Saudi Arabia’s market regulator said on Monday it would allow foreign investment in listed companies that own real estate within Islam’s two holiest sites of Makkah and Madina, as the Gulf country looks to attract more investment.

The move will allow foreigners to invest in firms whose revenues rely on the Islamic pilgrimage, one of the top revenue sources for the oil-rich kingdom.

Saudi Arabia’s market watchdog, the Capital Market Authority (CMA), said in a statement the move aimed to attract foreign capital and provide liquidity for present and future projects in the two cities.

Saudi Arabia has said it aims to welcome 30 million pilgrims for Haj and Umrah annually by 2030. In 2019, it earned about $12 billion from the two pilgrimages, according to official data.

The annual Haj pilgrimage plays a vital role in the country’s economy and upping the number of pilgrims is an integral part of its Vision 2030 economic reform agenda that aims to wean the economy off oil revenues.

Saudi Arabia’s benchmark index was up 0.2 per cent, led by 10pc increases in both Jabal Omar Development Company and Makkah Construction and Development Company, which have real estate in Makkah.

The bourse, the Gulf Arab region’s largest with a market capitalisation of 10.2 trillion riyals ($2.72tr), opened up to foreign investors in 2015 in a bid to attract more funds and has seen a flurry of new listings in recent years.

The CMA said that under Monday’s move foreign investment would be limited to shares, convertible debt instruments, or both, and would exclude “strategic foreign investors”.

The watchdog added that people without Saudi nationality would not be allowed to own more than 49pc of shares of the firms involved.

In 2021, it allowed non-Saudis to subscribe to real estate funds investing within the boundaries of Makkah and Madina.