Commercial Concealment in Saudi Real Estate: The Hidden Crime Stealing Youth Opportunities and Draining the National Economy

Introduction: The Hidden Face of the Real Estate Market

Imagine entering a real estate office bearing a Saudi name on its sign, but finding a foreign person behind the desk managing everything, receiving clients, closing deals, and collecting profits, while the Saudi name holder only appears to collect a meager monthly sum! This scene, which may seem normal to some, is actually a serious economic crime called "commercial concealment" - a phenomenon that erodes the national economy and steals job opportunities from citizens.

In this comprehensive scientific article, we will unveil the phenomenon of concealment in the real estate sector specifically, analyze its economic and social dimensions, review government efforts to combat it, and explain how every citizen can be part of the solution to build a fair real estate market that serves the nation and its people.

Chapter One: What is Commercial Concealment? Understanding the Crime Clearly

Commercial concealment is not just a simple administrative violation, but a complete economic crime defined clearly by Saudi law. The Anti-Commercial Concealment Law issued by Royal Decree No. (M/4) of 1442 AH defines commercial concealment as: a Saudi citizen or licensed foreign investor enabling a non-Saudi to work for their own account in an economic activity they are not authorized to practice, whether using their name, license, commercial registration, or any other method.

Elements of Commercial Concealment Crime

For the concealment crime to be complete, three basic elements must be present: The material element, which is the act itself - enabling a non-Saudi to practice an economic activity for their own account without the necessary license. The moral element, which is intent and will - that the concealer knows what they're doing is a crime punishable by law. Finally, the legal element, which is the existence of a legal text criminalizing this act and specifying its punishment.

Difference Between Legitimate Employment and Concealment

It's important to distinguish between two things: Employing a foreign worker legally under actual supervision and management from the Saudi employer - this is legitimate and permitted. Concealment, however, is when the foreign worker is the actual manager and real controller of the activity, while the Saudi is merely a front covering for them in exchange for a monetary amount.

Chapter Two: Concealment in the Real Estate Sector - The Painful Reality

The real estate sector is one of the sectors that historically suffered most from concealment. Before localization decisions, statistics indicated that the percentage of expatriate labor in the real estate sector exceeded 67% of total workers, while Saudis constituted only 33%! This is a shocking figure in a sector considered one of the most important drivers of the national economy.

Common Forms of Real Estate Concealment

Concealment in the real estate sector takes multiple forms, most notably: Opening a real estate office in a Saudi citizen's name and handing over its management completely to a foreigner in exchange for a fixed monthly amount. A non-Saudi working as a real estate broker or marketer without obtaining the legally required Fal license. Giving absolute powers to a foreign worker to manage office funds, sign contracts, and make decisions. Most dangerously, foreigners communicating with clients and completing sales, purchase, and rental transactions on behalf of the absent registration owner.

Why Does Concealment Spread in Real Estate?

Several factors make the real estate sector a fertile environment for concealment. First, the nature of work that depends on relationships and continuous communication with clients, making having someone dedicated throughout the day a necessity. Second, weak previous oversight before implementing the new real estate brokerage system. Third, some citizens' ignorance about the seriousness of what they're doing and their belief that it's just regular employment. Fourth, some people's greed for quick profit without effort, settling for renting out their commercial registrations.

Chapter Three: The Devastating Economic Impact of Concealment

Commercial concealment is not just a legal violation, but a real economic hemorrhage that weakens the national economy and deprives the state and citizens of their legitimate rights. Numbers speak clearly about the magnitude of the disaster.

Money Leakage Abroad

Estimates indicate that the volume of commercial concealment in the Kingdom reaches 350 billion riyals annually across various sectors. Expatriate workers' remittances abroad exceed 35 billion dollars annually - money that leaves the local economic cycle and brings no benefit to the national economy. In fact, Saudi Arabia ranks second or third globally in terms of money transfers abroad after the United States, a serious indicator of the magnitude of financial leakage.

Tax and Zakat Evasion

Establishments run through concealment often evade paying due taxes and zakat because actual profits go to the concealed person while official records show completely different figures. This deprives the state treasury of billions of riyals that could have been directed to development and public services.

Harm to Fair Competition

Concealing establishments operate at lower costs because they don't comply with required systems and standards, thus can offer lower prices, which harms legitimate establishments that comply with all requirements. This creates an unfair market that rewards violators and punishes the compliant.

Depriving Saudi Youth of Opportunities

This is the most painful effect. Every job occupied by a concealed person is a job stolen from a Saudi young man or woman. The real estate sector alone had more than 26,000 foreign workers before localization decisions, while Saudis numbered less than 10,000. Imagine if these jobs were truly localized, how many Saudi families would have found a dignified source of livelihood!

