense spiritual, cultural, and social significance for nearly a quarter of humanity.
Robert Coulson, executive adviser for real estate at Accenture
Al Shouly said projects across the holy cities are increasingly being designed around globally investable models focused on recurring income and integrated operations.
“Developers are placing greater emphasis on mixed-use masterplans, branded hospitality partnerships, recurring income assets, and integrated operating platforms rather than purely land-driven development activity,” he said.
Projects including Jabal Omar in Makkah, Rua Al Madinah and Thakher City are being positioned as integrated urban destinations that combine hospitality, transport connectivity, retail, residential space and public infrastructure.
International partnerships are also gathering pace.
Al Shouly pointed to a recent agreement involving Indonesian sovereign wealth fund Danantara Indonesia and hospitality-related assets in Makkah as evidence that foreign institutional investors are already preparing for deeper exposure to the holy cities.
“What makes this notable is that it highlights how sovereign investors from major Muslim markets are beginning to look at the holy cities through a longer-term investment lens tied to pilgrimage demand, visitor infrastructure, and the Kingdom’s broader Vision 2030 ambitions,” he said.
Raza said investor positioning has already been visible in capital markets.
“Entities like Makkah Construction and Development and Jabal Omar rose up to 10 percent on the CMA news, with gains in the regionally focused REITs as well,” he said.
He added that consultancy MEED estimates roughly $60 billion worth of projects is planned or underway in Makkah alone.
For many investors, the appeal of Makkah and Madinah is inseparable from the complexities surrounding them.
Raza said the holy cities remain among the world’s most tightly regulated property markets.
“The challenge: the same religious significance makes this the most regulated, access-restricted market in the Kingdom,” he said.
“Foreign capital enters as a minority financial participant through licensed structures, not as a controlling owner.”
HIGHLIGHT
The changes come as Saudi Arabia accelerates efforts to expand religious tourism and accommodate rising pilgrim numbers. According to the General Authority for Statistics, 1.7 million pilgrims performed Hajj this year, while the Kingdom aims to attract 30 million Umrah pilgrims annually by 2030.
The current framework allows foreign participation through regulated investment structures, while total ownership by non-Saudi individuals and entities in listed companies with exposure to real estate in Makkah and Madinah remains capped at 49 percent.
Coulson similarly said successful investment in the holy cities requires more than conventional financial targets.
“These cities carry immense spiritual, cultural, and social significance for nearly a quarter of humanity,” he said.
“This requires a stewardship mentality grounded in respect for the sanctity of the cities and alignment with the Kingdom’s custodial role.”
The scarcity of land surrounding the Grand Mosque is expected to intensify competition as institutional capital expands. Raza noted that plots near the Haram have traded at around $87,000 per sq. meter, placing them among the highest-valued urban land assets globally.
Still, analysts believe the next phase of development will focus less on landmark towers and more on integrated urban systems designed around the pilgrim experience.
Over the next decade, foreign participation is expected to influence not only pricing and competition but also the broader shape of urban planning across both cities.
Al Shouly said international investors could help raise standards in sustainability, governance and operational management.
“International capital often brings expertise across hospitality operations, smart-city technologies, ESG frameworks, crowd-flow management, and infrastructure integration,” he said.
As institutional investors enter the market, competition is also expected to evolve.
“Developers will increasingly compete not only on location, but also on design quality, customer experience, sustainability standards, brand partnerships, and long-term asset performance,” Al Shouly said.
Yet analysts say Saudi Arabia is likely to pursue a tightly calibrated opening rather than full liberalization, preserving the religious and cultural sensitivity of the two cities while expanding access to global capital.
“The likely outcome is a calibrated financialization of the holy cities, not their total deregulation. That calibration is a feature, not a limitation,” Raza said.
