Saudi CMA issues guidelines on real estate investment traded funds

The Capital Market Authority (CMA), Saudi Arabia's market regulator, has published draft instructions before introducing real estate investment traded funds (REITF).

Under the guidelines, REITF should be a closed-ended fund, with the minimum initial offering standing at SAR 100 million. Nominal value per unit should reach SAR 10, the CMA said in a statement.

In addition, fund managers should invest at least 75 percent of REITF’s total assets in construction and real estate developments. A total of 90 percent at least of the fund’s net income should be annually distributed to unitholders.

Meanwhile, fund managers are not allowed to invest in undeveloped lands. They can invest up to 25 percent maximum of the fund's total assets in real estate development, in renovation, or redevelopment of their owned properties

The CMA added that it’s open to receiving comments on the new guidelines no later than August 23 for study ahead of final approval.