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Saudi Arabia opens real estate funds trading to expats

RIYADH, October 31, 2016

In a major move, Saudi Capital Market Authority Board has given approval to expats living in the country to trade in the units of the real estate investment trust (REIT) traded funds in the Saudi bourse (Tadawul), said a report.

The final version of the REIT Instructions was given the go-ahead by The Saudi Capital Market Authority Board yesterday (October 30), reported the Saudi Gazette.

The instructions, the draft of which was published by the Capital Market Authority (CMA) in August, cover the management, operation and ownership of the funds.

The capital markets regulator dubbed REIT as a real estate investment fund that is publicly offered and the units of which are traded on the exchange and whose primary investment objective is to invest in constructionally-developed real estates that generate periodic income; this includes residential, commercial, industrial, agricultural and other types of real estates.

As per the rules, the fund must distribute a prescriptive percentage of the fund›s net profit in cash to the unit holders at least annually, it stated.

Also the fund manager must appoint a real estate company or more than one company specialised in managing properties (property management company) – after ensuring that the required approvals and licences are obtained from the relevant governmental agencies – to manage the property held for investment.

The new rules suggest that such companies must possess the necessary experience in real estate management, and should be responsible for carrying out property management activities including, but not limited to, maintenance, leasing services and rent collection.

The fund manager may agree with the lessee - under a leasing contract - that the latter will manage and maintain the property during the contract period, said the report.

CMA said this step comes as a part of its role in regulating and developing the kingdom's capital market as well as introducing new investment legislations to help provide new financial instruments and diversify investment opportunities therein in line with the National Transformation Program and Saudi Arabia’s Vision 2030, it stated.

Moreover, the capital markets regulator has taken the international best practices and standards into consideration while preparing the instructions, said the report.

In line with its (2015-2019) strategy, the CMA will conduct a number of initiatives to support the growth of this industry.

Tags: Saudi Arabia | CMA | expats | real estate funds |

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