The “Expropriation of Real Estate for Public Interest and Temporary Seizure of Property” system came into effect in the Kingdom of Saudi Arabia yesterday, following the lapse of 120 days since its publication in the Official Gazette.
The system includes a set of procedures that guarantee the rights of property owners and project developers. These include the valuation of expropriated properties by certified appraisers registered with the Saudi Authority for Accredited Valuers, in accordance with fair market value.
An additional 20% is added to this value as compensation for expropriation. The system also grants compensation for the temporary seizure of properties equivalent to the market rental value, with an additional 20%.
The State Properties General Authority clarified that this system represents a qualitative shift in regulating and unifying the procedures for expropriation and temporary seizure, to develop them in simplified and transparent ways, ensuring fair compensation for property owners and entities involved in projects.
Among the most prominent features of the new system is ensuring that individuals affected by expropriation receive fair compensation calculated based on the market value of the property, with an added 20% as compensation for expropriation.
Compensation also covers any damages resulting from these procedures. With the owner’s approval, the system allows alternative options such as compensation with another property or shares in the project, along with exemptions that include real estate transaction tax fees and white land fees, subject to specific conditions.
In the case of temporary seizure of properties without expropriation, the system obliges the competent authority to pay financial compensation not less than the market rental value, with an additional 20% as extra compensation, in addition to compensation covering any resulting damages.
The system also establishes a committee known as the Expropriation and Temporary Seizure Committee, chaired by the Governor of the Authority and comprising representatives from relevant ministries. The committee is tasked with studying expropriation requests, verifying project eligibility, ensuring the availability of necessary funding, and confirming the impossibility of finding alternative government-owned land.
The system stipulates that expropriated properties must not be owned by any government entity, and that this measure should only be taken after exhausting all other available options. It also requires the project entity to prepare detailed studies on the social, economic, and security impacts of the measures taken, in addition to setting out a clear timeline for project implementation.
