The Real Estate Authority detects violations of off-plan sales by 25 developers

In a decisive move aimed at enhancing transparency and protecting the rights of those involved in the Saudi real estate market, the General Authority for Real Estate announced that it had detected a series of serious violations related to off-plan sales without obtaining the necessary licenses. This intensive monitoring campaign covered the cities of Riyadh, Jeddah, and Mecca, where 25 real estate developers were apprehended for illegally marketing and selling properties and receiving payments from buyers.

the details of the violations and legal procedures,
stating that its monitoring teams, through field visits and electronic surveillance, were able to identify these developers who violated the explicit regulations governing the sale and leasing of off-plan real estate projects. The core violation lies in commencing sales and collecting funds from citizens and investors without legal cover or an approved escrow account, thus exposing shareholders' and buyers' funds to high risks. The Authority confirmed that legal procedures are underway against these violators, which may include referral to the Public Prosecution for the application of the deterrent penalties stipulated in the law.

The regulatory context and the importance of licensing:
This move comes within the framework of the Kingdom's ongoing efforts to regulate the real estate sector, which in previous decades suffered from stalled projects and the loss of shareholders' rights due to a lack of rigorous governance. The "off-plan sales" (Wafi) system is one of the most important pillars established by the state to enable developers to obtain direct financing from buyers, but within strict controls that ensure funds are used exclusively for project construction. The regulations require developers to open an escrow account for each project, from which disbursements can only be made upon completion of approved progress as assessed by an engineering consultant, thus guaranteeing the completion of construction and the delivery of units on schedule.

The economic impact and market protection
of these regulatory measures are of paramount importance given the construction boom the Kingdom is witnessing under Vision 2030, as the real estate sector is a key driver of the non-oil economy. Tolerance for such violations could undermine confidence in the real estate market, negatively impacting the attractiveness of both domestic and foreign investment. Therefore, the Authority's proactive measures against violators enhance the reliability of real estate transactions and assure investors that the market is governed by regulations that protect rights and ensure fairness and transparency.

concluding
statement, the General Authority for Real Estate reiterated its call to all real estate developers to fully comply with executive regulations and obtain the necessary licenses before advertising or selling properties. It also issued an awareness message to citizens and residents, urging them to verify the legality of any real estate project through the Authority's official platforms before making any payments or signing contracts, and to immediately report any suspicious practices that could harm the integrity of the real estate market.