Mecca draws influx of foreign capital as Saudi Arabia eases property rules
MECCA, Saudi Arabia – The train from Jeddah glides into town with a reminder on the travel app that this stop is “for Muslims only.”
The station could be anywhere in the Gulf – dotted with souvenir shops, mobile phone counters and a Costa coffee kiosk. Once you step outside, though, a sense of history and holiness reigns.
For more than 1,400 years, Mecca has been defined by worship. Now, increasingly, it’s also shaped by real estate, with construction cranes dominating the skyline.
“Why would people like me, and others who can afford it, want to buy there? To relax, to be close to God,” Anis Alhabshi, Vice President of real estate developer Arabian Dyar, said in an interview with The Circuit. “It has spiritual value.”
Muslims are drawn to Mecca because it is the birthplace of the Prophet Muhammad and home to the Kaaba, the cube-shaped sanctuary at the center of the Grand Mosque. Every day, millions around the world face it during prayers. The Hajj pilgrimage – one of the five core obligations of Islam – must be performed at least once in a lifetime by Muslims who are physically and financially able.
Many also visit the city and nearby Medina year-round on Umrah, a shorter pilgrimage involving rituals such as circling the Kaaba and walking between two small hills to recall the story of Hagar and her son.
The sanctity of the city means only Muslims are permitted to enter – making Mecca a global spiritual capital with an audience limited by religious law. That exclusivity has always set Mecca apart from Saudi Arabia’s other tourism sites.
Just a four-hour drive away, the kingdom is building resorts at the Red Sea, opening up archaeological marvels like AlUla, and promoting futuristic attractions such as NEOM – all designed to bring in Western travelers and non-Muslim spenders.
In Mecca, the balance is shifting. Saudi Arabia is overhauling the holy city at breakneck speed to accommodate a new kind of pilgrim: those who want to stay longer, return often, and even buy a second home in sight of the Grand Mosque.
Developers such as Jeddah-based Arabian Dyar are racing to meet that demand. State-backed giants, including Jabal Omar Development Co., which has already built one of the world’s largest hotel and residential complexes in Mecca, are expanding.
A pivotal shift came in 2025, when Riyadh passed a real estate law allowing foreigners to buy or lease property in the kingdom for the first time in decades. The rules introduce “designated zones” for non-Saudis to own homes, including parts of Mecca. Details remain limited, and ownership is expected to be restricted to Muslims, but developers say the policy has already triggered calls from investors across the Middle East and Asia.
Dyar’s first project two years ago was marketed only to Saudis because foreigners were excluded by law. Under the eased rules, the company is trying to sell Muslims from abroad on the prospect of buying second homes in close proximity to the Grand mosque.
Religious tourism is one of Saudi Arabia’s most valuable non-oil assets – worth roughly $12 billion a year, about 20% of the non-oil economy. Planners of the kingdom’s Vision 2030 development blueprint want that number to soar, projecting $350 billion in annual pilgrimage-linked revenue early next decade.
“The devil is in the details,” Alhabshi said. “But the country is… opening up to the world.”
On the ground, the transformation is visible block by block. Entire neighborhoods are wrapped in scaffolding, and glass towers rise beside century-old streets once lined with pilgrim hostels.
Longtime residents are adjusting. “Having 1,000 hotels is not like having 100,” said Talal Alghuraybi, a retired soldier in his 60s. “Mecca has changed a lot. We don’t always recognize it anymore.”
Saudi Arabia expands alcohol access with new liquor stores
Two new liquor stores are under construction in the cities of Jeddah and Dammam as Saudi Arabia further eases restrictions on alcohol in a bid to draw more foreign talent to reside in the kingdom, Reuters reports.
It comes after reports that the country’s only sanctioned liquor store, in Riyadh, is now allowing a larger group of foreign residents to make purchases.
Non-Muslims holding a permit under the Premium Residency program, which grants visas to entrepreneurs, investors, property owners and talented individuals, are now allowed to purchase alcohol in the store, which was previously reserved for diplomats.
Loosening rules around alcohol has been a delicate task for the Saudi leadership, which has attempted to appease conservatives by cracking down on nightclubs known as “lounges” in recent months.
Quality Saudi office space tough to find as firms flock to Riyadh
Saudi Arabia’s pressure on international companies to establish their regional headquarters in the kingdom has been so successful, it has eaten up virtually all the top commercial real estate in Riyadh.
Prime and Grade A office spaces are fully occupied while Grade B occupancy has hit 99.4%, according to a survey by international property firm CRBE cited by Daily News Egypt.
Jeddah and the Eastern Province cities of Dammam and Khobar have also recorded rental growth and increased occupancy rates.