Chapter Four: Vision 2030 and Real Estate Sector Localization

The wise leadership recognized the danger of concealment and its impact on achieving Vision 2030 goals, so decisive decisions came to localize the real estate sector and protect it from this scourge.

100% Localization Decision for Real Estate Professions

In October 2021, implementation began of the decision to localize real estate activities and professions by restricting work to Saudis at 100% in several vital professions including: Real estate brokerage including real estate broker, sales and rental broker, and land and property broker. Real estate marketing including real estate marketer and land registration clerk. Property management including owners' association manager and property manager. Real estate arbitration including real estate arbitrator and real estate conciliator.

Fal License: The Official Gateway to Real Estate Work

The Real Estate General Authority launched the Fal license system as an official gateway to organize work in the real estate sector. This license has become mandatory for anyone wanting to practice any real estate activity, with key requirements including: The applicant must be a Saudi national. Must have full legal capacity and not convicted of a crime involving honor or trust. Must pass training courses approved by the Real Estate Institute. Must pay prescribed fees of 300 riyals for individuals and 1,000 riyals for establishments annually.

Types of Fal Licenses

Fal licenses vary to cover all real estate activities: Fal license for brokerage and real estate marketing for individuals and establishments. Fal license for property management for establishments. Fal license for facilities management for establishments. Fal license for real estate auctions for establishments. Fal license for real estate consulting and analysis for individuals and establishments. Fal license for real estate advertising to publish advertisements in all forms.

Chapter Five: Deterrent Penalties for Concealment Crime

The state didn't stop at organizing the sector but imposed strict and deterrent penalties on perpetrators of commercial concealment. These penalties apply to both parties: the Saudi concealer and the foreign concealed person.

Basic Penalties

According to Article Nine of the Anti-Concealment Law, anyone who commits concealment is punished with imprisonment up to 5 years, and a fine up to 5 million Saudi riyals, or either. In case of repeating the crime within three years of the previous judgment, the penalty is doubled.

Supplementary Penalties

In addition to basic penalties, conviction for concealment results in additional penalties including: Dissolution of the establishment, cancellation of its license, and deletion of the convicted person's commercial registration. Confiscation of all money and profits resulting from illegal activity. Banning the convicted from practicing any economic activity for up to 5 years. Publishing the judgment in local newspapers at the convicted person's expense for shaming.

Special Penalties for Non-Saudis

The concealed foreigner faces additional penalties including: Deportation from the Kingdom after serving the sentence. Permanent ban from entering the Kingdom. Collection of all due fees, taxes, and zakat before deportation.

Chapter Six: Inspection Campaigns and Enforcement Mechanisms

Laws alone aren't enough; they must be applied on the ground. Therefore, competent authorities conduct intensive and continuous inspection campaigns to detect concealment cases and punish violators.

Authorities Responsible for Combating

Several government agencies' efforts converge in combating concealment, most notably: Ministry of Commerce as the main body responsible for the anti-concealment system. Real Estate General Authority responsible for organizing the real estate sector and monitoring compliance. Ministry of Human Resources and Social Development responsible for job localization and labor market monitoring. Ministry of Interior for apprehending violators and implementing deportation decisions.

Oversight Paths for the Real Estate Sector

The Real Estate General Authority explained that it works on four integrated oversight paths: Field oversight teams that verify the legality of establishments' work and advertising signs. Joint oversight campaigns with related agencies on localization and concealment violations. Electronic oversight targeting digital platforms to verify the legality of advertisements. Response path for reports submitted by citizens through the Authority's platform.

Inspection Campaign Results

Numbers confirm the seriousness of efforts made. The Real Estate General Authority announced detecting and addressing more than 3,500 violating real estate advertisements since starting work under the Real Estate Brokerage Law. The Ministry of Commerce also conducted more than 160 inspection campaigns on real estate offices in Riyadh alone, issuing 65 violations including employing non-Saudi labor and violations of the anti-concealment system.

Most Common Violations in Real Estate Offices

Inspection campaigns revealed several recurring violations including: Employing non-Saudi labor in professions restricted to Saudis. Exceeding the commission rate legally set at 2.5% of contract value. Combining real estate activity with other activities in the same location. Not updating commercial registration data. Practicing activity without a license or valid commercial registration.

Chapter Seven: How to Protect Yourself and Contribute to Combating

Combating concealment is a shared responsibility between the state and citizens. Here's how you can be part of the solution.

