Saudi Arabia’s legal sector has undergone significant reform in recent years, reflecting the broader economic and institutional transformation under way as part of Vision 2030. The reform programme has focused on strengthening legal certainty, improving enforcement mechanisms and modernising institutions to support investment, commercial activity and long-term economic diversification. A central element of this process has been the codification of private law. The introduction of the Civil Transactions Law (CTL) marked a major step towards establishing a unified framework governing contractual and civil relationships, providing clearer guidance on rights, obligations and remedies across commercial activity. Alongside this, the Evidence Law clarified evidentiary standards and procedures, contributing to greater consistency and predictability in dispute resolution. These reforms have strengthened confidence in contractual enforcement and reduced reliance on fragmented or discretionary interpretation.
Proactive Changes
Reform has extended beyond private law to the broader commercial and corporate environment. Updates to the Companies Law have modernised corporate governance requirements, enhanced shareholder protections and expanded flexibility in corporate structuring. Changes to insolvency and restructuring regulations have strengthened the legal framework for addressing financial distress, supporting business continuity while protecting creditor rights. These measures have aligned the Kingdom’s commercial legislation more closely with global practice, while remaining consistent with domestic legal principles.
Judicial modernisation has progressed in parallel with legislative reform. Continued investment in court infrastructure, digitalisation and judicial training has improved efficiency and transparency across the judicial system. Specialised commercial courts and enhanced procedural rules have bolstered the handling of complex business disputes, contributing to greater consistency in judicial outcomes. Enforcement mechanisms have been reinforced, supporting the effectiveness of court judgments and arbitral awards.
The regulatory environment governing investment has similarly evolved. Changes to foreign investment regulations and licensing frameworks have simplified market entry and reduced administrative barriers, reinforcing Saudi Arabia’s position as a destination for international capital. These developments are supported by clearer regulatory mandates and improved coordination between authorities, contributing to a more predictable operating environment for investors.
Rather than signalling the completion of reform, recent developments reflect a shift towards consolidation and implementation. The emphasis has increasingly moved from introducing new legislation to embedding existing laws within regulatory practice, judicial interpretation and institutional capacity. This consolidation phase has helped stabilise the legal environment while allowing sector specific regulation to operate within a clearer and more coherent framework.
Within this context, legal developments affecting key sectors such as real estate, construction and large scale project delivery can be understood as applications of a broader legal architecture that is now largely in place. As subsequent sections demonstrate, the interaction between general legal frameworks and sector specific regulation continues to shape commercial activity across the Kingdom, supporting both ongoing development and the maturing role of law in Saudi Arabia’s economic transformation.
Evolving Landscape
The real estate sector continues to evolve through a sequence of targeted legal and regulatory reforms that reinforce transparency, investor access and orderly development. In 2025policymakers introduced measures that reshape the ownership framework, strengthen investment channels, and refine the rules governing landholding and leasing within urban boundaries. These initiatives reflect a broader effort to modernise the legal foundations of the sector and align them with the Kingdom’s long term urban and economic objectives. As the regulatory environment becomes more structured and predictable, both domestic and foreign market participants operate within a clearer framework governing ownership, taxation, land use and contractual relationships.
Foreign Ownership
Saudi Arabia’s real estate sector entered a pivotal phase in 2025 with the enactment of the Law of Real Estate Ownership by Non-Saudis, a statute that replaces the earlier 2000 regime and introduces a modern, rules-based framework. The reform reflects the Kingdom’s wider ambition to position real estate as a globally investable asset class, supported by transparent procedures, clearer safeguards and a legal infrastructure capable of attracting long term international capital.
Under the previous framework, foreign ownership was permitted only through narrow channels or specific licences, resulting in limited access and procedural uncertainty. The new law introduces broader and more predictable eligibility rules, permitting foreign natural persons, foreign companies, Saudi companies with foreign participation and regulated investment vehicles to own or invest in real estate in accordance with statutory conditions. This shift moves the system away from exception driven approvals and toward a unified structure that accommodates both individual purchasers and institutional investors.
A core innovation is the adoption of a zoning-based model for determining where foreign ownership or other real rights may be held. Acting on recommendations from the Real Estate General Authority, the Council of Ministers will designate areas that permit full ownership, areas subject to additional conditions and areas where restrictions continue to apply. This allows policymakers to calibrate access according to development priorities and urban planning considerations while maintaining safeguards in key locations.
