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Inayat-ur-Rahman, business editor
The launch of real estate investment trust (REIT) funds is a good step as these funds are considered an attractive mechanism to strengthen the UAE real estate market.
That’s according to Saleh Tabakh, portfolio management expert and CEO of Al-Andalus Courtyard Real Estate Developer, in an exclusive interview with Gulf Today.
Tabakh also highlighted that he welcomes the recent announcement by the Securities and Commodities Authority (SCA) to simplify and facilitate the rules for local REIT funds within the framework of providing attractive and diversified investment mechanisms.
“These funds could make a quantum leap in the means of financing available in the real estate market,” Tabach added.
He said that the UAE has one of the best real estate markets in the region and globally, with enormous capacity, attractive opportunities and unprecedented facilities offered by the country’s real estate industry, as well as modern investment vehicles that have become common in the UAE in recent years, such as Invest in REIT funds as these vehicles fulfill the desires of real estate investors.
Tabakh pointed out that Dubai is currently witnessing unparalleled turnout from local and foreign investors, while a number of public government agencies in Dubai are listed on the stock exchange as they launch initial public offerings (IPOs).
He emphasized that real estate is considered one of the important investments to benefit from unprecedented investment vibrancy, not to mention it is the safest investment as it generates fixed returns and also due to rising asset values. Correspondingly, the role of REIT funds emerged, as an investment platform, providing investors with an alternative to stock investment, not to mention it also provides financing opportunities to participate in large-scale project development, increasing the turnover of developers, And provides real estate liquidity.
“REITs are financial vehicles that raise capital from investors and shareholders with the aim of investing this capital in the real estate sector by issuing investment units of equal value and rights to these investors,” Tabakh explained.
“The percentage ownership of any investor or shareholder in a REIT is calculated based on the number of units he owns compared to the total number of units in the fund. These funds enable individuals and institutions to acquire a diversified portfolio of real estate assets, such as residential buildings , whose main objective is to bring in profits, as well as save huge profits when real estate prices or values rise, increasing income from diversified capital gains in a manner that secures staples,” he added. Tabakh emphasized that the first REIT fund in the Middle East was launched only 13 years ago, and it was in the UAE.
Regarding the operating mechanism of REIT funds, Tabakh said that these funds are set up by listed companies, banks or financial investment companies. “Entities setting up REIT funds decide on the same investment opportunities after researching projects, setting goals, capital, implementation plans, and target entities for real estate funding,” he noted.
“Real estate units are offered as public contributions under terms prescribed by the entity setting up the REIT fund, which vary from fund to fund. It is therefore important for potential investors in REIT funds to examine the terms of each fund and determine the best terms,” Tabakh added.
He said investing in REIT foundations brings many benefits, such as offering investors the opportunity to invest in a portfolio comprising various real estate assets, which in turn leads to high income as the portfolio is backed by long-term lease contracts, And high sums, as well as participation in the real estate market inside and outside the UAE, which helps to add value and bring capital returns in the long run.
Tabakh said REITs enable investors to acquire single-rent properties in fast-growing industries, such as education and health properties. Additionally, REIT funds are professionally managed to assess risk and determine the best investment style and vehicle, he continued.
He added that SCA revealed a month ago that it intends to soon launch a new investment fund scheme aimed at strengthening the local industry as it is considered one of the investment vehicles that matches investors in the securities industry.
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