A GUIDE TO ARCHITECTURAL LICENSING IN SAUDI ARABIA

This article has been researched and written by the Business Development Team at Creation Business Consultants. AI has not been used in generating this article.

SAUDI ARABIA: A HUB FOR ARCHITECTURAL INNOVATION

The construction sector in Saudi Arabia is growing tremendously, in part because of Vision 2030 – which is the governmental framework to diversify its economy, including huge investment in infrastructure and mega projects like NEOM, or the Red Sea. The construction sector is backed by the Public Investment Fund (PIF) of Saudi Arabia, which is one of the largest sovereign wealth funds in the world with a total estimated asset value of over USD 925 billion in 2024. Most investment is happening in the residential sector, such as millions of homes and hotel rooms will be built. This level of investment is forecasted to take Saudi Arabia to the world’s largest construction market by 2028, with a construction output at the end of 2028 estimated to be more than USD 181 billion. Thus, Saudi Arabia has begun to make noise about its architecture and development ambitions and to promote itself as a centre and base of architecture. It aims to attract international architecture and development companies to the Kingdom.

This blog may help you understand the legalities, registration requirements and process to establish your architecture practice firm in Saudi Arabia and will save you time and money.

THE IMPORTANCE OF CORRECT LICENSING IN SAUDI ARABIA

While Saudi Arabia’s architectural industry offers numerous opportunities to external firms, forming your presence involves much prior planning and understanding of the licensing requirements. Conducting the appropriate licensing applications is genuinely important and worth reading with regard to the following:

• COMPLIANCE AND LEGALITY: Registering for the appropriate business licenses in Saudi Arabia business licenses in Saudi Arabia will allow your firm to be compliant with the licensing procedures. Otherwise, your firm may face potential regulatory fees or legal challenges as a result of not complying with the law, and be unable to operate legitimately in the Kingdom. In terms of compliance, this is more than just law; as compliance goes a long way to establishing professionalism and trust with local clients and joint venturers.
• SMOOTH OPERATIONS: Applying for licensing will be the precursor to your firm being operational – ideally, obtaining the requisite licenses will allow your firm to concentrate on creating magnificent architecture, rather than stressing about how you’re complying with your licenses. You and your team can innovate and be creative and not have the worry of having compliance issues, allowing you to build upon your firm’s image and brand in a competitive Saudi environment.

UNDERSTANDING THE REGULATORY LANDSCAPE

For foreign architectural firms looking to license and permit in the Kingdom of Saudi Arabia, there are some steps to take:

• CHOOSING THE CORRECT BUSINESS ACTIVITY

The first step will be to determine the proper business activity for your firm, which in this case is architectural and engineering consulting activities.

• SECURING THE INVESTMENT LICENSE

All foreign businesses need to apply for an investment license from the Ministry of Investment in Saudi Arabia (MISA). MISA is the main government department charged with attracting and facilitating Foreign Investment in the Kingdom. Foreign architects will be required to hold a “Professional Investment License” when seeking to establish their own businesses in Saudi Arabia.

• OWNERSHIP REQUIREMENT AND LEGAL STRUCTURE

A Professional Investment License is a partnership with a Saudi Partner, and the Saudi Partner will retain at least 25% ownership.

However, if Engineering Offices have 10 years of experience and are licensed in the same discipline in at least 4 other countries, the Ministry of Investment may provide an exception from the ownership requirement, and they may be qualified for 100% Foreign Ownership.

Limited Liability Company will be the most common legal structure, if there is a desire to register an architectural entity in Saudi Arabia for a foreign-owned firm. The Limited Liability Company legal structure provides clear statements of liability for the shareholders.

• DOCUMENTATION

All corporate documents for the foreign entity, including resolution and articles of association along with commercial registrations are mandatory when seeking 100% foreign ownership to register Engineering Offices; also copies of the commercial registrations of the shareholding entity in the same field in four countries as well as signed audited financial statements of the last year’s financial year end, stamped by the Saudi Embassy.

• EXTERNAL LICENSING AND APPROVALS

Architectural licensing and approvals will involve two primary entities as follows:

• Ministry of Commerce:

After licensing from MISA (mentioned earlier), the Ministry of Commerce (MOC) is arguably the 1st regulatory and business registration authority for foreign businesses registered in the Kingdom that sets the parameters as to how businesses can be established and operate.

The MOC provides oversight for registration of all businesses in multiple sectors, including all professional services, i.e. architecture business activity.

Part of architectural firms’ licensing is obtaining Commercial Registration (CR) that MOC issues, which gives the architectural firm the ability to operate legally as an architectural firm with commercial licensing. The MOC can and will inspect the practice to ensure the architect is complying and following ” Good Practice”.

• Saudi Council of Engineers: 

The Saudi Council of Engineers (SCE), or Saudi Engineers Authority, is the national authority for engineering and architectural professions in KSA and has several regulatory functions:

• 1. Regulating and Licensing: SCE produced a licensing regulatory authority for professional engineers and architects who are practising in the Kingdom and builds specific requirements and criteria, based on qualification and experience. This is a mandatory external licensing process for foreign businesses to complete to be eligible to officially practice as a registered architect in Saudi Arabia. The approved license lasts one year and is renewable. SCE also maintains a publicly accessible record of all registered professional engineers and architects in Saudi Arabia.
  2. Code of Ethics: SCE has developed, implemented and enforced an architectural and engineering code of ethics for practising engineers and architects and oversees the continued enforcement of those codes of ethics. The codes of ethics set out standard acceptable professional conduct and assure clients their engineers and architects will provide ethical services.

• Compliance with Registration Requirements:

Architectural firms and engineering offices that operate without an external licensing or after the cancellation of their license can face a penalty fine not exceeding one million Saudi riyals. In addition to legal responsibilities and liabilities, authorities may suspend work on projects resulting in considerable inconvenience, delays and financial losses to clients. Further and most importantly, failure to comply with mandatory legislation or regulations can inflict reputational damage on a firm and consequently limit business opportunities.

CONSULTATION

It is important to contemplate using legal and business professionals who specialise in foreign investment in Saudi Arabia while setting up your architectural firm. With appropriate considerations, your business will receive unique tailored advice on the specifics of its business: national partnership exemptions and a smoother experience through the application for incorporation.

TAKEAWAY

As long as foreign-owned architectural firms go through the registration process and procure the requisite external licenses, there are no risks of non-compliance or any restrictiveness about practising as a foreign business in Saudi Arabia. If you are curious to learn more, please contact our team of consultants and have your complimentary expert consultation. We will guide you through the regulations to avoid any compliance risks and check your eligibility to incorporate. Take the lead in your industry; contact us via email [email protected] or call Saudi Arabia +966 56 865 2329 UAE +971 4 878 6240 today.