White Lands in Saudi Arabia: Comprehensive Explanation and Market Impact

White lands in Saudi Arabia are large plots located within the approved urban boundaries of cities, which have remained free of any construction activity or economic exploitation for more than a year since the urban plan was approved, without any building permits or development projects issued for them. The concept of white lands is based on a reform vision adopted by legislative and regulatory authorities in the Kingdom, as systems and regulations governing this category of lands were enacted to correct the course of the real estate market and address the phenomena of monopolies and speculation that led to a shortage of supply and rising prices.

The system grants the relevant authorities the power to classify white lands according to specific criteria, the most prominent of which is that the area exceeds a certain limit (usually 5,000 square meters), that it is located within an approved urban plan (residential or commercial), and that it is not subject to active or licensed development projects. Some lands are exempt from classification, such as active agricultural or industrial lands, and lands owned by government or religious entities.

The term white lands first emerged in extensive economic and media discussions in 2015, coinciding with the government's efforts to regulate the real estate market and achieve the goals of Vision 2030, highlighting the danger of thousands of vast plots remaining unused in major cities such as Riyadh, Jeddah, and Mecca. This led to the issuance of an official system imposing a progressive annual tax on these lands, requiring owners to disclose their status, and providing a specified grace period for development or sale, otherwise, they would incur accumulating financial obligations. This mechanism aims to achieve a balance between owners' rights and development necessities, transforming white lands from a burden on the economy into an active resource supporting housing and investment.

The Kingdom of Saudi Arabia based its regulation of white lands on a set of regulations and official decisions that established a strict legal framework defining the application controls and technical and procedural criteria for classification and monitoring. The first executive regulations for the white lands system were issued by the Ministry of Municipal and Rural Affairs and Housing, in collaboration with the Ministry of Finance and the General Authority for Real Estate, and these regulations set precise criteria related to the land area, its location, the type of urban plan, and the state of use.

The system requires that the land be free of construction or designated for an active project, and that the area exceeds the minimum specified (e.g., 5,000 square meters), and that it be within an approved urban plan registered in municipal records. Specialized technical committees in municipalities and secretariats determine white lands based on field visits, verifying the license records, and utilizing advanced geographic information systems.

The system grants the owner a time frame (usually one year from the date of notification) to begin developing or selling the land, and if no action is taken, the white lands tax begins to accumulate on the land at progressive rates starting from 2% of the market value and gradually increasing each year, with a maximum limit not exceeding 6%.

The regulations include exemptions for active agricultural lands, lands with existing industrial projects, lands owned by government or religious entities, and some small lands or those located in areas not targeted for urban development. The system also allows owners to appeal and contest the administrative decision, providing documents that prove their initiation of construction or the existence of legal impediments preventing development. These regulations are periodically updated to keep pace with market developments, and electronic platforms have been launched to facilitate disclosure, submission, and tax payment processes, ensuring transparency in application.

The classification of land as white land is subject to a series of technical and legal procedures overseen by specialized government entities to ensure accuracy and fairness in application. The mechanism begins with a monitoring phase, where municipalities and secretariats rely on digital databases supported by geographic information systems to identify large lands within the urban boundaries that have not undergone any development or construction. The records of real estate licenses are reviewed to search for any building permits or active projects related to the land in question.

When the land meets the classification criteria, a preliminary administrative decision is issued, and the owner is officially notified, granting them a time frame (usually one year) to start development or submit a supported objection with documents. Evaluation committees rely on precise criteria to estimate the market value of the land, such as its location, proximity to services, surrounding infrastructure, and the state of the real estate market in the area. Certified real estate appraisal experts are consulted to ensure objectivity.

If the owner does not respond, the white lands tax is imposed, calculated as a percentage of the estimated market value. Annual re-evaluations are conducted to review any changes in the market or the state of the land. It is noteworthy that the system allows the owner the right to contest the evaluation or classification within a specified period by submitting to the relevant appeals committee and providing evidence of the initiation of construction or the existence of external impediments.

