The ratings agency said the kingdom’s REIT sector remains small compared with regional peers, with 19 listed trusts valued at about US$4 billion as of August, but that new rules and property sector reforms could accelerate its growth.
“The new regulation permitting REITs listed on Nomu to invest in property development projects represents a major milestone in the evolution of the Saudi REIT market,” S&P said in its report Saudi REITs: A Market in the Making. “We expect it will encourage more listings and help the sector gain scale.”
New rules reshape Saudi REIT market
Saudi Arabia’s Capital Market Authority updated its REIT framework in July as part of efforts to deepen capital markets and align with Vision 2030. The changes allow Nomu-listed REITs to invest in development projects, strengthen disclosure requirements, and tighten oversight of fund managers.
The regulator said the reforms aim to attract more capital, boost transparency, and give developers new fundraising options. S&P added that the updates, together with wider economic diversification plans, should help modernise the asset-management sector and increase the real estate industry’s contribution to GDP.
The rule changes coincide with a new foreign ownership law taking effect in January 2026, which will permit non-GCC nationals to buy property directly across most regions for the first time. S&P said the measure would deepen market liquidity and attract more international investors.
“The new law will allow foreigners to own property directly across most regions, which could boost demand and liquidity in the market,” the report said.
S&P highlighted the continued role of Vision 2030 giga-projects such as NEOM, Qiddiya, Diriyah and The Red Sea as key drivers of long-term demand. “We expect these projects to sustain strong demand for both residential and commercial property,” it said.
Short-term pressures may arise from a five-year rent freeze introduced in Riyadh earlier this year in September. The measure, enforced by the General Real Estate Authority, prohibits any rent increases on residential and commercial properties within the city’s urban boundary. It applies to both new and renewed leases and requires all rental contracts to be registered on the government’s Ejar platform.
The freeze, designed to stabilise costs and enhance Riyadh’s appeal as a global business hub, could cap income growth for landlords and investors, S&P said. “Rental yields are expected to stabilise or soften in the near term as landlords adjust to the freeze,” the agency noted.
Despite near-term challenges, S&P said the outlook for Saudi REITs is improving as regulation matures and investor participation grows.
“The continued development of new products, such as development REITs, could transform the Saudi market over the next few years,” it said.