Saudi Arabia

Legal and institutional framework

Saudi Arabia is an Islamic country, and Islamic Sharia is the basis of the constitution and the laws. The legislative framework supports a system where the highest level of power is help by top governmental tiers including the king, the Council of Ministries, the Council of Economic Affairs and Development and the Shura (Consultative) Council. The central government has a very prominent role in decision-making and setting out the policy framework, and the constitution also provides regulations for lower (local) government levels. The executive and legislative arms report to the king and the Council of Ministers. 

Three early statutes form the basis of the spatial planning process in the country, namely the Roads and Building Statute of 1941, the Municipalities and Villages Law of 1976, and the Law of Provinces of 1992. The current spatial planning legislation is associated with multi-level spatial planning. Urban planning is governed by the National Spatial Development Strategy approved by Council of Ministers (Resolution No. 151 in 2001) and by the subsequent preparation of regional, structural, directive and local development plans. These constitute an integral part of spatial planning legislation. 

Resolution No. 157 of 2007 sets the rules for Urban Growth Boundaries called Nitaq Omrani, which delineate the appropriate future boundaries for urban activities, development and infrastructure. Resolution No. 320 of 2012 calls for the establishment of standing committees in all regional municipalities, or Amanats, to consider all matters regarding the coordination and monitoring of projects and to manage and resolve emerging issues and conflict. 

Other important legislations concerning spatial planning and land management include the following: 

• Basic Law of Governance, issued by Royal Order No. A/90 dated 1/3/1992, provides for the functions of the sovereign authorities of the state and sets out the legal tools for issuing laws and imposing taxes. 

• The Law of Regions, issued by Royal Decree No. A/92 dated 2/9/1977, provides for the division of the Kingdom into regions under the supervision of rulers and governors. It also specifies roles in terms of regional and service development. 

• The Municipal and Rural Areas Law, issued by Royal Decree No. M/5 dated 2/9/1977 as the System of Governance Resource Constraints law, addresses the functions of municipalities and entrusts the latter with all activities relating to restoration, enhancement and safeguarding of health, security and safety. 

• The Roads and Buildings Law, issued in 1941, regulates planning and sets out construction formalities and requirements, including zoning, licensing health and safety measures. 

• The Municipal Property Law, issued by Royal Decree No. M/64 dated 20/12/1972, governs the preservation and use of public and private assets owned by municipalities and Amanats. 

• The Law Governing the Distribution of Barren Lands, issued by Royal Decree No. M/26 dated 28/9/1968, provides conditions for lands to qualify as barren and distribution to eligible individuals and companies for operation and potential ownership. 

• The Public Service Protection Law, issued by Royal Decree No. M/62 dated 5/9/1985, requires that plans and instructions be obtained from the competent authority. 

• The Implementing Regulations Setting out the Rules for Urban Until the Year 2029, issued by Ministry of Municipal and Rural Affairs resolution No. 66000 dated 14/10/2014, sets out the phases for urban development and the corresponding implementation measures. 

• The General Environment Law, issued by Royal Decree No. M/34 dated 15/10/2001, aims to preserve, protect and develop the environment and safeguard it from pollution. It provides for the inclusion of environmental planning as an integral part of overall development planning in all industrial, agricultural, urban and other areas. 

• The Law Governing the Ownership and Allotment of Real Property Units, issued by Royal Decree No. M/5 dated 24/4/2002, provides the requirements and procedures for the allotment of real property units. 

• The Law Governing the Registration of Real Property, issued by Royal Decree No. M/6 dated 24/4/2002, provides the requirements and procedures for registering real property rights at a public register. 

• The Expropriation Law, issued by Royal Decree No. M/15 dated 12/5/2003, entitles ministries, governmental authorities and other entities with public standing to expropriate real estate property for public interest in return for fair compensation. 

• The Law of Unpleasant, Health-Damaging and Hazardous Establishments, issued by Royal Decree No. M/14 dated 19/6/2002, subjects the establishment, operation or expansion to prior licensing from competent authorities. 

• The Law Imposing Fees on Idle Lands, issued by Royal Decree No. M/4 dated 24/11/2015, imposes a fee on unused lands allocated for residential or commercial. 

Policies relating to spatial development addressing social, cultural and ecological principles were progressively articulated in the National Settlement Strategies and Development Plans between 1980 and 2000. 

