A New Phase in Vision 2030: From Strategic Exemptions to Broad Ownership

Saudi Arabia is making a bold push to rewire the rules of the game for foreign investment within the Kingdom. The proposed lifting of the 49 percent foreign‐ownership cap in publicly listed companies is emerging as the next frontier of that effort. This reform, scheduled to take effect on February 1, could change the calculus for active and passive global capital, drive fresh scrutiny of regulatory constraints, and test the Kingdom’s ability to follow through in what may prove to be a tight balance between opening up and preserving sovereign control.

Tracing the Arc of Saudi Capital and Property Reform

The reforms currently shaping Saudi Arabia’s economy are the latest step in a broader push toward diversification. Under Vision 2030, led by Crown Prince Mohammed bin Salman, Saudi Arabia has committed to diversifying its economy away from oil, increasing and empowering private-sector activity, and improving the country’s investment climate.

In 2019, the “strategic investor” regime allowed approved foreign investors to acquire majority stakes in listed Saudi firms, abandoning older constraints on shareholding and easing “Qualified Foreign Investor” (QFI) eligibility thresholds. While this granted flexibility in isolated cases, it left in place a de facto barrier to broader foreign control.

What is emerging now is a move to generalize that flexibility, turning what was once an exception into a norm. The current laws, still subject to regulatory and state approvals, would permit foreigners to own a majority, or even full control, in publicly listed companies by the end of 2025. News of the plan sparked a broad rally led by banks and real estate, with the Tadawul All-Share Index jumping more than 5 percent, in its biggest one-day advance in more than five years. Analysts now argue that when the cap is raised toward full ownership, passive index-tracking funds could funnel as much as $10 billion or more into Saudi equities.

In the real estate sector, regulators have delivered a parallel signal of intent. In July 2025, the Kingdom passed a new “Law of Real Estate Ownership by Non-Saudis,” replacing the previous 2000 law and going into effect in January 2026. Under the new statute, non-Saudis—whether individuals, companies, or nonprofit entities—may acquire full ownership, long leases, or usufruct (the right to use and benefit from the property) within “designated geographic zones.” This is not wholesale liberalization but a measured step toward openness, anchored in zone-based restrictions and awaiting detailed regulatory clarification.

Together, these twin reforms in both capital and property form a coherent architecture for economic liberalization. They underscore that the pending shift in equity ownership is not a standalone gesture but part of a broader strategy to reshape how capital and its control flow in the Kingdom.

Engines of Reform: Capital, Inclusion, and Financing Imperatives

Several converging pressures are driving Saudi Arabia to loosen its control over listed companies and property markets. The Kingdom faces a combination of necessity and opportunity, making reform both urgent and transformative.

First, the equity market has underperformed amid declining oil prices, heightened geopolitical risks, and concerns over wasteful public spending. In 2025, investor sentiment remained muted, and market underperformance has highlighted the need for further reforms that signal openness. Such measures could help reset perceptions and reignite capital inflows.

Second, fiscal pressures are mounting. Saudi Arabia is projecting a deeper budget deficit as Vision 2030 spending collides with weak oil revenues. On a monthly average basis, Brent crude slid from a January 2025 peak of $79 a barrel to $63 a barrel in December, its lowest monthly average since early 2021—well below the Kingdom’s fiscal breakeven of $94, or $111 when sovereign wealth fund spending is included. With revenues falling short of outlays, Riyadh faces growing pressure to attract external capital, explaining its push to relax foreign investment restrictions and open markets more broadly to global funds.

Third, the funding demands of Vision 2030 are immense. Megaprojects, infrastructure expansion, social programs, and efforts to diversify the economy away from oil require capital far beyond what modest sovereign surpluses can support. In a context of volatile oil prices and high fiscal breakeven thresholds, attracting both foreign direct investment and portfolio capital is essential. Easing ownership caps on listed companies could become a critical lever in mobilizing that capital.

Fourth, global inclusion in major stock indexes like MSCI and FTSE could dramatically magnify the effect of Saudi Arabia’s policy changes. International funds that follow these indexes are currently restricted in how many Saudi shares they can purchase under foreign ownership limits. If these rules are lifted, funds would be able to invest substantially more in Saudi stocks, unlocking billions of dollars in passive investment and giving fresh momentum to the country’s financial markets. Supporting this trend, Saudi Arabia revised its 2024 foreign direct investment (FDI) numbers in August, reporting near-record inflows driven by manufacturing, wholesale and retail trade, and construction. In the second quarter of 2025, FDI net inflows rose 14.5 percent year-on-year to $6.1 billion, reflecting continued strong appetite for the Kingdom’s reform-driven economy. UBS, JPMorgan, EFG Hermes, and others estimate that full liberalization could generate inbound flows of more than $10 billion.

