Industrial cities run by MODON
Saudi Arabia’s 24 “industrial cities”, comprising 92.78 million square meters, are supervised by the Saudi Industrial Property Authority (MODON). Each industrial city has an on-site Administration to handle the day-to-day needs of investors and oversee the site development process.
MODON’s primary task is planning industrial cities in the Kingdom and to encourage establishment, development and management, maintenance and supervision including but not limited to, the following:
- Implement the strategy to develop industrial cities;
- Develop rules and procedures relating to the establishment of industrial cities and their development, management, maintenance and operation.
- Propose appropriate locations of land belonging to the state to establish industrial cities and recommend necessary suggestions to the Supreme Economic Council for approval and adoption by the Council of Ministers for specific industrial city. Also, acquire land owned by the private sector and licensing for its development by the private sector for specific industrial cities according to its regulations and executive statute.
- Cooperate with relevant authorities to provide services and necessary facilities to set limits of industrial cities.
- Encourage the private sector to establish, develop, manage, operate and maintain industrial cities.
- Grant licenses to developers/operators of specific industrial cities in accordance with its bylaws.
- Take necessary steps to protect the environment in specific industrial cities in coordination with the relevant authorities.
- Supervise the performance of developers/operators to ensure their commitment to the terms of development and operation, or any one of these; and successful implementation of terms and conditions.
- Seek to resolve disputes amicably between the developers and operators of industrial cities and between specific users or tenants and residents.
- Encourage establishing modern technology zones and their expansion by providing necessary services and support entrepreneurs for their innovative ideas.
The land in the industrial cities is rented for a specified period of 25 years. The current tenants are entitled to refuse to renew the lease on prevailing conditions. The land rents in the industrial cities differ from one city to another, these are from SR 1 (US $ 0.26) to SR 2 (US $ 0.53)/square meter per year, includes fee for operation and maintenance. Allocation fees (one-time on allocation only) differ from one city to another starting from SR 4 (US $ 1.06) to SR 50 (US $ 13.33).
Other Means
There are other options for acquiring land for industries in Saudi Arabia for investment purposes. Industrial land is available in:
Municipality lands allocated for industrial purposes
The land in urban area and its surrounding fall within the purview of the municipality, which grants license for developing industrial and commercial establishments.
The newly enacted Regulation of Ownership and Investment in Real Estate for Non-Saudis allows for “a non-Saudi investor of natural or legal character licensed exercising any professional, vocational, or economic activity” to “possess real estate required for performance of that activity.”
This right includes “property necessary for his residence and housing for his workmen.” However, if the “license includes the purchase of buildings or land for the construction of buildings thereon… the total actual costs of the project – both land and buildings – shall not be less than SR 30 million” (US $8 million). Development of this land must be carried out within five years of the purchase date.
Foreign investors may only lease municipally owned land for a pre-approved purpose. Typically, the municipality will designate a piece of land for a specific use and then hold a public auction at which private bidders compete for the right to develop the site and manage it according to the city’s plans.
Contact the Ministry of Municipalities and Rural Affairs for information on how to participate in a municipal auction.
Industrial lands by the Royal Commission for Jubail and Yanbu
The Royal Commission for Jubail and Yanbu supervises two major industrial sites located on Saudi Arabia’s eastern and western coasts. Investors in these areas are focused on various oil and petroleum-related activities. Businesses are classified in the zone in three tiers:
- Primary industries, including ethane and methane, petrochemical and fertilizer manufacturers.
- Secondary industries, such as plastics and synthetic materials producers;
- Light industries and Support services.
The lease terms are fixed and renewable. Lease terms for the various types of business are:
- Primary industries – 30 year lease;
- Secondary industries – 20 year lease;
- Support and light industries – ten year lease.
Jubail
Jubail is located on the Arabian Gulf.
Details of Jubail's infrastructure
Investor services in Jubail
There is a plan to develop 14,000 hectares to nearly double the Jubail industrial zone, compared to the area’s current size.
Yanbu
Yanbu is located north of Jeddah on the Red Sea. It hosts major industrial projects, including three oil refineries, a petrochemical plant, and several small and supporting industries.
Details of Yanbu's infrastructure
Investor services in Yanbu
Private Industrial lands owned by development companies licensed by MODON
Investors may purchase or lease land owned by private developers licensed by MODON. The role of MODON is to direct investors to these industrial cities licensed by MODON and to provide them with extensive background data, methods of communication with these industrial cities and to serve the investors in acquiring industrial land in these privately developed industrial cities.
The investor negotiates with the owner of the license to determine the value of the land or lease without the intervention of MODON. The investor should undertake the required procedures for the transfer of ownership of the land in accordance with the prevailing regulations of the Kingdom, making sure of title and ownership of land to the seller / developer via notary and land registration, and the issuance of the appropriate instrument from the court of proof of purchase of the land, or by signing an agreement between the developer and the investor to lease the land and determine the duration of the lease with a document from the concerned authority in the Kingdom.
Once a private purchase agreement has been negotiated, an investor must go to the local Shariah Court to ensure that the land in question is duly owned by the seller and record transfer of title to the buyer. The Court will stamp a title document to indicate the legal transfer of ownership.
MODON allocates to investors only the industrial lands supervised by MODON. The other organizations allocate their private industrial lands according to their own conditions directly.