Framework for REIT funds to be issued by mid-year in Oman

947974BENCHMARKED: Dedicated REIT Fund regulatory framework to cater for both conventional and Sharia-compliant REITs –

Conrad Prabhu –
A keenly-awaited regulatory framework for Real Estate Investment Trust funds (REITs) is expected to be issued before the end of the first half of this year, according to a high-level official of the Sultanate’s Capital Market Authority (CMA).
Kemal Rizadi Arbi (pictured), an adviser at the Authority, said the draft regulations are currently being reviewed and revised based on feedback from various stakeholders before it can be formally issued to the general public.
“The draft regulations were made available to the stakeholders last December and feedback from them is being collated,” Kemal said. “We are amending it right now having taken into consideration some of the comments we have received. We will also place it before Tanfeedh (the National Programme for Enhancing Economic Diversification that has mooted the introduction of REITS) before it is issued to the public.”
A Real Estate Investment Trust is defined as a security that sells like a stock on exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets), and their revenues come principally from their properties’ rents.
Speaking to the Observer, Arbi said interest in REITs from the real estate industry has been “positive”. “In fact, the new executive regulations will allow real estate players to step in and be licensed to issue REITS. So real estate companies can set up a management company and issue a REIT fund. They can monetise their assets in order to raise funds,” he said.
A Real Estate Investment Trust, he explained, can either be listed on the stock market or held as private equity. “Even without the new regulatory framework, it has been possible for (real estate companies) to issue REITs, but what the new regulation aims to do is to provide greater clarity to the market on these funds.”
Significantly, the new executive regulations have been internationally benchmarked. “During the drafting phase, we benchmarked the regulations with other jurisdictions in the GCC, Europe and Asia,” he added.
Earlier, CMA Executive President Abdullah bin Salim al Salmi said the Authority was in the midst of issuing a dedicated REIT Fund regulatory framework to cater for both conventional and Sharia-compliant REITs.
Speaking at the opening of the IFN Forum at the Grand Millennium Muscat yesterday, Al Salmi said the development of the REITs industry, which has been promoted by the CMA, has also won the backing of the Omani government via the Tanfeedh programme. The introduction of a regulatory framework for REIT funds is one of 121 landmark initiatives mooted by Tanfeedh to help drive non-oil economic development and investment inflows into the country.