The controls vary by city or region, with some densely populated cities subject to stricter criteria, while exemptions or relaxed requirements are applied in agricultural or industrial areas or those with special characteristics. The evaluation controls take into account legally established exemptions, such as lands owned by government or religious entities, or those designated for active housing or commercial projects. These mechanisms aim to achieve fairness among owners and stimulate the market towards optimal land use.

The white lands tax is the central tool in the Saudi system to motivate owners of undeveloped lands to develop or sell them, and this tax is subject to a precise and transparent calculation mechanism. The tax starts at 2% of the market value of the land in the first year of classification as white land, and it gradually increases in subsequent years if no development work is undertaken. The relevant authorities estimate the value of the land based on reports from certified appraisal experts, taking into account the location, area, level of surrounding services, and prevailing market prices.

For example, if a plot of land measuring 10,000 square meters is classified with a market value of 10 million riyals, the tax due in the first year would be 200,000 riyals. If the land remains undeveloped in the second year, an additional (cumulative) tax may be imposed, reaching up to 4% of the land value, which would amount to 400,000 riyals, and it increases annually according to the executive regulations, with a maximum cap usually not exceeding 6% of the market value.

The primary objectives of this tax are to encourage owners to expedite construction and development processes or to reintroduce lands into the market, contributing to an increase in the supply of lands and housing and commercial units, and reducing the phenomenon of monopolies and speculation that inflate prices without real economic justification. The tax also allows the government to collect additional revenues that can be directed to support housing and infrastructure programs, including projects for schools, hospitals, and roads within cities.

The system allows for temporary exemptions or reductions in specific cases, such as actual commencement of construction or the existence of compelling reasons preventing development, based on a request submitted by the owner to the relevant committee along with the necessary documents. Through this mechanism, the government aims to achieve a balance between stimulating development and not harming owners' rights, while ensuring fairness in application and transparency in revenue collection.

Despite the comprehensiveness of the white lands system and the strictness of its regulations, it allows for several exemptions and exceptions aimed at achieving justice and avoiding infringing on the rights of certain entities or specific cases. The main exemptions include lands located within the holy areas of Mecca and Medina, where these areas have been partially exempted from tax application under the same criteria, due to the sensitivity of ownership and religious and residential use in those cities. Lands owned by government entities, purely agricultural lands, and existing industrial projects are also exempted.

The regulations also set a minimum threshold for the area or value of the land (usually 5,000 square meters or one million riyals) to avoid imposing the tax on small family plots or those not suitable for organized commercial or residential investment. Owners who prove the existence of legal building plans or valid building permits can have their lands reclassified and halt tax collection until the project is completed. The regulations allow for objections, where the owner can submit a complaint with the necessary documents to prove the existence of compelling impediments to development, such as legal disputes or regulatory obstacles.

Exemptions also apply to lands located outside urban plans or those proven to be not targeted for urban development within an approved timeframe. In cases of land transfer for government housing projects or partnerships with the public sector under official contracts, exemptions or reductions in tax value may be granted.

The implementation of these exemptions is subject to close monitoring by evaluation and appeals committees in municipalities, and decisions regarding exemptions or exceptions are periodically reviewed to ensure transparency and fairness. Through these criteria, the system aims to stimulate development without harming the interests of exempted groups, achieving a balance between development requirements and property rights.

The implementation of the white lands system has led to radical changes in the dynamics of the Saudi real estate market, where the real estate sector now has a clearer and more transparent regulatory framework. The tax has contributed to increasing the supply of lands and housing units, as many owners have rushed to expedite sales or enter into partnerships with real estate developers to avoid accumulating costs. This has reflected on market activity, with major cities such as Riyadh and Jeddah witnessing a notable increase in the number of new housing projects launched and a diversity of real estate products offered.

Recent reports indicated that the real estate index in the Saudi stock market recorded a growth of 5-7% by the end of 2024 compared to 2023, supported by construction activity and increased demand for residential and commercial properties. Data from the Ministry of Housing showed the implementation of massive projects such as 'Sakani', which partially benefited from the activation of white lands, enabling tens of thousands of citizens to own new residential lands, with financing support from banks and financial institutions.

