State Properties in the Saudi Financial Market: Transformations, Impact, and

State properties in Saudi Arabia refer to all real estate assets owned by government entities or directly supervised by them. This includes government land, administrative buildings, public facilities, and major projects such as new economic cities and housing and infrastructure projects. The economic role of state properties is highlighted as they form a fundamental pillar in development plans, especially within Vision 2030, where the Kingdom seeks to diversify its economy by more effectively utilizing government real estate assets. This utilization takes various forms, including the development of large housing projects through programs like 'Sakani', the establishment of special economic zones such as NEOM and Qiddiya, and the allocation of land for major tourism projects like the Red Sea Project.

In the Saudi financial market, state properties are represented through listed companies that manage or develop government assets, where some companies operate on long-term contracts with the government or hold stakes in government projects. This is reflected in the financial performance of these companies, as they often benefit from government guarantees or financial support, enhancing their stability and investment attractiveness. For example, companies like 'Hail Cement' or 'Yamama Cement' supply construction materials for state projects, making the demand for their products directly linked to government real estate activity.

The impact of state properties extends beyond mere real estate development to include related sectors such as contracting, building materials, real estate financing, and banking. For instance, the government supports housing projects through financing facilities, while construction companies undertake the creation of government housing complexes. Additionally, government real estate policies influence land prices and rents, shaping the trends of the entire real estate market. From this perspective, understanding state properties in Saudi Arabia requires recognizing their interconnection with economic policies and their multiplier effect on the sectors linked to the financial market.

Official data and financial reports indicate that the government real estate sector in Saudi Arabia plays a pivotal role in the national economy. In 2024, the construction and building sector contributed no less than 10% to the Kingdom's GDP, driven by the activity of massive housing and urban projects implemented by the government. The Ministry of Housing announced before the end of 2024 that it would provide more than half a million housing units under government support programs, with expectations that this number will exceed one million units by the middle of this decade.

Regarding major projects, significant initiatives such as the Red Sea Project are underway, which is expected to exceed 50,000 hotel rooms upon completion, in addition to cities like Qiddiya and NEOM that are central to the Kingdom's strategy to diversify income sources. It is noted that these projects are not limited to the residential sector but also include the development of tourism, entertainment, and commercial complexes, expanding the economic base of the government real estate sector.

In terms of foreign investments, the government real estate sector has seen significant developments with the Capital Market Authority's decision in January 2025 to allow foreigners to invest in listed companies that own real estate assets in Mecca and Medina. This decision has led to an increase in foreign capital inflow into the sector, with expectations that this move will attract tens of billions of Saudi riyals by 2025. It is noteworthy that activities related to Hajj and Umrah contributed approximately $12 billion to the national economy in 2019, reflecting the strategic importance of state properties in the holy areas.

Additionally, the main index of the Saudi financial market recorded a slight increase of 0.2% on January 27, 2025, following the announcement of regulatory decisions that supported the shares of companies owning properties in Mecca. These figures confirm the market's sensitivity to any developments in government real estate policies and the dynamic role of state properties in driving national economic growth.

The Saudi financial market witnessed a significant regulatory transformation in January 2025 with the Capital Market Authority's announcement allowing foreign investors to invest in listed companies that own real estate assets in Mecca and Medina. This decision is one of the most notable recent legislative achievements aimed at enhancing the attractiveness of the Saudi market and attracting foreign capital, within the framework of Vision 2030, which seeks to transform the Kingdom into a global investment hub.

Historically, investment in sacred real estate was restricted to Saudi citizens and certain selected nationalities, making real estate assets in Mecca and Medina some of the most conservative assets in the local market. However, this decision has allowed foreigners, for the first time in many years, access to shares of companies owning these assets, with a maximum foreign ownership limit of 49% of the company's capital. This cap is designed to maintain national control and ensure a balance between attracting investments and protecting real estate sovereignty in sensitive areas.

The decision led to a positive market response, as shares of related companies recorded significant increases the day after the announcement, and the main index rose by 0.2%. Additionally, the decision provided an additional impetus for listed real estate development companies to expand their projects or reassess their financing strategies to benefit from foreign liquidity. On the other hand, this step has enhanced transparency and governance in the real estate sector, as attracting foreign investments requires a higher level of disclosure and compliance with international accounting standards.

