The Capital Market Authority has issued initial approval to establish the first real estate investment fund named “Aman REITs” as part of economic diversification initiatives of innovative finance and financing lab supported by “Tenfeeth”. The IPO of the fund is expected during the first quarter of this year.
REITs are considered a qualitative addition to the GDP and would enhance investment opportunities in the real estate sector as new avenue of investment through encouraging small and institutional investors to enter the Omani real estate market, moving the financing wheel and encouraging real estate investment which would have considerable impact on the foreign investments as such funds provide incentives for foreign investments and attract investments from abroad beside diversifying investment options and increases market depth.
Mohammed Said Al Abri, Vice President, Capital Market Sector at the CMA said “ We praise the first initiative to establish real estate investment fund which we expect to have noticeable impact in pushing the economic development process in Oman. He added, “Aman REITs” for real estate investment is in the initial procedures and expressed hope to finalize the offering process before the end of the first quarter of this year. Al Abri pointed out that CMA’s initial approval has been issued for RO 20 million fund. 50% will be offered for the public. He added “We are viewing such funds as regulated portal for foreign investors to activate the real estate market through holding investment units” emphasizing that the funds would remedy the concerns of local investors over foreign investors entering and controlling the properties including residential properties and the social and security impact as the funds would provide numerous options for investors including allowing the companies and individuals to invest in real estate and owning investment units without having direct control on the assets beside providing opportunities for partnerships with citizens to avail the promising real estate investment opportunities. He added that listing the fund in the stock exchange would contribute to supplying the market with new security which would allow easy exit through trading beside the importance of listing in attaining high standards of transparency on the financial position of the fund as well as smooth liquidity for the issuer.
Mr. Abdulsamad Al Maskari, Chief Executive Officer of Tharaa Global Business said “This type of funds attained global commend for the positive indicators they achieve in a number of economies beside contributing to creating employment opportunities and fixed income in addition to attracting foreign investments that help in moving the wheel of the national economy. We find out after considering a number of experiences especially in Asian countries that REITs contribute to the GDP and furnish diversified investment opportunities beside their ability to provide liquidity. They had obvious impact on the GDP of Japan which realized 0.3% or about US$ 287 billion.
The idea of offering funds came from the laboratories of “Thanfeeth” to set out regulations for REITS which had positive impact according to the vision provided by leading real estate companies in Oman. They are expected to enhance the confidence of investors in the market and in stimulating the real estate business which would reflect the actual role the sector plays in the capital market in particular and the national economy in general..
REITs will allow foreign investor to own 100% in the properties which would increase capital flow to the local market beside positively enhancing the foreign investment.
The decision to establish REITs had great role in increasing the efficiency of real estate products and project whether services, commercial or industrial and everything that attains lucrative return without impacting the mechanism for expatriates owning properties as the process will be similar to buying shares in the stock markets.
The Regulation obligates the REITs to distribute not less than 90% of the total profits to unitholders and keeping 10% of the fund returns for operational expenses of the properties.