The reform operates in close connection with the Real Estate Registration Law, which requires all ownership and real rights – including those held by non -Saudis – to be recorded in the national digital cadastral system. This ensures definitive title, enhances the enforceability of rights against third parties and provides a more transparent foundation for financing, large scale development and cross border transactions. The alignment of ownership rights with a unified registration system represents a major step in strengthening legal certainty across the sector.
For foreign investors, the new regime provides clearer pathways and lower procedural risk, supported by defined eligibility rules, structured zoning criteria and mandatory registration that clarifies the status of rights. These elements collectively modernise the investment environment and support the continued evolution of mixed-use, tourism, residential and development led real estate projects across the Kingdom.
The law mandates that its Implementing Regulations be issued within 180 days of publication – by January 2026. These regulations are expected to address eligibility verification, zoning procedures, registration requirements and transitional rules, which will determine how the framework operates in practice and guide investor engagement as the regime enters into force.
Capital Market Updates
The capital markets framework for real estate investment advanced in 2025 with amendments to the Real Estate Investment Funds Regulations, issued by the Capital Market Authority (CMA) in May, and further changes in November. The update bolsters the regulatory environment for Real Estate Investment Trusts and private real estate funds, supporting a more transparent, institutionally oriented market that complements the year’s broader reforms in property ownership and land governance.
The amendments enhance governance requirements, such as more robust risk management controls, clearer conflict of interest procedures, and bolstered oversight obligations for fund managers. Valuation and reporting standards were updated, requiring more frequent independent valuations and expanded disclosure on asset acquisitions, related party transactions and changes in fund capital. These refinements boost operational discipline and align Saudi real estate funds more closely with global investment standards.
The regulatory update clarifies and broadens the scope of permissible investments, allowing funds to participate in a wider set of asset classes, such as mixed use real estate and operational assets tied to tourism, hospitality, logistics, and other key sectors. This flexibility supports investment structures linked to national development initiatives and giga-projects, where real estate forms part of integrated economic clusters.
While not expressly designed as a foreign ownership reform, the updated framework provides clearer participation pathways for foreign and institutional investors, offering an alternative route to real estate exposure alongside newly liberalised direct ownership rules. This strengthens the overall investment ecosystem by enabling capital markets participation in parallel with the opening of on the ground real estate markets. As implementation progresses, further guidance is expected to refine reporting workflows, valuation methodologies, and fund manager obligations.
Real Estate Transactions
Although Saudi Arabia’s Real Estate Transaction Tax (RETT) has been in force since 2020, recent regulatory refinements and updated guidance have made the regime more operationally significant in 2024-25. RETT remains a flat 5% tax on transfers of real estate and real rights, but the Implementing Regulations and the latest Zakat, Tax and Customs Authority (ZATCA) guideline provide far clearer definitions of taxable transactions, exemptions and procedural requirements. These developments play an increasingly central role as investment structures expand and foreign participation grows.
A major feature of the updated framework is the detailed articulation of exemptions, including transfers to public authorities, inheritance distributions, gifts between close relatives, Islamic finance structures, capital in kind contributions, and internal reorganisations where beneficial ownership remains unchanged for five years. This clarity reduces historic uncertainty and supports more efficient structuring for real estate funds, corporate groups and development vehicles.
The regulations also strengthen the valuation and compliance rules, requiring tax to be calculated on the higher of the sale price or fair market value, with documentation submitted prior to notarisation or registration. ZATCA has reinforced compliance through specific filing obligations, mandatory documentation for exempt transactions and a tiered penalty regime that includes fines and, in cases of evasion, tax multipliers.
For investors, these refinements create a more predictable execution environment – particularly relevant as foreign ownership reforms expand the range of eligible participants and as large scale projects consolidate assets through specialised vehicles. RETT clarity also supports the effective implementation of the real estate registration system and the administration of white land fees, both of which rely on accurate transaction recording and valuation. As regulatory guidance continues to evolve, the RETT regime is becoming a more stable and transparent component of Saudi Arabia’s real estate investment landscape, aligning tax treatment with the sector’s broader legal modernisation.
White Land Fees
Saudi Arabia’s White Land Fee regime has entered a new regulatory phase following recent amendments that materially expand its scope and bolster the government’s ability to direct urban land utilisation. Although the original Vacant Land Law dates to 2016, the new framework increases the fee to up to 10% of land value, introduces broader categories of land subject to assessment, and reinforces the enforcement powers of the Real Estate General Authority (REGA) and municipal bodies. These developments represent a significant evolution in the legal architecture governing undeveloped land within urban boundaries.