If You're a Real Estate Office Owner

Ensure all workers in Saudi-restricted activities are actually Saudis holding valid Fal licenses. Don't delegate any foreign worker with powers beyond their defined scope of work. Keep clear and transparent financial records reflecting the actual reality of the establishment. Be present and actually supervise your business; don't settle for receiving a monthly amount. Remember that concealment penalty can reach 5 years imprisonment and 5 million riyal fine - is the meager amount worth all these risks?

If You're Looking for Work in Real Estate

The opportunity is now greater than ever! With localization decisions, thousands of jobs are available for Saudis in the real estate sector. Start by obtaining a Fal license from the Real Estate General Authority and pass the required training courses from the Real Estate Institute. You can work as a freelance real estate marketer without needing to open an office, or join one of the licensed real estate companies. Raghdan Real Estate Services platform provides an ideal work environment for licensed real estate marketers, with more than 15,000 licensed real estate agents and integration with Real Estate General Authority systems.

If You Suspect Concealment

It's your national duty to report commercial concealment cases. You can submit a report through several channels: Commercial Report app from the Ministry of Commerce, calling the unified number 1900, or through the Ministry of Commerce website. The system protects reporters' identity confidentiality and rewards them with up to 30% of the collected fine after the final judgment.

Chapter Eight: Signs Indicating Real Estate Concealment

How do you know if the real estate office you're dealing with practices concealment? Here are some warning signs.

Clear Concealment Indicators

Permanent absence of the Saudi commercial registration owner from the office and inability to communicate with them directly. A foreigner acting as the office owner, making all decisions, and managing money. Clients dealing completely with the foreign employee without any intervention from the Saudi. Bank accounts or financial transfers in the foreigner's name rather than the official establishment name. No Fal license displayed in the office or employee's inability to show it.

How to Verify a Real Estate Marketer's Legitimacy

Before dealing with any marketer or real estate broker, you can easily verify their legitimacy. Ask for their Fal license number and verify its validity through the Real Estate General Authority website. Ensure real estate advertisements carry the Authority-approved advertisement license number. Deal with trusted and licensed real estate platforms like Raghdan Real Estate Services platform, which ensures all registered marketers hold valid licenses.

Chapter Nine: The Future of the Saudi Real Estate Sector

Despite challenges, the future is bright for the Saudi real estate sector and citizens working in it. The radical reforms taking place under Vision 2030 lay the foundation for a fair, professional, and sustainable real estate market.

Promising Opportunities for Saudi Youth

The real estate sector offers excellent opportunities for Saudi youth in diverse and rewarding professions. Real estate brokerage allows excellent income based on commissions reaching 2.5% of each transaction value. Real estate marketing can be practiced with high flexibility, whether full-time or as additional work. Property management is a growing field with increasing residential and commercial units. Real estate analysis and consulting for those with market experience and knowledge.

Technology's Role in Market Organization

Technology plays a pivotal role in combating concealment and organizing the market. Trusted electronic platforms like Raghdan Real Estate Services platform ensure dealing with licensed marketers only. Electronic verification systems facilitate confirming licenses and advertisements validity. Electronic linkage between government agencies reveals violations quickly and accurately. Big data and artificial intelligence help identify concealment patterns and suspect them.

Vision 2030 Goals for the Real Estate Sector

Vision 2030 targets raising Saudi home ownership to 70%, increasing the real estate sector's contribution to GDP, creating thousands of job opportunities for citizens in the sector, and developing an integrated legislative and regulatory environment that protects all parties' rights. All these goals require a clean market free from concealment and illegitimate practices.

Conclusion: Together We Build a Fair Real Estate Market

Commercial concealment in the real estate sector is not just a legal violation, but a betrayal of the nation and citizens. Every riyal transferred abroad illegally is a riyal stolen from our economy. Every job occupied by a concealed person is an opportunity stolen from a Saudi young man or woman who deserves to work with dignity in their homeland.

Systems are clear, penalties are deterrent, and government efforts are serious and continuous. But real success requires everyone's cooperation: establishment owners complying with systems, youth embracing work in the sector, and citizens reporting violations.

At Raghdan Real Estate Services platform, we believe the Saudi real estate sector deserves to be a model in integrity and professionalism. Therefore, we work in full integration with the Real Estate General Authority and ensure every marketer on our platform holds a valid Fal license. We are part of the solution, and we're proud to serve more than 15,000 licensed real estate agents working honorably and with integrity to serve their clients and their nation.

The message is clear: there's no place for concealment in our real estate market. Together, we build a bright future for a 100% Saudi real estate sector, managed by Saudis, serving Saudis, and contributing to building a strong and sustainable national economy.