Official entities expect this openness to accelerate the pace of implementing major real estate projects and expand the investor base in the financial market. It will also enhance competitiveness among listed companies, pushing them towards innovation and improving the quality of services and facilities. Overall, this regulatory transformation reflects the Kingdom's desire to align the government real estate sector with international best practices and make state properties a key element in the sustainable economic development strategy.

The state properties sector plays an important role in determining trends in the Saudi financial market, as its activity directly reflects on the stock indicators listed in the real estate development, building materials, and contracting sectors. With the magnitude of ongoing government projects, such as economic cities and massive housing complexes, the demand for products and services from listed companies has increased, leading to growth in their profits and improved market valuations.

At the beginning of 2025, the main index of the Saudi market recorded an increase of 0.2% following the announcement of regulatory decisions supporting foreign investment in real estate companies owning assets in Mecca and Medina. This increase reflects the market's sensitivity to any government developments affecting the real estate sector, as stock prices often react quickly to news related to government projects or regulatory support decisions. For example, companies like Hail Cement and Yamama Cement benefited from increased demand for building materials due to the expansion of housing and infrastructure projects.

The relationship between state properties and the financial market is intertwined, as the performance of listed real estate companies serves as an indicator of the health of the government real estate sector. When major projects are launched by the Public Investment Fund or the Ministry of Housing, shares of contracting and building materials companies experience simultaneous increases, reflecting investors' expectations of improved revenues. Conversely, any challenges in project implementation or regulatory decisions that restrict returns (such as rent freezes) may lead to a temporary decline in the performance of some stocks linked to the sector.

Additionally, market liquidity partially depends on the influx of capital into the real estate sector, especially with the entry of foreign investors following the 2025 decisions. This liquidity increases market depth and diversifies funding sources, supporting the stability of sector indicators in the medium and long term. Overall, it can be said that state properties represent a locomotive for the growth of the Saudi financial market, as they are linked to stock movements, employment opportunities, and expansions of listed companies in the construction and real estate development sectors.

The building materials sector, particularly cement companies, is one of the main pillars relied upon by state property projects in Saudi Arabia. With the acceleration of government projects under Vision 2030, the demand for cement and concrete has significantly increased, positively reflecting on the performance of listed cement companies in the Saudi financial market. Among the most prominent of these companies is 'Hail Cement' (symbol 3001), which is one of the oldest and largest companies in the sector, in addition to major competitors such as 'Yamama Cement' (3002), 'Southern Cement' (3040), and 'Eastern Cement' (3000).

During 2024 and 2025, local cement companies recorded strong sales supported by increased demand for housing and infrastructure projects. The price of Hail Cement shares reached approximately 15 riyals by the end of 2024, with a market value approaching 4-5 billion riyals. The price-to-earnings (P/E) ratio for the cement sector generally ranged between 10 and 15, reflecting stable returns and the sector's suitability for long-term investment. These companies are keen to distribute regular dividends ranging from 10-15% of net income.

Cement companies heavily rely on supply contracts for state projects, as they enter into long-term agreements with government entities to provide essential materials for housing, infrastructure, and economic city projects. This reliance provides a relative guarantee for revenue stability, but it also places companies in front of challenges such as fluctuations in energy prices and production costs, especially with global changes in fuel and raw material prices.

On the other hand, competition among Saudi cement companies is fierce as each company seeks to secure larger shares of government contracts, pushing them to improve production efficiency and offer competitive prices. Overall, the building materials sector serves as a mirror of the health of state property projects, as the financial results of companies reflect the volume of government real estate activity and the progress made in implementing major projects across the Kingdom.

Government real estate development companies or those linked to the state play a pivotal role in implementing state property projects in Saudi Arabia. Among the most prominent of these entities are companies such as 'Red Sea Development Company', overseeing the Red Sea tourism project, and 'Qiddiya Investment Company', which manages the massive Qiddiya entertainment project, in addition to NEOM and The Line development companies. These companies are often partially or wholly owned by the Public Investment Fund (PIF), giving them substantial financial capacity and direct government support.