The amended regime now enables regulators to apply the fee across a wider set of land classifications, including large parcels, subdivided land, and serviced plots where development has not meaningfully commenced. The shift towards a tiered and more expansive application reflects a deliberate policy direction to legally compel the activation of idle urban land and accelerate development patterns in growth dependent cities such as Riyadh and Jeddah. A central feature of the updated framework is the enhanced regulatory authority granted to REGA, which now plays a more active role in identifying designated zones, assessing compliance, verifying exemption claims and issuing implementing decisions. The law mandates more stringent disclosure and registration obligations, supported by digital systems that integrate cadastral data, ownership information and municipal records. This consolidation of legal and administrative authority significantly improves the enforceability of the fee and reduces historical ambiguity around classification and valuation.
Exemptions remain available, but the threshold for qualification has tightened. Landowners must demonstrate approved development plans, ongoing construction, or legally recognised impediments to avoid fee liability. The legal burden has therefore shifted from discretionary exemption to documented compliance.
Landlord-Tenant Regulation
In 2025 Saudi Arabia introduced a new regulatory framework governing the relationship between landlords and tenants, issued through REGA with approval by Royal Decree and the Council of Ministers. Although lease relationships were previously governed by contract principles and Ejar registration requirements, the new regime establishes binding rules on rental value, renewal and registration, marking a shift towards a more structured legal environment for residential and commercial leasing.
A central element of the 2025 regulation is the five-year suspension of rent increases within Riyadh’s urban boundaries. For properties with prior leasing history, rental values are fixed at the amount last registered on the Ejar platform. For properties not previously leased, pricing is set by agreement but remains frozen for the duration of the five-year period. This limits unilateral changes to rental value and introduces a degree of price stability that did not exist under earlier Saudi lease law.
The regulation also strengthens contract formalities and renewal rules. All lease agreements must be registered on the Ejar system, and the registered contract becomes enforceable unless the counter-party objects within the specified period. Lease contracts are generally renewed automatically unless either party provides at least sixty days’ prior notice, establishing a clearer statutory baseline for continuity of occupancy.
REGA is granted broader oversight and enforcement authority, including mechanisms for monitoring compliance, imposing penalties, and receiving violation reports. This enhanced regulatory role brings landlord-tenant relationships into closer alignment with the wider institutional reforms shaping the real estate sector, contributing to greater contractual certainty and more predictable leasing practices.
Real Estate Registration System
The continued rollout of the real estate registration system advanced in 2025, as additional cities and development zones were brought under the national digital cadastre. This expanding coverage strengthens the legal infrastructure that underpins the year’s major reforms, particularly in areas where clarity of title and mapped boundaries are essential for investment activity. The system is based on definitive, parcel level registration, through which ownership and other real rights become formally established once recorded. As more areas were activated during 2025, a growing share of real estate transactions – including those connected to strategic developments – became subject to definitive title recording. This has improved transparency, reduced uncertainty around encumbrances, and supported more consistent application of priority rules.
These developments are closely connected to the new foreign ownership framework, which requires rights granted to non-Saudis to be registered to gain enforceability. Accurate cadastral data also supports the administration of RETT, the updated white land fee regime, and the governance of large-scale projects, all of which depend on reliable land information. Further technical enhancements are expected as implementation progresses, including refinements to surveying standards, digital workflows and procedures for correcting or updating recorded rights. These measures reinforce the transition towards a real estate environment characterised by greater certainty, clearer rights and stronger alignment across regulatory systems.
Contracting
Saudi Arabia’s ongoing investment in infrastructure, industrial capacity and large-scale economic development has reinforced the importance of engineering, procurement and construction (EPC) contracting across multiple sectors. EPC structures are used to deliver complex projects that require integrated design and construction under a single contractual framework, offering greater coordination and predictability for project owners. As the scale and technical ambition of projects increase, the legal and regulatory environment governing EPC contracts has become an important component of the Kingdom’s broader economic reform agenda.
CTL
EPC contracts in Saudi Arabia operate within the wider framework of the CTL, which governs contractual relationships across the private sector. Introduced as part of legal modernisation efforts, the CTL provides a unified foundation for civil and commercial obligations, reinforcing principles of contractual certainty, good faith and enforceability. Within this broader framework, EPC agreements fall under the provisions governing work contracts, which outline the core responsibilities of contractors and employers in construction related arrangements. These provisions establish baseline expectations around performance, cooperation between the parties, responsibility for materials and the handling of defective work. The CTL does not, however, seek to regulate the detailed mechanics of EPC delivery. Instead, it provides a general legal backdrop against which parties define their respective rights and obligations through contract.
