Saudi Arabia has made a big announcement to diversify its economy and draw in foreign investment: foreign investors can now purchase real estate in Mecca and Medina, the two holiest towns in Islam, through Saudi-listed firms. Foreigners may now buy shares or convertible debt instruments of these companies with a 49% non-Saudi ownership cap, as of right now.
Economic Diversification and Vision 2030
The action is a component of Saudi Arabia's larger Vision 2030 plan, which invests in industries like real estate and tourism in an effort to lessen the kingdom's dependency on oil earnings. Mecca and Medina, which bring in large sums of money from religious tourism, are at the heart of these initiatives. The yearly Hajj and Umrah pilgrimages generated about $12 billion in revenue in 2019, and the country hopes to see 30 million pilgrims annually by 2030.
Investment Opportunities
In order to provide a formal framework for foreign investors to engage in the development of these holy towns, foreign investments will be restricted to companies that are registered on the Saudi capital market. This includes large-scale initiatives like Mecca's Masar plan, which aims to accommodate the expected surge of pilgrims by constructing 40,000 additional hotel rooms.
Market Response
Investor confidence about the possibilities for expansion and development in Mecca and Medina was reflected in the sharp increase in shares of real estate companies listed on the Saudi stock exchange after the announcement. The stock prices of companies like Makkah Construction and Development Company and Jabal Omar Development Company increased significantly.
An important milestone in the kingdom's attempts to diversify its economy is Saudi Arabia's decision to allow international investment in Mecca and Medina. The nation hopes to boost local economic growth and increase the competitiveness of its capital market by drawing in outside investment while preserving its religious and cultural legacy.
Sources: Retuers, Arab news, Gulf Business