These companies rely on partnerships with the private sector to implement mega projects, where they enter into contracts with local and international contracting companies to accelerate construction and ensure quality execution. For example, the Red Sea Company has signed contracts worth billions of riyals with major Saudi and international contracting firms to create hotels, roads, and tourist facilities. Additionally, Qiddiya aims to build a comprehensive entertainment city that includes sports, tourism, and residential facilities, attracting investments from both domestic and foreign sources.

On the other hand, government real estate development companies contribute to enhancing sector governance through adherence to transparency and financial disclosure standards, especially with the Kingdom's direction towards attracting foreign investments. These companies often follow strict financial policies to ensure project sustainability, including utilizing financing tools such as bonds and sukuk issued by the government or the Public Investment Fund.

These entities directly impact the Saudi financial market through their contracts with listed building materials and contracting companies, creating a chain of reciprocal effects between the public and private sectors. Furthermore, the success of these companies in implementing major projects enhances the Kingdom's position as a regional investment hub and supports achieving Vision 2030 goals in diversifying the economy and increasing the contribution of the real estate sector to GDP.

The contracting and construction sector forms the backbone of state property projects in Saudi Arabia, as the government primarily relies on local and international contracting companies to implement its massive projects. Companies such as 'Hail Cement', 'Yamama Cement', and 'Southern Cement' compete for supply contracts for building materials, while major contracting companies work on creating housing complexes, administrative towers, and infrastructure for new economic cities.

Competition in this sector is intense, as each company seeks to win larger shares of government contracts, which are often long-term and of high financial value. Competition relies on several factors, including production capacity, material quality, competitive pricing, and execution speed. For example, 'Hail Cement' achieved strong sales in 2024 due to its contracts with government housing projects, while 'Yamama Cement' expanded its share in the western sector through partnerships with economic city development companies.

The sector faces challenges such as rising energy and raw material costs, prompting companies to improve production efficiency and adopt innovative solutions to reduce expenses. Additionally, demand fluctuations related to the scheduling of government projects affect revenue stability, as some projects may slow down due to budget reviews or changes in government plans.

Listed contracting companies play an important role in the Saudi financial market, as their financial results serve as indicators of the health of the government real estate sector. Investors typically monitor these companies closely, especially during periods of government project expansion or when new contracts are announced. Ultimately, the performance of the contracting and construction sector reflects the volume of government real estate activity and the state's ability to implement its development plans under Vision 2030.

Government financing represents a fundamental pivot in implementing state property projects in Saudi Arabia, with the Public Investment Fund (PIF) playing a leading role in financing and directing major real estate investments. The fund holds significant stakes in real estate development companies and finances massive projects such as NEOM, the Red Sea, and Qiddiya, in addition to housing and infrastructure initiatives.

In 2025, the Public Investment Fund announced the issuance of dollar-denominated bonds with a ten-year maturity, raising $5.5 billion from a previous sukuk offering within a week. These figures reflect strong demand for Saudi sovereign debt instruments and provide substantial liquidity to reinvest in government infrastructure and real estate projects. Reports from 2025 also indicated that the fund reduced the accounting valuation of some of its real estate projects by about $8 billion, bringing the total valuation to 211 billion riyals by the end of the year, compared to 241 billion riyals in 2023. This reduction reflects a realistic economic review of profitability expectations and indicates that some projects may face challenges in financing or achieving targeted revenues.

Financing state property projects also relies on coordination with local and international banks, in addition to benefiting from public-private partnership (PPP) programs. These programs allow private capital to participate in implementing government projects, alleviating the burden on the public budget and enhancing execution efficiency.

Additionally, the government launches financing support programs such as the 'Sakani' program, which provides facilities for those wishing to own housing and supports real estate development companies through financial incentives and government guarantees. Overall, government financing and the Public Investment Fund represent a fundamental lever to drive state property projects and ensure their sustainability and ability to achieve national development goals.

