Saturday 27 / April / 2024
Muscat: Oman’s market regulator Capital Market Authority (CMA) has stipulated a minimum capital of OMR20 million for establishing a real estate investment trust (REIT) fund.
The new regulation, which will enable property developers to unlock their assets and allow small investors to invest in real estate projects, will be announced this week, Sheikh Abdullah Salim Al Salmi, the Executive President of the CMA, told the Times of Oman in an exclusive interview.
As per the new regulation, the funds can invest only in real estate projects that are 90 per cent complete.
REIT funds are securities that sell like a stock on the bourse and invest in real estate directly, either through properties or mortgages.
Sheikh Al Salmi said the new fund will not only allow real estate developers to unlock the value of existing properties and reinvest the fund in other projects, but also provide investors an opportunity to participate in real estate projects with small fund sizes and offer regular income and capital appreciation.
Omani investors
“Omani investors have invested a lot of money in real estate projects and it is time for the real estate developers to offload these assets,” Sheikh Al Salmi remarked, adding; “In order to invest in real estate, investors need to have a plot of land and a sizable amount for investment. The REIT fund will give everybody an opportunity to partially own a property, which is a good investment opportunity for the general public.”
He indicated that REIT funds will also attract foreign investment and create liquidity in the local bourses. REIT funds will be listed on the Muscat Securities Market, which will help investors to call back their money. Also, once the maturity period of the funds ends, investors can again receive their money.
Sheikh Al Salmi noted that two to three companies have already approached the CMA to seek approval for floating REIT funds. Some of the real estate developers are expected to create REIT funds to transfer a part of their assets, which will help them unlock their investment.
Some real estate sector-specific mutual fund schemes may also try to change their legal status to a REIT fund.
Among GCC countries, Saudi Arabia, Bahrain, and the United Arab Emirates have allowed the listing of REIT funds.
The CMA will soon begin a marketing campaign to attract companies from within the country, and outside, to float REIT funds.
