GCC REIT Industry (2022 – 2027) Increase in asset allocation to real estate by major investors in the region


DUBLIN, March 18, 2022–(BUSINESS WIRE)–The report “GCC REIT Industry – Growth, Trends, COVID-19 Impact, and Forecasts (2022 – 2027)” has been added to from ResearchAndMarkets.com offer.

The GCC has seen a number of real estate investment trusts (REITs) listed on the stock exchange in recent years. This accelerated after the Capital Markets Authority (CMA) of Saudi Arabia approved the listing of REITs in 2016 under the National Transformation Program (NTP) and Saudi Vision 2030.

Due to the economic crisis following the COVID-19 pandemic, many listed REITs have experienced a sharp decline in their share prices and market capitalization.

REITs are not popular in the GCC as they are in advanced countries despite the fact that the region is home to high net worth individuals and large institutional investors. The absence of a regulatory framework for the listing and operation of REITs remains a major obstacle to its development in the region.

However, the region’s Capital Markets Authority (CMA) has begun revamping regulations to pave the way for the development of alternative investments. The future looks bright for GCC REITs, especially with the new class of investors looking for investment products to diversify their portfolios across local markets. Islamic REITs may be a preferable option for traditional investors who wish to invest in Sharia-compliant products in different asset classes such as real estate.

Main market trends

Market opportunity: increased asset allocation to real estate by large investors in the region

Historically, only 33% of SWFs had a 10% or more allocation to real estate, but this is set to change with around 70% of SWFs targeting a 10% or more real estate allocation in the GCC.

The reason being the property sector’s ability to generate stable cash flow from rental income and its inherent ability to act as an inflation hedge (due to contractual escalations in long-term contracts) in addition to healthy returns and the prospect of capital appreciation.

The correction in real estate prices in the United Arab Emirates has prompted many investors to explore other investment opportunities to preserve and grow their wealth. Ironically, the current downturn in the real estate industry is also an opportune time to invest in a Real Estate Investment Trust (REIT).

GCC REIT 1-Year Average Returns

REITs in the United Arab Emirates offered healthy dividend yields compared to the global average. However, the emerging story in Saudi Arabia was a bit different with REITs offering an average dividend yield of 2.7%.

Part of the problem in Saudi Arabia was that there was a sudden rush in listings with insufficient due diligence on asset quality. Early market entrants may have earned an initial listing premium, however, the long-term performance of a REIT is determined by the underlying quality of the real estate.

The UAE has higher returns than most popular real estate investment locations around the world because rental income is tax exempt and because of the capital gains tax exemption.

Competitive landscape

The report includes an overview of REITs operating in the GCC. We want to present a detailed profile of a few major companies covering product offerings, regulations governing them, their headquarters and financial performance. Currently, some of the major players dominating the market are listed below.

For more information about this report visit https://www.researchandmarkets.com/r/8ui8f7

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220318005199/en/


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