The first National Spatial Strategy was adopted in 2001. The main body responsible for its implementation is the Ministry of Municipal and Rural Affairs (national/regional level) in cooperation with the Ministries of Interior, Agriculture, Transportation and Economic and Planning for the national level and government bodies of a special nature at all levels. Enhancing the capacity and expanding the coverage of municipal services is key to implementing the National Spatial Strategy, which aims to reduce regional disparities by achieving balanced and sustainable development throughout different regions of Saudi Arabia. 

In response to the increase in cities, towns and villages (reaching 258 in 2014, more than four times than in 1968), the Ministry of Municipal and Rural Affairs has established new municipal agencies and strengthened the institutional and staff capacities of existing agencies. The shift towards administrative decentralization was bolstered by expanding citizens’ participation in the management of local affairs, electing half of the members of municipal councils and establishing a total of 17 Amanats, to which local municipalities report. In 2005, as part of the decentralization of power and responsibility of mayors and heads of municipalities, the Ministry issued an extensive library of planning guidelines and design standards that have a focus on urban planning and urban development control responsibilities. These include Urban Design Standards, Community Centres and Neighbourhood Manual, Street Fixture Manual, Regional Plans Preparation and Updating Manual, Architectural Heritage Manual, Public Facility Planning Standards and other manuals and standards.

The government and institution bodies associated with urban planning in Saudi Arabia are: 

• The sovereign entities (national level), which includes the king, the Council of Ministries, the Council of Economic Affairs and Development and the Shura Council, responsible for issuing legislation related to urban issues;

• The Ministries and Departments concerned with urban planning (national level), which oversee proposing, implementing and supervising the laws, regulations, plans and programmes at the national level; 

• The Ministry of Municipal and Rural Affairs (national/regional level), which is the authority in charge of urban planning; 

• Other key ministries (national/regional level), including the Ministry of Transport, Ministry of Economy and Planning and the Ministry of Agriculture, which are in charge of the five-year plans; 

• Amanats (local level – province), which are service bodies that have corporate personality (i.e. they are legal entities distinct from their members); there are 17 amanats;

• Municipalities (local level – city); there are 268 municipalities;

• Regional councils (regional level), led by His Highness the Prince (Amir) of the region, and oversees economic, social and urban development, identifying the needs of the regions and specifying regional development projects; 

• Bodies with special nature (national, regional and local levels), which are the authorities linked to urban planning, such as the High Commission for the Development of Arriyadh, Makkah and the Holy sites Development Authority, Al-Madinah Al-Munawarah Development Authority, Royal Urban Regeneration Company, AL-BALAD ALAMEEN for Development and Urban Regeneration in Makkah, the Saudi Commission for Tourism and Antiquities, Saudi Organization for Industrial Estates and Technology Zones, Saudi General Authority for Investment and Economic Cities Authority. 

Land tenure

The government is responsible for administering land efficiently and fairly [2]. Since 1932, the Kingdom authorities have adopted The Ottoman Land Code of 1858 (with some modifications), taxing land and property to some extent, without neglecting the Islamic concepts [3]. According to Islamic Law, property rights are divided into three categories: public, state and private. Public property such as forests, pastures and rivers are under the supervision of the state to ensure that no exploitation of it occurs contrary to the public benefits [2]. State-owned land (emir) includes lands that belong to the state, whether occupied or not, and the state has the right to give access and usufruct rights to individuals. Private ownership (mulk) carries a similar notion to western terminology of “freehold" [3].

The Ministry of Justice (land tenure, cadastral survey and registration regulations and standards) and the Ministry of Interior are responsible for land tenure in Saudi Arabia. Until recently, no central registration system for land rights existed; property transfers occurred through public notaries, who marked the title deeds held by landowners [7]. The Real Property Registration Law establishes a real estate area in each region to evidence real property rights, including all amendments, and to gather deeds, judgments and other relevant documents. Under this law, all real estate rights arising from acquisitions under Islamic sharia must be recorded in the real estate register. The Realty in Kind Registration Law, issued by Royal Decree No. M/6 on 9/2/1423H, was enacted to create a transparent land identification, ownership and registration system, which will ultimately cover all real estate in Saudi Arabia. Under the Law, a copy of the cadastre (title deed) is issued to the owner of a plot of land or a building once the ownership is entered into the cadastre (Article 67). This title deed certifies and confirms the ownership of a plot of land or a building. Article 2 of the Law provides that “[t]he register shall have an absolute confirmation power, and its content may not be objected after the elapse of the defined periods for objection stipulated in this law unless based on the breach of the Sharia requirements, or on forgery of such”.