In practice, this approach places significant emphasis on contractual drafting. Key aspects of EPC execution – such as variation procedures, time related relief, design responsibility and payment mechanisms – are primarily governed by the terms agreed between the parties. The CTL plays a complementary role, supporting contractual interpretation and enforcement where disputes arise or where agreements are silent on specific issues.
Courts
Judicial practice has developed alongside the implementation of the CTL, contributing to greater predictability in construction related disputes. Courts have increasingly applied the law’s general principles to EPC type arrangements, reinforcing contractual balance and clarifying the consequences of non-performance. This supports a more consistent approach to issues such as employer-caused delay, evolving design obligations and the assessment of contractual penalties. Rather than introducing project-specific rules, judicial interpretation has focused on bolstering the reliability of contractual outcomes. For EPC participants, this has highlighted the importance of clearly articulated agreements and well documented project administration.
Procurement Law
EPC contracting in the public sector is shaped by an extra regulatory layer through the Government Tenders and Procurement Law (GTPL). The GTPL governs procurement activities undertaken by ministries and public authorities, and extends its principles to government-owned firms where the government holds a controlling interest. Compared to the CTL, the GTPL provides a more detailed framework for managing the contractual relationship between the employer and the contractor. It regulates tendering procedures, contract amendments, variations, extensions of time, penalties, termination and payment processes.
As a result, EPC contracting in Saudi Arabia is shaped by different regulatory environments depending on the nature of the procuring entity. Private sector projects rely on the CTL and negotiated contract terms, while public sector projects are governed by the more prescriptive requirements of the GTPL, alongside the general principles of the CTL. This distinction is a defining feature of the EPC landscape and has a direct impact on how projects are structured and managed.
Public-Private Partnerships (PPPS)
Alongside traditional public sector EPC procurement, PPP frameworks have increased relevance in the project delivery landscape. PPPs are primarily used in capital intensive sectors such as utilities, transport and social infrastructure, where long term operational considerations and private financing play a greater role. The development of PPPs has been supported by the Privatisation Law and its implementing regulations, as well as by the institutional role of the National Centre for Privatisation, which oversees project structuring and approvals.
In PPPs, EPC contracts are embedded within broader concession or project agreements, resulting in tighter integration between construction obligations, performance standards and financing requirements. This structure influences risk allocation, delivery timelines and contractual flexibility when compared with conventional public sector EPC arrangements. While PPPs represent a selective procurement model rather than a dominant approach, their growing use reflects the government’s broader objective of mobilising private capital and expertise in infrastructure development.
Contracting Standards
Alongside legislative reform, EPC contracting practices have continued to evolve in line with global standards. Contract forms based on the Fédération Internationale des Ingénieurs-Conseils are used across complex construction and infrastructure projects, reflecting their suitability for integrated design and build arrangements and multi-party project environments. These forms provide structured approaches to variations, claims management and risk allocation, supporting clearer contractual governance in large scale developments.
The use of internationally recognised contract models has also supported greater alignment with global dispute resolution practices. Arbitration is now commonly incorporated into EPC agreements, particularly for projects involving international contractors or complex technical scopes. The Saudi Centre for Commercial Arbitration has emerged as a key institution in this context, reinforcing confidence in the enforceability and neutrality of dispute resolution mechanisms.
Operational Considerations
Despite increasing legal and contractual sophistication, EPC delivery continues to be influenced by practical considerations inherent in large projects. Design development often progresses alongside construction, requiring coordination between contractors, consultants and employer representatives. Approval processes, interface management and scope adjustments remain central to project performance, particularly where multiple stakeholders are involved. These dynamics have heightened the importance of clear contractual frameworks and consistent project administration. While the CTL and the GTPL provide the overarching legal context, the effectiveness of EPC delivery continues to depend on how contractual mechanisms are applied in practice.
EPC Contracting
Legal reform, evolving procurement practices and greater alignment with international standards have contributed to a more mature EPC contracting environment. The CTL provides a unified foundation for contractual relationships, while the GTPL establishes structured governance for public sector projects. The use of globally recognised contract forms and arbitration mechanisms further supports predictability and transparency.
As Saudi Arabia continues to advance its long-term development agenda, EPC contracting is expected to remain a key feature of project delivery. The interaction between legal frameworks and sector practice will continue to shape how risks are allocated, managed and resolved, reinforcing the role of clear contractual structures within the Kingdom’s evolving legal landscape.
OBG would like to thank Al Jamhor Law for their contribution to THE REPORT Saudi Arabia 2025
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