Saudi REITs offer higher dividend yield than global peers: Aljazira Cap

Saudi real estate investment trusts (REITS) offer higher dividend yield for investors compared to their global peers, AlJazira Capital stated in a recent report.

The research firm added that TASI REITs index dividend yield declined to 5.8% as of September 2020 due to the COBID-19 pandemic.

The dividend yield for global REIT indices, such as MSCI World REIT and S&P Global REIT, stood at 3.47% and 4.46%, respectively in September, while REITs in the US (MSCI US REIT) and Europe (FTSE EPRA Nareit Developed Europe Index) had dividend yields of 3.79% and 4.13%, respectively.

Saudi REITs have better opportunities as compared to their global peers, AlJazira Capital stated, noting that the domestic economy has shown more resilience to the COVID-19 crisis in October, compared to most of the other countries.

“Economic activities are gaining back momentum in the Kingdom, hence rental income for REITs is expected to improve in the near future. This should reflect in increased dividend yields as well,” the research firm stated.

Since the real estate market and REITs’ performance are directly proportional, the REITs sector is expected to experience continued pressure, the report indicated.

However, the government’s efforts to promote affordable real estate and replacement of the value-added tax (VAT) with the transaction tax should boost the residential and commercial real estate sectors, which will in turn benefit the REIT funds exposed to these sectors.