The registration process starts with the delimitation of property, which includes an invitation for rights holders to produce evidence of their rights, followed by mapping and surveying. Authentication procedures are then conducted under the supervision of a judge appointed by the tribunal of the area wherein the property is located. Following the registration process, all acts creating, transferring, and amending real estate rights, such as real estate divisions, testaments, endowments, inheritance, mortgage and all final judgments, must be registered. The real estate registry issues title deeds to real property owners and real estate certificates. 

The application of the Law is still limited to specific areas and is unlikely to be implemented beyond these areas. The predominant practice in Saudi Arabia is titling and conveyancing through notaries (under the Ministry of Justice along with the courts) under Executive Regulation of Notaries Public Jurisdictions (‘Notaries Regulations’), Ministry of Justice Circular 13/T/2460 on 25/5/1425. In the case that a plot of land is located in an area where the Law has not been implemented, a title deed issued to the owner by a regional government employee of Shari’ite qualifications (Notary Public) or a court is used to certify and confirm the ownership of the plot of land or building. In 2015, the Ministry of Justice passed resolution No. (5135) dated 4/3/1437 AH, providing that the Law applies to certain real estate zones [8].

The Ministry of Municipal and Rural Affairs is responsible for surveying, cadastral mapping and computerization activities. A cadastral survey is carried out directly by the municipality for the approved plans or by consulting engineers appointed by landowners under the supervision of the municipality for private plans or projects. The cadastral survey must follow technical standards and include determining content. All cadastral information is archived at the Ministry of Justice as it is the authority that registers and changes ownership in the cadastral record. 

The Kingdom has introduced reforms to address the land and housing crisis, along with a new computerized land registry system in 2015 [5]. This is intended to further improve access to and security of land tenure, which is crucial to the health and development of the Saudi business climate; it is believed that these improvements will increase access to capital and encourage investment in long-term productivity [6].

Land value

There are no property taxes in Saudi Arabia, with the exception of the “white land” tax. To increase the availability of developed lands, ensure residential lands are affordable, protect fair competition and combat monopolistic behaviours, the Law Imposing Fees on Idle Lands issued by Royal Decree No. M/4, dated 24 November 2015, imposes an annual fee on idle lands owned by one or several non-governmental physical or moral entities at a rate of 2.5 per cent of the value of the land. Idle lands are defined, under the same law, as “vacant lands allocated for residential or commercial residential purposes within the urban boundaries”. The Ministry of Housing (MOH) has been mandated to enforce and implement the Law.

Fees and penalties collected are deposited in a special account maintained before the Saudi Arabia Monetary Agency and spent on housing projects, including public services and public utilities. The Ministry of Housing is entrusted with implementing the Law Imposing Fees on Idle Lands in coordination with relevant authorities. 

The white land tax instigated a shift in supply-and-demand dynamics that is likely to significantly reduce prices, though for most micro-, small- and medium-sized enterprises, the cost of purchasing land will remain extremely high and one of the main challenges for entrepreneurs in Saudi Arabia when attempting to acquire land for business purposes and expansion [7].

Services within municipalities have improved substantially, which can be attributed to the government’s financial support to the municipal sector. The government recognizes the importance of expanding public services and facilities in Saudi cities, towns and villages and developing the technical and administrative capacities of municipal agencies. The government service sector has grown at an annual rate of 3.7 per cent (9th National Development Plan 2010-2014), although the target growth rate in the 8th Development Plan was 3.8 per cent from 2005 to 2009. The government paid particular attention to enhancing the capacities of municipal agencies and allocated a considerable proportion of government expenditures to strengthen municipal and local finance. Investment in the government services sector rose by 12.8 per cent per annum. 

These developments improved the coverage of municipal services in all administrative regions and increased the proportion of the population covered by municipal services. All regions, especially those experiencing a shortage of services in the past, developed and updated their municipal services, contributing to a regionally balanced development in the country. Such development based on land taxation is still limited compared to the municipalities’ total expenditures. 

Expansion of the municipal services sector provided local economic opportunities, particularly for the private sector. Implementing municipal projects, including the physical construction of roads, infrastructure and public facilities, contributes to local economic activity and supports the private sector. Municipal agencies also seek effective and efficient measures to improve their services by privatizing certain public services, including transport, the collection of municipal revenues, cleaning, waste management and investment management in municipal properties. The government’s efforts focus on less developed regions to reduce disparities regarding available municipal public services and infrastructure among regions, which are prerequisites for a balanced social and economic development. 

