Experts and specialists expressed their optimism about the future of real estate investment funds (REITs), due to their features that suit this stage with the ease of investment and clarity of its instructions, expecting that the volume of investments in them by 2019 will reach 30 billion riyals, revealed the first forum for traded real estate investment funds organized by Musharaka Capital in cooperation with the Capital Market Authority and the Saudi Capital Market Company (Tadawul).
The first forum for ETFs, which was organized by Musharaka Capital in cooperation with the Capital Market Authority and the Saudi Stock Exchange Company (Tadawul), was held on Wednesday.
Real estate funds are available to everyone
For his part, the representative of the Capital Market Authority (CMA), Mazen bin Abdulshakoor Jazzar, confirmed that the real estate investment funds are funds listed on the Saudi capital market, available to all investors, whether Saudi or foreign, after meeting all the requirements for offering fund units, including that the fund be closed with a combined capital of not less than 100 million riyals for establishment, with a nominal value of each unit equal to 10 riyals, He stressed that the authority urges real estate fund managers to list them on the market for more transparency and to raise disclosure rates.He pointed out that the fund manager must adhere to the need to invest in real estate actually developed (structural development) that achieves periodic rental income of 75% of the value of the fund's total assets according to the latest audited financial statements.
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Fixing violations within a month
Jazzar explained to the businessmen who attended the forum that in order for the fund to be listed, its units must have sufficient liquidity by having at least 50 owners from the public, and their ownership must not be less than 30% of its total units."
Jazzar emphasized that fund managers are not entitled to invest in real estate outside the Kingdom by more than 25% of the total value of the assets according to the latest audited financial statements, and if this violation occurs due to circumstances beyond control, the violation must be fixed within a month from the date of occurrence, and if not, the fund manager must immediately notify the Capital Market Authority with reference to the action taken and the time period required to fix the violation.
Fund managers must immediately notify the CMA with reference to the action taken and the time period required to fix the violation.
There are restrictions on assets, for example, the fund manager may not invest in white land at all, and he can invest in construction real estate development in a percentage not exceeding 25% of the total value of the fund's assets
He stressed that an updated copy of the fund's terms and conditions must be submitted to the CMA within 10 days of making any change to it and another to the custodian.
Transparency and disclosure are key features
The CEO of Musharaka Capital, Ibrahim bin Fahad Al-Assaf, gave a presentation at the beginning of the forum that included the most important features of real estate ETFs and their potential effects on the real estate market in its various classifications and levels, in addition to the expected benefits that will return to the sector in general and investors in particular.
Assaf revealed that the expected volume of investments in real estate ETFs in 2019 will reach 30 billion riyals, pointing out that increasing transparency and disclosure rates is the most important thing that real estate ETFs will provide to the real estate market in addition to providing fair information, and the institutional work that will be adopted by the fund administrations to come up with the best useful management practices, in addition to increasing the proportion of qualitative real estate development activity, which enhances the efficiency of the sector, and the funds will contribute to increasing the activity of evaluation, property management and real estate marketing.
Assaf revealed that the volume of investments in ETFs in 2019 will reach 30 billion riyals.
Spreading awareness of fund concepts
Al-Assaf pointed out that awareness of the concepts of these funds and communicating the message to the public is the biggest challenge that will be faced by fund managers, adding that the benefits of these funds to investors can help in communicating the message correctly and beneficial to all, such as the expected growth in assets and returns, which provides added value to the investment, high periodic distributions if compared to stock market returns, which will provide liquidity to investors in addition to low risk and the availability of professional and professional work.
Assaf pointed out that awareness of the concepts of these funds and delivering the message to the public is the biggest challenge that fund managers will face, adding
