Details

-Real Estate Investment Trusts augment trading liquidity, stimulate property & financial markets, spur investments

 

-High-performing REITs restructuring investment landscape

 

-Al Mazaya Report: Kuwaiti economy boasts in-depth, exceptional investment prospects

Investment sectors across the World have witnessed many positive and negative changes over the past few years, which contributed to the emergence of several innovative investment tools that integrate with the market in a manner that meets various investor requirements.

This comes at a time when investment sectors typically encounter financial and economic challenges and pressures that can be dealt with in times of economic downturn and loss of business confidence.

In this regard, Al Mazaya Holding’s weekly report pointed out that the real estate investment trusts (REITs) represent a good investment alternative, providing a regular periodic income for real estate owners by investing in income-generating real estate assets in light of the decline in good and stable real estate investment opportunities.

The Saudi real estate market seems to be one of the most active markets in this regard, where such funds are diversified, ranging from residential to industrial as well as hospitality funds. The attractiveness of these funds lies in the fact that they combine the best assets in the real estate market and seek to facilitate investment in mature real estate sectors. In addition, they are characterised by low investment costs and a commitment to distribute 90% of their net profits periodically.

Within this context, Al Mazaya Holding hailed the positive developments in the Kuwaiti economy in light of the current endeavours to ensure the country become a leading financial hub in the region.

The weekly report of Al Mazaya Holding said that the ongoing trend to support the Kuwaiti property market with innovative tools through the establishment of income-generating real estate funds would restructure the investment culture and mindset in Kuwait over the coming short period.

The report said in this regard that the official launch of such funds is likely to, directly and indirectly, stimulate the investment sectors in general in the Kuwaiti economy by reflecting positively on diversifying investment options for individuals and establishments alike.

The report affirmed that the regional real estate markets are getting more geared to deal with new investment vehicles, with individuals and institutions looking for investment options that can provide good and stable returns away from daily volatility and uncertainties. Therefore, real estate investment trusts are expected to expand over the coming period in the region, according to the report.

The Al Mazaya Holding report pointed out that the Saudi Real Estate Investment Trust showed more positive performance indicators until the end of the third quarter of this year, booking noticeable gains and significant returns of monthly gains, which increased in September by 0.94% compared to the same period last year. The accumulated gains since the beginning of this year amounted to 5.5%.

Al Mazaya report added that the Tadawul All Share Index (TASI) rose 3.39% during the same period, which means that these funds have achieved gains that exceeded those secured by the index. This proves that such funds have the ability to achieve good returns in conditions of decline and recovery.

Al Mazaya Holding report stressed that the formation of REITs on the Saudi Stock Exchange (Tadawul) is aimed at diversifying investment opportunities for all dealers in the Saudi market, and maintaining the values of real estate income-generating assets, given the depth of the Saudi real estate and financial market.

The number of these funds in Saudi Arabia reached 17 with public ownership of 30%, giving more liquidity and providing a competitive edge to wider segments of existing and potential dealers and investors. Though still fledgeling, these funds managed to account for 1% of the total weight of the TASI, with a total market value of about 49.5 billion riyals until the end of the third quarter of this year.

The Al Mazaya Weekly report shed light on the positive indicators of real estate funds, despite the fluctuations recorded in many sectors and investment instruments in the region and the world at large. Listed real estate investment trusts, said the report, achieved combined net profits of  75% during the first half of this year, compared to the same period in 2018, a quantum leap that is expected to grow on account of the fact that these funds are available for small investments in existing properties with returns of more than 7% annually. In addition, such funds provide investors with the freedom to sell and buy at any time, an advantage that is not available in conventional real estate trades, taking into consideration that these funds are not subject to speculations in time of prices changes.