Al Jazeera Capital has confirmed that the Real Estate Investment Trusts (REITs) in Saudi Arabia continues to consolidate its investment appeal as one of the most prominent income-generating assets, supported by improved dividend yields and lower valuations compared to global markets.
In a recent report, the company explained that the average dividend yield in the sector increased to 5.7% in 2025, with expectations to rise to 5.8% in 2026, reinforcing the positive differential compared to the cyborg rate, which has fallen to 5.2% since the beginning of the year.
The assessment of the attractiveness of REITs is based on several criteria including expected dividends, implied capital ratio, debt criteria and relative valuation, noting that the top five funds according to the weighted rating are: Bonyan REIT, Enma Hotel REIT, Al Maather REIT, Enma Retail REIT and Al Ahli REIT 1.
Al Jazeera Capital expects 9 out of 19 real estate ETFs to achieve higher dividend yields in 2026 compared to 2025, supported by improved financial performance, while 13 funds are expected to record returns above 6.According to the report, Alinma REIT Retail, Bunyan REIT, Alinma REIT Hotel and Al Ahli REIT 1 are expected to top the list of highest expected returns with 7.92%, 7.89%, 7.86% and 7.75%, respectively.<The firm added that Saudi REITs have proven their ability to act as hedging assets amid global economic uncertainty, with investors increasingly turning to assets that provide stable income, despite continued pressure from rising interest rates and a rent freeze in Riyadh.
Factors that position Saudi REITs
The significant discounts at which the sector is trading, coupled with regulatory reforms such as the removal of the Qualified Foreign Investor framework and allowing investment in holy cities, position Saudi REITs as a low-risk entry point to real estate growth in the UAE, it noted.
According to the report, Saudi REITs continue to outperform global indices such as Morgan Stanley and US REITs by 200-300 basis points, supported by stable domestic liquidity and a decline in the 6-month SIBOR rate to 5.2% from 5.8% in 2024.
The report also showed that the sector is currently trading at a book value multiple of 0.8 times, a discount of 14% to its five-year historical average, and a P/E discount of 53% to historical averages, reflecting that most economic risks are already priced into current unit prices and enhancing the sector's re-rating prospects as macroeconomic conditions improve and interest rates move lower.