On the other hand, the system has helped curb real estate speculation, as it has become economically unfeasible to hold large lands without development, given the escalating tax obligations. This has led to relative stability in land and housing unit prices and increased ownership opportunities for citizens. The tax revenues have also provided additional resources to support infrastructure and public service projects, positively impacting the quality of life in cities.

Despite these positives, the challenge remains to achieve a balance between stimulating development and not excessively pressuring owners, especially given the varying market conditions between cities. As the system continues to be updated and economic changes are monitored, the impact of white lands remains a vital focus in the future of the Saudi real estate market.

The white lands system represents a qualitative opportunity for the real estate development and contracting sector in Saudi Arabia, creating a more competitive and transparent environment and providing greater access to lands within the urban boundaries. Before the system was implemented, the market suffered from a monopoly by a limited number of investors and owners of large lands, leading to a shortage of supply, rising prices, and difficulty in executing large residential and commercial projects. After the system was activated, the tax has prompted owners to offer their lands for sale at more realistic prices or enter into partnerships with real estate development companies to create integrated projects.

This transformation has resulted in a noticeable increase in the number of projects executed by major real estate development companies such as Dar Al Arkan, Emaar the Economic City, and Development, which have started competing in government auctions to acquire the offered white lands. General contracting companies, such as Binladin Group, Al-Fawzan, and Namarq, have benefited from the increased volume of construction work associated with transforming white lands into housing or commercial centers.

This activity has contributed to increasing job opportunities, localizing professions in the contracting sector, and pushing construction companies to develop their technologies and enhance their productivity. Partnerships between the public and private sectors have also accelerated project implementation, achieving the goals of national housing programs such as 'Sakani' and 'Partnership'. Financially, real estate development and construction companies have seen improvements in revenues and profits with the increased demand for their services and products.

As new auctions continue to be launched and opportunities for local and international investors expand, white lands are expected to remain a key driver of growth in the real estate development and contracting sector in the coming years, with the need to continue developing regulatory policies to ensure sustainable growth and achieve a balance between supply and demand.

The white lands system is closely linked to the building materials sector in Saudi Arabia, as the increase in construction activity resulting from the activation of white lands serves as a major driver for the growth in demand for cement, steel, bricks, and ready-mix concrete. With the government's announcement of the implementation of thousands of new housing units on white lands, building materials companies have witnessed a significant improvement in their financial and production performance.

For example, sales in the Saudi cement sector reached approximately 19 billion riyals by the end of 2024, an increase of 8% from the previous year, driven by the expansion of housing and infrastructure projects. Companies such as Hail Cement (3001), Yanbu Cement (2040), Saudi Cement (3006), and Al-Yamamah Cement (2050) were among the main beneficiaries of this activity. According to the Ministry of Industry data, steel production increased by about 10% in the first quarter of 2025, and sales surged as construction operations expanded.

The growing demand has prompted building materials companies to launch expansion plans and enter into partnerships with global firms to improve technology and increase efficiency. The sector has also seen strong competition among local producers, under government policies that limit imports to support the national industry. Additionally, prices for some building materials have gradually increased with rising demand, especially in areas with major projects.

This connection between white lands and the building materials sector is one of the vital elements in developing the non-oil Saudi economy, as it contributes to creating new job opportunities, stimulating investment in the industry, and achieving integration between the real estate development, contracting, and industrial sectors. As the government continues to inject new projects, the building materials sector is expected to remain one of the biggest beneficiaries from the activation of the white lands system.

The white lands system has played a pivotal role in supporting national housing programs in Saudi Arabia, which aim to increase citizens' home ownership rates and enhance urban quality of life. Since the launch of the 'Sakani' program and other government initiatives, the activation of white lands has become one of the main tools to achieve the goals of Vision 2030 in the housing sector.