Within the Gulf, Saudi Arabia is strengthening its FDI strategy amid strong competition from the UAE and Qatar. The UAE—ranked 10th globally in FDI—attracted record inflows in 2024, driven by policy agility, a mature business ecosystem, and large-scale infrastructure projects. Saudi Arabia’s proposed reforms seek to match this momentum and expand its share of global investment. These measures position the Kingdom to compete more effectively for investment and to demonstrate that its reform-driven economy can attract significant international interest.

Finally, real estate liberalization reinforces the narrative of systemic change. By combining expanded property investment in designated zones with proposed equity reforms, Saudi Arabia is signaling that these measures are part of a coherent strategy rather than ad hoc tweaks. Together, they create a compelling proposition for foreign investors seeking exposure to both capital and real estate markets.

But while momentum is building, the risks and constraints remain significant.

Where Reform Meets Regulation

One of the first things an astute global investor will ask is: What are the details? A headline shift in foreign-ownership caps is only the beginning—the real test lies in how regulators translate that policy into enforceable rules. If implementing regulations carry burdensome prerequisites, investors may remain hesitant.

Legacy sectoral limitations remain powerful barriers. Saudi Arabia maintains a “Negative List” excluding foreign participation in sectors such as core oil exploration, military manufacturing, detective services, and commercial agency. Even ostensibly open industries often require additional approvals from sectoral regulators. Foreign ownership in many firms may still be constrained by sectoral walls, limiting the investable opportunities.

Cultural, social, and political sensitivities present a subtler but nonetheless formidable  constraint. Policies in cities of intense religious significance—Makkah and Medina—continue to carry their own weight. Foreign ownership there, especially by non-Muslims, remains heavily circumscribed. The state must navigate public sentiment, nationalist sensitivities, and religious doctrine in deciding how much latitude to allow. By adopting “designated zones” rather than blanket liberalization, the real estate law reflects that trade-off.

Perception and trust are also at stake. Foreign capital will only flow if investors believe rules will not be reversed, that enforcement will be reliable, and that structural governance standards will be improved. If reform announcements turn into partial or vacillating implementations, reputational costs could outweigh the benefits.

Fiscal pressures—sustaining subsidies, rising social spending, managing public finances, and volatility in oil prices—adds another layer of complexity. The same macroeconomic constraints that are driving reform could delay or complicate implementation, especially if regulatory agencies struggle with resources.

Liquidity and governance challenges in listed firms are yet another obstacle. Even if foreigners can own majority stakes, many domestic companies suffer from low trading volumes, high ownership concentration, weak legal protections for shareholders, or limited disclosure. Improvements in market infrastructure and governance are necessary to translate ownership liberalization into significant capital inflows.

Hence, implementation matters even more than the headline policy. The credibility of Saudi’s commitment will rest on transparency, regulatory coherence, and enforceability.

Can Saudi Deliver Reform?

If the reforms are delivered largely as promised, the implications could be profound. Passive flows alone may deliver billions of dollars over subsequent years. Active institutional capital could follow, especially in sectors with strong growth prospects like healthcare, renewables, digital, and infrastructure. Listed Saudi companies themselves may respond proactively by enhancing disclosures, adopting modern board practices, reshuffling capital structures, or listing formerly private operations domestically rather than abroad. In real estate, the designated zone model offers a testbed for reconciling openness with sovereignty. If the implementation is effective, developers and global capital may increasingly compete for high-potential zones in Riyadh, Jeddah, and special economic hubs.

But if reforms falter, the risks are substantial. A half-open door might channel only trickles of capital, dampening expectations and generating investor disappointment. Market performance could disappoint, eroding the credibility of Saudi’s reform narrative. Regulatory ambiguity or flip-flopping could undermine trust and provoke internal and external backlash, slowing additional liberalization efforts.

In the best-case scenario, Saudi Arabia could recalibrate its position on the global investment map, shifting from a reluctant recipient of foreign capital to an active competitor in the global allocation game. The Kingdom could capture flows that for decades have favored emerging markets in Asia or Latin America, accelerating its non-oil growth trajectory, deepening its capital markets, and cushioning itself against oil price volatility.

Yet, even if the full arc of transformation is not realized by 2030, the move could still mark a pivot, signaling that Saudi Arabia is serious about recalibrating control and not just posturing. The next 12 to 18 months will reveal whether this is a turning point or merely a headline.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.