REIT can boost tax base, job market

Muscat, Jan 10 – The Real Estate Investment Trust (REIT) has the potential to change the entire complexion of a neighborhood in Oman, said a top official at the Ministry of Housing. Speaking to Observer on how it can change the dynamics of real estate market, Siham al Harthy, Director-General of Real Estate Development, said, “REITs are an important part of the economy, investors’ portfolio and local communities. Taken individually, a single REIT-owned property can change the entire complexion of a neighbourhood. When viewed as an entire industry, REITs significantly contribute to the tax base, job market and business community.”
She added, “Having witnessed a global economy recovery after a painful financial crisis starting in 2008, it is evident that the real estate sector is currently considered one of the most influential factors in the global financial recovery, particularly in the Gulf region.”
The establishment of an REIT along with guidelines, which offer detailed provisions and regulations on this matter while being publicly listed on the stock exchange market for trading, is very crucial for a healthy GDP of a country.
The significance or scope of REITs for the Gulf financial market is large, particularly in countries that lack diversification of resources, Siham said.
“From a business standpoint, the REIT is considered to be a liquid asset or an investment that has a generally accepted value and a market where it can be sold easily with little or no discount.”
She added, “Although REITs relate to the real estate sector, a solid asset, they also have the advantage of liquidity of stocks. It is worth highlighting that when an investor buys a REIT, he is not just purchasing real estate, he is also buying a business.”
The BMI Research expects Oman to be one of the better performers in terms of construction sector growth, both on a global and regional level.
It has forecast a growth of 10.4 per cent for 2018. In the next five years, the country’s construction sector will expand at an annualised average of 9.9 per cent.
Last month, Gulf Islamic Investments (GII) announced the official launch of its Shariah-compliant real estate investment trust (REIT), under the name GII Islamic REIT Ltd, in which has been described by one of the founders as a marketplace worth ‘billions of dollars’.

Vinod Nair