The system has facilitated citizens' access to residential lands at affordable prices by increasing supply and reducing monopolies and speculation that previously inflated prices unjustifiably. According to data from the Ministry of Housing, around 50,000 citizens were enabled to obtain residential lands in 2024, with the commencement of 30,000 new housing units on previously white lands. The residential ownership rate also increased from 62% in 2021 to 68% in the third quarter of 2024, thanks to these initiatives.

Housing programs relied on partnerships between the public and private sectors, where white lands were offered in government auctions or allocated to real estate developers to create integrated projects. Banks and financial institutions also provided financing support to citizens wishing to build on white lands, including mortgage loans supported by reduced interest rates and financing programs covering part of the land value.

These efforts have helped activate construction activity, increase investments in the building sector, and achieve a balance between supply and demand in the real estate market. They have also contributed to supporting non-oil economic growth and improving the quality of services and infrastructure in cities. As the system continues to be updated and housing programs expanded, the contribution of white lands in enabling citizens to own homes and enhancing social and economic stability is expected to continue.

The impact of the white lands system extends beyond the real estate market to the Saudi economy as a whole, contributing to enhancing non-oil economic growth and stimulating investment in the construction, industry, and services sectors. Statistics from the General Authority for Statistics in Saudi Arabia showed that the contribution of the construction and housing sector to the GDP increased by about half a percentage point between 2022 and 2024, driven by increased construction and building activity associated with the activation of white lands.

The system has helped create a more transparent and equitable economic environment by regulating land use within cities, stabilizing the real estate market, and encouraging long-term investment rather than short-term speculation. The tax revenues have also provided additional resources to support infrastructure, education, and health projects, contributing to improving quality of life and increasing the attractiveness of Saudi cities for investment and residence.

Socially, the system has helped mitigate the housing crisis, increase citizens' home ownership opportunities, and achieve family stability. It has also contributed to creating new job opportunities in the construction and industry sectors, supporting the localization of professions, and stimulating innovation and the adoption of modern construction technologies.

Financially, real estate development companies, building materials firms, and banks have experienced growth in revenues and profits with the increased demand for their services and products. The system has also enhanced the role of the private sector in urban development through partnerships with the government in implementing housing and infrastructure projects.

Despite these positives, the challenge remains to achieve a balance between development goals and owners' rights, ensuring sustainable growth amid economic fluctuations. As the system continues to be updated and policies developed, white lands are expected to maintain a pivotal role in supporting Saudi economic growth and achieving the goals of Vision 2030.

The financial institutions and banking sector play a crucial role in activating the white lands system and stimulating the real estate market, as real estate financing has become one of the key success factors in transforming white lands from dormant assets into active housing and commercial projects. With the increased supply of white lands and the trend of owners and developers towards construction, the demand for mortgage loans and financing programs has risen, prompting banks and financial institutions to offer innovative products that support citizens and investors.

Saudi banks, in collaboration with the Ministry of Housing, launched financing initiatives that include mortgage loans with reduced interest rates (up to 4%) and financing programs covering a percentage of the land value (at least 15%) to encourage construction on white lands. Real estate financing companies also offered special incentives to developers committed to implementing residential or commercial projects on these lands, including longer credit facilities and government guarantees.

These initiatives have contributed to increasing the number of homeowners and investors in the real estate sector and accelerated the pace of new project implementation. Banks have also provided electronic channels and digital platforms to facilitate financing procedures and enhance transparency in real estate transactions.

Partnerships between the public and private sectors have enhanced the effectiveness of the white lands system, as sovereign funds such as the Public Investment Fund participated in major development projects, injecting new capital into the sector, which contributed to diversifying funding sources and distributing risks. Real estate financing programs have also helped achieve the goals of national housing programs, increase home ownership rates, and stimulate the non-oil economy.

As the real estate market continues to expand and demand for financing increases, the financial institutions and banking sector are expected to remain a key player in supporting the activation of white lands and achieving sustainable urban development.