Although Saudi Arabia has one of the lowest population densities in the world, the price of land in the Kingdom’s major cities has reached unprecedented levels in recent years [9]. In 2022, the Saudi Authority for Accredited Valuers (TAQEEM) published a manual to provide harmonized guidelines for the actors in the sector. 

Land use

Built up areas in Saudi Arabia account for only 41,224 km², or 1.9 per cent of land use. Permanent cropland accounts for 66,640 km² or 3.1 per cent, with another 34,395 km² or 1.6 per cent of arable land. Forest and other woodland constitute just 0.5 per cent of land use, at 9,770 km². 

The county is experiencing rapid urbanization, with continuing currents of rural migration toward urban centers. Non-residential land uses (urban amenities, vacant land and open space) account for slightly over two-thirds (roughly 68 per cent) of the total areas of the Saudi cities. The vacant land category is characterized by areas with urbanized land and clear street layouts that are not yet occupied. In principle, they represent future urban developments. 

Most Saudi cities allocate an adequate proportion of land to streets (measured as the per centage of land area covered by streets from the total land area of the city). Generally, the land allocated to streets varies between 10.6 per cent and 28.9 per cent, with an average of 22.3 per cent. These values appear to be relatively low because open space – quite high in most Saudi cities – is included. However, when open space is excluded, the average land allocated to city streets increases to 27.8 per cent.

Subdivided land is counted as a suburban area regardless of its built-up density. Therefore, urban and suburban built-up areas separated from the main urban area by unbuilt subdivided land are considered contiguous. Informal subdivisions are areas that have been subdivided for urban use but lack visible evidence of legal formality, such as paved streets, streetlights or sidewalks. 

Saudi Arabia is the world’s largest oil exporter and the second-largest oil producer, controlling the second- largest oil reserves and the sixth-largest gas reserves. Several large oil fields are present in the country, particularly in the east of the country.

Land development

Land ownership has historically created huge areas of open or vacant land inside city boundaries. In most of the cities of Saudi Arabia, open space and vacant land constitute up to 46 per cent of the total land within city boundaries. ‘White land’, as open and vacant land is called, is served with state infrastructure and, despite the fact that it is complete with roads, water and streetlights, sits empty. This land is located mostly in the middle of the city and the city centers. In some cases, it has remained empty for years because the owners have no incentive to build on them or they draw benefits from some forms of speculation. The existence of white land in Saudi cities is a major cause of low densities, wasteful use of the space, inefficient usage of the street network, unproductive infrastructure investment and lack of available land for affordable housing [4].

In addition to Comprehensive Strategic Plans and Local Plans put together by the urban development agencies and municipalities, the Ministry of Municipal and Rural Affairs sets Urban Growth and Development Boundaries, known as the Nitaq Omrani. To rationalize the physical growth of Saudi cities, local plans are developed for areas defined within the Nitaq Omrani. These plans aim to apply regulatory controls through land use, planning, building controls, provision of infrastructure and provision of urban services. Nitaq Omrani delineates the appropriate future boundaries for localizing urban activities and urban development during a specific period and providing public services and facilities to realize the maximum economic efficiency of available resources. Additionally, it aims to reach the optimal sizes of cities and villages following the directions of the national spatial development strategy. 

As part of the Saudi Green Initiative, the country declared its intention to achieve net-zero greenhouse gas emissions by 2060 and pledges to plant 450 million trees and rehabilitate 8 million hectares of degraded land by 2030, among other initiatives [12].

Land expropriation 

Royal Decree No. M/15 dated 3/11/1424 AH on the system of expropriation of real estate for the public benefit and temporary seizure of real estate allows ministries, government departments and other bodies with a public legal personality to expropriate real estate for the public benefit in return for fair compensation, after verifying that there are no government lands and real estate that meet the needs of the project. It is not permissible to expropriate real estate except to implement a project approved in the budget.

Article 11 of the executive regulations for the system of expropriation of real estate for the public benefit and temporary seizure of real estate (issued by Cabinet Resolution No. 54 and dated 11/2/1437) determines the cases in which compensation is granted, which vary according to the type of land and the area excised.

The Privatisation Law offers support for the acquisition of land. Following article 38, properties may be expropriated or compulsorily purchased if this is necessary to accomplish a public-private-partnership project. This provision is subject to the laws of expropriation and compulsory purchase for the public benefit [13].