“The lack of available quality stock is somewhat hampering the potential of the market,” said CRBE’s Taimur Khan, Head of MENA Research.
UAE’s Agthia opens $24.5 million meat plant in Saudi Arabia
Abu Dhabi food and beverage group Agthia has opened a meat processing facility in Jeddah, Saudi Arabia’s second-largest city, as the kingdom looks to feed its growing population and the broader region pushes for greater food security.
The $24.5 million factory, located in Jeddah’s Industrial City 1, spans 9,000 square meters and is expected to produce over 9,000 tons of processed proteins – enough to export to more than 25 countries.
Agthia, which is owned by Abu Dhabi sovereign wealth fund ADQ, is in the midst of a five-year growth strategy in its push to become one of the region’s top food and beverage companies
Can Lucid jump-start the electric vehicle industry in Saudi Arabia?
Saudi Arabia’s push to develop an electric vehicle industry took a step forward last week when California-based Lucid Motors opened the kingdom’s first automobile factory.
With initial plans to assemble 5,000 EVs a year at its new plant outside the western port city of Jeddah, Lucid expects to boost that number to 155,000, underlining Saudi Arabia’s ambition to become a significant manufacturer. It would be a major leap as much for the country as for the luxury carmaker, which produced 7,180 vehicles last year at its sole factory in Casa Grande, Ariz., hampered by supply chain issues and recalls. By comparison, Elon Musk’s Tesla sent almost 1.4 million cars off its assembly lines in the U.S., Germany and China last year.
Riyadh is looking to supply the domestic market but also to transform the kingdom into a regional car hub as it diversifies its economy beyond oil revenue – and it’s looking beyond Lucid to meet its aims.
While the kingdom’s Public Investment Fund has put a total of $5.4 billion into the loss-making Lucid to become its largest shareholder, the government has also signed a $5.6 billion deal with China’s Human Horizons to develop and manufacture EVs. Meanwhile, major players from Hyundai to Peugeot have already said they see a road to Middle East manufacturing and sales of EVs running through Saudi Arabia.
Market research firm Mordor Intelligence valued the EV market in the Middle East and Africa at $2.7 billion this year, dominated by Tesla, Volkswagen, BMW, Nissan and Hyundai but estimates it will grow to $7.65 billion by 2028.
The kingdom is eyeing the domestic development of EV parts both for home and export as well. PIF, Saudi Arabia’s sovereign wealth fund, and Taiwanese manufacturing giant Foxconn founded the Saudi electric car company Ceer Motors in 2022 and the pair is in talks to build a $9 billion plant to manufacture microchips and electric-vehicle components.
While the new Lucid plant will see workers reassemble premade American-designed and built “kits,”, the kingdom is planning to domestically design and manufacture EVs as part of its Vision 2030 reform program to shake up almost every sector of the society and economy over the next seven years under Crown Prince Mohammed bin Salman.
“As Saudi charges toward its Vision 2030, our facility will pave the way for the country’s electric automotive industry and the expansion of the supply chain, and with the support of the Saudi Government, we are proud to drive local talent development in the technology industry,” Peter Rawlinson, CEO and chief technology officer of Lucid Group, said at the opening of the plant in Jeddah on Wednesday. “We look forward to delivering Saudi-assembled cars to customers in Saudi Arabia and beyond.”
But Saudi Arabia will face strong global competition in EV manufacturing and regional challenges from long-established car industries in Morocco and Turkey; the latter says its membership in the EU Customs Union gives it a strong advantage.
While the kingdom plans on 30% of car sales to be EVs by 2030, it may face consumer hesitation. Gasoline is subsidized at $2.35 a gallon this month – compared to an average $3.85 in the U.S. – and less than 1% of passenger car sales are currently electric.
Another major speed bump is a lack of charging infrastructure as well as maintenance and specialized technical knowledge.
However, the government launched the Saudi Electrical Vehicle Charging Infrastructure Development Initiative in 2021 with the target of 50,000 charging stations across the nation by 2025.
A poll by General Motors and Morningstar in June 2023 found that 63% of Saudi respondents were “strongly considering” a future EV purchase but only 1 in 5 said that they knew of a charging point in a convenient location for home or work.
The same poll found that knowledge of EVs in the kingdom was already very high, no doubt boosted by some of the kingdom’s flagship projects like the NEOM McLaren Electric Racing team competing in the Formula E championships as well as the off-road all-electric Extreme E race.
While the kingdom is aiming for net zero by 2060, most respondents to the survey said that it was the cost of fuel, potential savings and the improvement in available EV options that was driving them to look at buying an electric car.