The white lands sector in Saudi Arabia has witnessed increasing competitiveness among local and international companies, with the opening of opportunities for foreign investors and the development of a more attractive and transparent investment environment. Before the system was implemented, competition was limited to local real estate development and contracting companies, but with the updating of regulations and allowing Gulf and international companies to participate in white lands auctions, the level of competitiveness has significantly increased.

In January 2025, the government announced the opening of the door for foreign investors to own lands in Mecca and Medina through joint-stock companies, creating new opportunities for collaboration and partnership in major development projects. International companies from Turkey, Italy, and Gulf countries have also entered into alliances with Saudi cement and contracting companies to exchange expertise and employ modern technologies in construction projects.

This competitiveness has contributed to raising the quality of projects executed on white lands and offering more diverse and innovative residential and commercial products. It has also led to improved cost efficiency and reduced some prices as a result of competition among companies to win contracts and government projects. On the other hand, competition has pushed local companies to develop their technical and managerial capabilities and adopt global standards in design and execution.

Competition remains governed by government regulations that ensure priority for national products and protect the interests of the local market, especially in the building materials sector, where the ministry imposes restrictions on imports to support local industry. As the system continues to be updated and more opportunities are opened for local and international investors, competitiveness in white lands projects is expected to increase, enhancing the quality of executed projects and contributing to achieving sustainable urban development goals.

The years 2024-2025 witnessed a series of important updates and developments in the white lands system, reflected in the level of regulation, application, and market impact. The Ministry of Municipal and Housing Affairs reviewed the classification controls for lands and adopted an advanced geographic information system to accurately monitor and evaluate white lands, enhancing the efficiency of monitoring and classification operations.

The government launched new auctions to offer white lands in Riyadh and Jeddah for residential and commercial use, as part of new city development programs such as 'Riyadh 8' and 'Jeddah 2'. A database for qualified participants was also prepared, and application procedures were facilitated through modern electronic platforms, contributing to increased transparency and expanding the competition circle.

The government collaborated with local and international investors to accelerate the development of areas classified as white lands, linking them to vital infrastructure such as new roads and public facilities. The building materials sector also witnessed an expansion in production lines and the introduction of environmentally friendly technologies through partnerships with Turkish and Italian companies.

On the financing front, banks launched new initiatives to support buyers of white lands, including reducing interest rates on mortgage loans and offering financing programs covering part of the land value. Saudi Arabia also participated in international conferences to showcase its experience in activating the white lands system as a tool to support sustainable urban development.

These developments have reflected positively on the real estate market's performance, with the residential ownership rate rising to 68% in 2024, and thousands of new housing units being implemented on white lands. As the system continues to be updated and partnerships between the public and private sectors are activated, these developments are expected to continue and achieve further growth in the Saudi real estate sector.

Despite the successes achieved by the white lands system in Saudi Arabia, it faces several challenges that require innovative solutions and renewed policies to ensure sustainable growth and achieve developmental goals. Among the most prominent challenges is the need to balance stimulating development without excessively pressuring owners, especially given the significant disparity between cities in terms of real estate demand and investment capacity.

Another challenge is updating real estate data and enhancing transparency in classification and evaluation, as continuous monitoring and evaluation of white lands require significant investments in geographic information systems and digital technologies, in addition to training technical and administrative staff. The market also faces challenges in providing adequate financing for new projects and ensuring that financial institutions can meet the growing demand for mortgage loans at reasonable prices.

On the other hand, white lands open wide opportunities for economic growth and urban development by stimulating investments in construction, industry, and services, creating new job opportunities, and supporting national housing programs. They also provide an opportunity to enhance partnerships between the public and private sectors, attract foreign investments, and improve the quality of executed urban projects.

The greatest opportunity lies in the government's continued updating of the system and developing regulatory frameworks, expanding support and financing programs, and adopting innovation and modern technologies in construction and real estate development. The role of the private sector and civil society can also be enhanced in monitoring implementation and ensuring fairness and transparency. With ongoing reforms and the development of partnerships, white lands are expected to remain a key driver for achieving sustainable urban development and supporting the goals of Vision 2030.