Land dispute resolution

The most common forum for the resolution of contractual disputes in Saudi Arabia remains the Courts, and for most leasing transactions this is adequate. The country has a well-structured formal system to resolve conflicts and disputes related to land rights and parcel boundaries. However, there is no system of judicial precedent, giving judges the power to use independent legal reasoning to decide. Saudi judges tend to follow the principles of the Hanbali school of jurisprudence and are noted for their literalist interpretation of the Qur’an and Hadith. Because the judge is empowered to disregard previous judgments (either his own or of other judges) and may apply his interpretation of sharia to any case, divergent conclusions arise even in apparently identical cases, making predictability of legal interpretation difficult. 

Royal Decree No. M/34 of 16 April 2012 ‘Arbitration Law’ and the recently established Saudi Centre for Commercial Arbitration modernized the regulatory framework for arbitral proceedings in Saudi Arabia and signaled the Government’s endorsement of arbitration as an alternative and viable dispute resolution mechanism. 

The Saudi Real Estate Arbitration Center specializes in resolving and settling real estate disputes arising between the parties to the dispute. It aims to find alternative solutions to the courts by resolving disputes arising from programs supervised by the General Real Estate Authority, such as rental programs and owners' associations [14] [15] [16].

Key interventions

The Future Saudi Cities Programme is a joint programme developed by the Saudi Ministry of Municipal and Rural Affairs (MoMRA) and UN-Habitat, implemented in close cooperation with the municipalities of 17 major Saudi cities. The cities have been selected based on their different population sizes, geographic distribution, and a range of criteria based on capacities and economic potential to create a more balanced regional development among the cities of Saudi Arabia. The programme contributes to developing a new vision and a strategic planning framework for a sustainable urban future in the Kingdom of Saudi Arabia that follows international standards and fully aligned with the Municipalities New Strategy. The aim of the program is an improvement in urban planning and design and the effective implementation of urban plans’ outcomes by local authorities and ministries. This is achieved by building on i) the promotion of high-quality urban design supported by practical implementation strategies incorporating, ii) economic and financial tools and iii) effective legal and institutional structures.

UN-Habitat has also been involved as well with Public Investment Fund in urban regeneration of central Riyadh City. The collaboration focused on building an engagement plan for citizens and expatriates in the urban regeneration area.

In addition, UN-Habitat is currently building partnerships with Arriyadh Development Authority and Madinah Development Authority. These focus on supporting the achievement of SDG Goal 11 in Riyadh and globally, and on supporting the measurement of development in Madinah Region through support to the local urban observatory.

Key documents and links

[1] UN-Habitat/GLTN (2024). Saudi Arabia Land Sector Assessment Background Paper.

[2] Sait, S. and Lim, H. (2006). Land, Law and Islam: Property and Human Rights in the Muslim World. London & New York: Zed Books.

[3] Zakaria, N., Zaiton Ali, Z., & Awang., M. (2019). White Land Tax: Evidence in the Kingdom of Saudi Arabia. Journal of Accounting and Auditing: Research & Practice.

[4] UN-Habitat (2015). Spatial Capital of Saudi Arabian Cities: Street connectivity study for the City Prosperity Initiative. 

[5] World Bank (2016). Business Reforms Pick Up in Middle East and North Africa, Despite Conflict, Says Doing  Business Report. 

[6] De Soto, H. (2000). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.

[7] Rahman, A., De Giorgi, G., & Linjawi, S. (2018). Kingdom of Saudi Arabia provincial competitiveness study. World Bank. 

[8] Bureau of Experts at the Council of Ministers. (2002). The Realty in Kind Registration Law. 

[9] Dahlan, A. (2015). Land Fees and Barriers to Real Estate Development. Okaz Newspaper.

[10] FAO (2022). FAO participates in the Kingdom of Saudi Arabia World Desertification and Drought Day 2022. 

[11] UN-Habitat, Future Saudi Cities & Ministry of Municipal and Rural Affairs (2019). Saudi Cities Report. 

[12] United Nation (2021). UN Country Results Report 2021: Kingdom of Saudi Arabia 2021. 

[13] Ministry of Municipal and Rural Affairs. (2022). Laws and regulations. 

[14] Ministry of Municipal and Rural Affairs (2022). 

[15] Saudi Arabia’s National Unified Portal for Government Services. 

[16] Saudi Real Estate Arbitration Center.

[17] UN-Habitat, Future Saudi Cities, &Ministry of Municipal and Rural Affairs (2018). Saudi Cities Report.