The Saudi Cabinet approved a tax on urban land that is not developed, as well as rules regulating foreign investments in the Saudi Kingdom to own 100 percent of retail and wholesale businesses, the official Saudi Press Agency said, according to Reuters.
The 2.5% annual tax of the value of undeveloped land, that is allocated for residential or commercial use will be applied to owners of land lots exceeding 5,000 square meters, the agency quoted a Cabinet Statement.
The move is meant to help resolve the affordable housing shortage in the Kingdom, through putting up unused lands up for sale, to be purchased by developers.
The cabinet also approved rules, allowing full ownership of retail and wholesale operations by foreign investors, which exceeds the previous ownership ceiling at 75%.
Saudi Arabia is currently working on attracting more foreign investments, to preserve an economy which was hit with the low oil prices.
“Before these changes, there used to be significant land appreciation in Saudi Arabia and that meant that the rules were not encouraging anyone to develop,” said Managing Director of Property Consultants Colliers in Saudi Arabia, Imad Damrah, according to The National.
“Since these changes, already Colliers has been involved in a number of agreements between developers and the ministry of housing regarding affordable housing.”