How to Turn White Land Fees into a Profitable Development Project
As part of the ambitious national transformation driven by Saudi Vision 2030, the Kingdom’s real estate sector is undergoing a historic phase of restructuring and regulation aimed at enhancing land use efficiency and promoting sustainable urban development.
Among the most significant tools adopted by the state to achieve this goal are the White Land Fees not designed merely as a form of taxation, but rather as a smart economic policy to address the challenges of undeveloped land accumulation within urban boundaries and to encourage genuine investment and actual development.
Although these fees may initially appear as a financial burden on landowners, in essence, they represent a comprehensive investment opportunity aligned with one of the key pillars of Vision 2030: enhancing spending efficiency and maximizing the economic value of real estate assets.
Owners and investors who understand this vision can turn imposed costs into a driver for growth by planning development projects that meet market needs, contribute to balancing housing supply and demand, and encourage investors to become active partners in building prosperous cities and a diversified, sustainable economy.
Thus, the burden becomes an investment, and the fees turn into profits.
In this article, Salamah Law Firm explains how to transform white land fees into an exceptional investment opportunity.
Article elements
Ways to Transform White Land Fees into a Profitable Investment
There are several effective ways to convert the annual burden of white land fees into a golden opportunity that can generate significant returns for landowners, companies, institutions, and investors. The main strategies include:
1. Direct Sale
Direct sale is the simplest and fastest way to convert land into liquidity.
The land is listed for sale in the real estate market, and the owner negotiates with potential buyers (individuals, real estate developers, or investors) to complete the transaction for an agreed cash amount.
Once the sale is finalized and officially registered, ownership of the land transfers fully to the buyer, and the seller receives the agreed payment—thus avoiding future annual fees and all related liabilities.
2. Long-Term Lease
This type of lease agreement, widely recognized in Saudi Arabia, extends for long periods—typically between 20 and 99 years.
In this arrangement, the landowner does not permanently sell the property but leases it to a tenant (usually a real estate developer or major company). The tenant is then entitled to develop the land (build residential, commercial, or hotel facilities, etc.) and profit from it during the lease term, while the owner retains title and receives regular lease payments (annually or quarterly).
At the end of the lease period, the land and all its built structures revert to the original owner.
Advantages for the Landowner:
- Stable and continuous income: Provides long-term guaranteed returns, helping to cover annual fees and generate profit.
- Retention of ownership: The owner keeps the title, benefiting from any long-term appreciation in land value.
- Benefit from development: After the lease ends, the land returns to the owner with all built structures, significantly increasing its value.
- Reduced risk: The tenant typically assumes most of the development and operational risks.
However, an important regulatory update for Riyadh must be noted:
According to the new provisions governing lease agreements in Riyadh:
- The lessor is not permitted to increase the total rental value of residential or commercial properties, whether in existing or new contracts, within the urban boundaries of Riyadh for five years starting from September 25, 2025.
- If the property was previously leased, the new rent must not exceed the value of the last lease contract.
3. Contributing the Land to a Real Estate Fund
In this method, the landowner contributes the land as part of the capital (in-kind share) in a specialized real estate investment fund focused on property development.
The fund pools capital from multiple investors and uses it to finance various real estate development projects, including the one built on the contributed land.
The landowner then participates in the profits of the project (or the fund as a whole) proportionally to their contribution.
4. Contributing the Land to Off-Plan Real Estate Projects
Article 1 of the Real Estate Off-Plan Sales and Leasing Law defines an off-plan real estate project as:
“A real estate project intended to be developed for the sale or lease of developed lands or real estate units off-plan, before or during the execution and development works according to the agreed design or plan.”
Thus, the land may be contributed to a licensed real estate developer a legal entity authorized to acquire or lease real estate for the purpose of developing, selling, or leasing it, whether as a main or sub-developer who undertakes the development and construction on behalf of the landowner.
5. Self-Development by the Landowner
If the landowner prefers not to contribute the land to an off-plan project with a developer, they can personally undertake the development to remove it from white land fee liability. Some practical self-development methods include:
- Establishing a basic infrastructure area (electricity points, water, temporary drainage, internet) to lease to food trucks or cafés.
- If the land is near a busy commercial or administrative district lacking parking (e.g., King Abdullah Financial District or university areas), it can be converted into a paid parking facility.
- Building small storage units or warehouses, which qualify as land development and thus exempt the property from white land fees.
FAQs
1. What types of land are subject to White Land Fees?
Every undeveloped plot that is suitable for development within the urban boundary.
2. How can landowners be exempted from White Land Fees?
By taking one of the following actions:
- Direct sale.
- Long-term lease.
- Contributing the land to a real estate investment fund.
- Contributing the land to an off-plan real estate project.
- Self-developing the land.
3. Can land subject to White Land Fees be included in off-plan sales and leasing projects?
Yes, it can.
4. Can land subject to White Land Fees be contributed to real estate funds?
Yes, it can.
In Conclusion
Salamah Law Firm provides full consultation and legal support to help clients understand the new White Land and Vacant Property Fees Law and its implementing regulations.
If you wish to submit a legal objection, our firm is ready to assist you with professional expertise and procedural support.
