Saudi Arabia has made a bold move to reshape its real estate sector. On Tuesday, the Saudi Cabinet approved critical amendments to the White Land Tax system.
Real estate experts say this marks a turning point. The system now encourages development over speculation. Investors must act or face higher fees. These actions directly respond to that directive.
The revised system introduces three clear phases. In Phase 1, the tax applies to undeveloped land over 10,000 square meters in specific zones. Phase 2 includes developed land of the same size or plots owned by one entity. Phase 3 expands to developed land of 5,000 square meters or total holdings over 10,000 square meters per city.
However, The Ministry of Housing can now apply multiple phases in one city. Currently, Riyadh, Jeddah, Dammam, and Makkah are under Phase 1. Together, they account for over 411 million square meters and 5,500 payment orders. The system has now expanded to Madinah, Asir, Jazan, Taif, and Tabuk.
The old flat 2.5% tax rate lacked urgency. The new model raises fees up to 10%, depending on land use. This forces landowners to develop their plots or pay more. Bin Abdullah believes the change will boost housing supply and reduce land hoarding quickly.
Khaled Almobid, CEO of Menassat Real Estate, called the changes timely. He said high land prices hurt everyone—developers, residents, and the broader economy. These amendments offer a needed correction. He added that the system now rewards construction, not speculation.
Almobid said the reforms would create jobs across 150 real estate-related sectors. This will help the economy beyond just housing. He expects this will lead to fewer rent increases and better housing access.
The central goal remains clear: boost housing supply and reduce land hoarding. The White Land Tax is no longer symbolic. It’s a serious tool for reform. With stronger incentives and broader coverage, Saudi Arabia is pushing for real urban development. As more land enters the market, housing prices should begin to stabilize.
By boosting housing supply and reducing land hoarding, the government is taking a firm step toward solving its real estate challenges.