State property projects play a key role in driving the Saudi national economy by creating new job opportunities and stimulating related sectors such as building materials, contracting, real estate financing, and logistics services. Estimates indicate that the construction and building sector contributed more than 10% to GDP in 2024, reflecting the scale of government spending on housing and infrastructure projects.

These projects stimulate local demand for materials and services, as the state relies on local suppliers to meet the needs of its massive projects. For example, cement and steel companies benefited from increased demand resulting from the implementation of housing and economic city projects, leading to growth in their profits and improved market valuations. Additionally, contracting companies employ thousands of workers and engineers, contributing to reducing unemployment rates and enhancing national income.

On the other hand, state property projects contribute to attracting foreign investments, especially after the 2025 decisions that allowed foreigners to invest in companies owning properties in Mecca and Medina. This openness expands the investor base and increases the influx of capital into the real estate market, enhancing financial stability and increasing companies' ability to finance future expansions.

In addition to the direct economic impact, state property projects contribute to achieving the goals of Vision 2030 by diversifying national income sources and providing a developed urban environment that meets the needs of citizens and new residents. These projects also support the development of new sectors such as tourism and entertainment, contributing to creating a diverse and sustainable economy. Overall, the state property sector serves as a driver of economic growth and reflects the government's ability to direct investments towards achieving comprehensive development.

The state property sector in Saudi Arabia has witnessed a series of legislative and regulatory developments in recent years aimed at enhancing transparency, attracting investments, and facilitating the implementation of major projects. Among the most important of these developments is the Capital Market Authority's decision in January 2025 to allow foreigners to invest in listed companies owning real estate assets in Mecca and Medina, with a cap on foreign ownership set at 49% of the company's capital. This decision reflects the Kingdom's desire to open up to foreign capital and transform the government real estate sector into an attractive platform for international investment.

Additionally, in September 2025, the government issued a decision mandating relevant authorities not to increase annual rent prices in major cities, especially Riyadh, for five years. This decision aims to combat real estate inflation and protect tenants, but it may impact the revenues of new city development companies or rented housing complexes.

Regarding project financing, the Public Investment Fund announced the issuance of international bonds and sukuk to raise the liquidity needed to finance real estate and infrastructure projects. These steps reflect the government's direction towards diversifying funding sources and relying on sovereign debt instruments to secure the needs of mega projects.

Furthermore, the government is moving towards updating real estate legislation to expedite property transfer procedures, facilitate electronic property registration, and adopt greater transparency in the valuation of government land. Regulatory authorities closely monitor the performance of listed companies and impose advanced financial disclosure standards to ensure investor protection and raise governance levels. Overall, these legislative developments reflect Saudi Arabia's commitment to improving the real estate investment environment and ensuring the sustainability of state property projects within the framework of Vision 2030.

The state property sector in Saudi Arabia offers diverse investment opportunities for local and international investors, especially following regulatory changes that allowed foreign capital to enter listed companies owning government real estate assets. These opportunities include investing in shares of real estate development companies, contracting, building materials, in addition to real estate investment trusts (REITs) that allow investors to own shares in income-generating rental properties.

Listed companies benefit from high demand for housing units, tourism facilities, and commercial complexes developed by the state as part of Vision 2030 projects. For example, investors can purchase shares of companies like Hail Cement or Yamama Cement to benefit from the growing demand for building materials. REITs also provide the opportunity to invest in commercial and residential properties leased by the state or its companies, offering stable periodic returns.

With the entry of foreign investors, the Saudi financial market has become deeper and more diverse, increasing its liquidity and enhancing its ability to finance future projects. Additionally, investment opportunities have expanded with the launch of mega projects such as NEOM, Qiddiya, and the Red Sea projects, which require massive investments in infrastructure and real estate.

It should be noted that investing in the state property sector is linked to market fluctuations and government performance, as regulatory or economic changes may affect the profitability of companies and stock prices. Therefore, investors are advised to review company reports and financial disclosures and closely monitor sector developments. Overall, the state property sector represents a promising investment platform within the Kingdom's efforts to diversify its economy and achieve sustainable development.

