Saudi Arabia is broadening investment opportunities within its holy cities, announcing that non-Saudis will be permitted to invest in publicly traded companies owning real estate in Mecca and Medina. Effective Monday, the Capital Market Authority (CMA) has authorized foreigners to purchase shares and convertible debt instruments in firms holding real estate assets, both private and public, within these religiously significant locations.
This decision comes despite the continued prohibition on non-Muslims directly owning property in Mecca and Medina. These cities hold immense value for Muslims globally and are often viewed as secure and stable investment destinations. Mecca and Medina serve as central hubs for the millions of Muslims who participate in the annual Hajj and Umrah pilgrimages, generating substantial and consistent revenue for hotels, related services, and the broader economy.
While Saudi Arabia has launched extensive global and domestic investment campaigns, the Kingdom remains heavily reliant on oil revenue to finance its ambitious economic transformation. The International Monetary Fund (IMF) estimates that Saudi Arabia requires oil prices of $96 per barrel to balance its budget, approximately $20 higher than current market prices. This reliance on oil underscores the urgency of the Kingdom’s diversification efforts.
In a related development, Saudi Arabia has shifted its investment focus inward, prioritizing domestic projects over overseas ventures. This strategic realignment is reflected in recent data. In 2024, the UAE’s Mubadala surpassed Saudi Arabia’s Public Investment Fund (PIF) as the world’s most active sovereign wealth fund. According to a report by Global SWF, a research consultancy firm, the PIF’s spending decreased by 37 percent to $19.9 billion in 2024, down from $31.6 billion the previous year.
Despite facing challenges in attracting direct foreign investment for its projects, Saudi Arabia has successfully tapped into international debt markets. Bloomberg reports that investor bids for a $12 billion bond issuance exceeded $30 billion. In 2024, the Kingdom sold $17 billion in international bonds, placing it second only to Romania among emerging markets in terms of bond issuance volume. This strong demand for Saudi debt indicates continued investor confidence in the Kingdom’s long-term economic prospects, even as it navigates the complexities of its economic diversification strategy.
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