Tadawul set to launch REITs by year-end

The Saudi Stock Exchange (Tadawul) is planning to list several Real Estate Investment Traded Funds (REITs) by the end of the year, the bourse said in a statement.

The new funds allow investors to access the local real estate market through purchasing existing, developed property.

REITs are prohibited from investing in vacant lands and are also required to distribute at least 90 percent of their annual net profit to unit holders.

Investors can participate in REITs, upon the initial public offering (IPO) on the primary market, or after listing fund units, where investors will buy these units on the secondary market.

Fund managers are now allowed to invest more than 25 percent of the fund's total assets in properties outside the kingdom, according to Tadawul’s regulations.

Tadawul added that an independent sector will be introduced for REITs on the equity market, to allow investors to buy and sell fund units under the same trading mechanism used for equities.

The move comes in line with Saudi Vision 2030, which aims to develop the capital market by providing new trading instruments to diversify investment options.

Earlier this week, the Saudi Capital Market Authority, the kingdom’s market regulator, approved the final rules regulating REITs, Argaam reported.