Despite the rapid growth and significant opportunities in the state property sector in Saudi Arabia, the sector faces several challenges that may affect project sustainability and the achievement of developmental goals. Among the most prominent of these challenges is the high financing cost, as mega projects require substantial funding from the public budget or through sovereign debt instruments, which may place a burden on public finances during periods of economic downturn or fluctuations in oil prices.

The sector also faces challenges related to rising building material prices due to fluctuations in energy prices and transportation costs, which increases the cost of project implementation. Additionally, demand fluctuations for real estate due to market changes or global crises, such as the COVID-19 pandemic, may lead to delays in some projects or rescheduling of implementation.

Some major cities, such as Riyadh and Jeddah, suffer from an oversupply of real estate, especially in the residential and hotel sectors, which puts pressure on prices and affects the profitability of government projects. These challenges have prompted the government to take measures such as freezing annual rents and providing incentives for the private sector to accelerate construction.

On the other hand, bureaucratic complexities and regulatory constraints pose challenges to the speed of project implementation and property transfer. Despite the recent openness to foreign investment, the cap on foreign ownership at 49% may limit the Kingdom's ability to attract long-term strategic investments.

Nevertheless, the future prospects for the state property sector remain positive due to continued government support, the expansion of public-private partnership programs, and rising local demand for housing and infrastructure. The Kingdom is expected to continue implementing mega projects under Vision 2030, enhancing the role of state properties as a key driver of economic growth and achieving sustainable development.

Saudi Vision 2030 serves as a strategic framework for restructuring the state property sector and making it more dynamic and innovative. The vision aims to diversify national income sources and reduce dependence on oil by launching massive real estate projects that contribute to developing infrastructure, housing, tourism, and entertainment. Among the most prominent of these projects are NEOM, Qiddiya, and the Red Sea, which aim to transform vast areas of government land into integrated economic and tourism centers.

Vision 2030 drives the enhancement of public-private partnerships, encouraging local and foreign investors to participate in the development of government land through financing programs and investment incentives. The vision also focuses on updating real estate legislation, facilitating property transfer procedures, and increasing transparency in the valuation of government assets.

Additionally, the government has launched massive housing programs such as 'Sakani', aimed at increasing the homeownership rate among citizens and providing diverse housing solutions that meet the needs of various segments of society. The state supports these programs by providing land, facilitating real estate financing, and collaborating with local and international real estate development companies.

The vision also enhances the role of state properties in supporting the religious tourism sector by developing projects in Mecca and Medina and improving infrastructure to accommodate increasing numbers of pilgrims and Umrah performers. It also drives the development of new entertainment and tourism areas to attract visitors from within and outside the Kingdom. Overall, Vision 2030 has contributed to transforming state properties from static assets into active economic projects that create new job opportunities, achieve comprehensive development, and enhance the Kingdom's position as a global investment hub.

Major cities in Saudi Arabia, such as Riyadh and Jeddah, are witnessing significant changes in residential and commercial property prices due to supply-demand dynamics and government interventions in the market. In recent years, property prices have risen significantly driven by strong demand for housing and government support programs such as 'Sakani'. However, the government has issued decisions to curb real estate inflation, such as freezing annual rent prices in major cities for five years starting September 2025.

This measure aims to protect tenants from excessive price increases and ensure market stability, but it may impact the returns of some government investment projects in the rental housing sector. As the supply of housing units increases due to government projects, observers expect the market to experience a balance between supply and demand in the medium term.

Supply-demand dynamics also affect listed companies in the financial market, especially real estate development and building materials companies that primarily rely on the activity of housing and infrastructure projects. Excess supply in some areas may put pressure on land and building prices, while strong demand in other areas supports continued sector growth.

On the other hand, the government is pushing to diversify sources of demand for real estate by developing new tourism and entertainment projects and attracting foreign investments in cities like Mecca and Medina. Financing programs also provide incentives for citizens and companies to purchase or develop properties, supporting price stability and enhancing the sector's ability to withstand fluctuations. Overall, the balance of supply and demand is a key element in the sustainability of the state property sector and requires careful monitoring of economic and regulatory developments affecting the market.