Oman’s draft regulation for REIT funds

A draft regulation for listing real estate investment trust(REIT) funds is ready and is awaiting final approval from certain ministries, such as the Ministry of Housing, according to a top-level official at the Capital Market Authority (CMA), reported the Times of Oman.

“From our side, the draft is ready. We need to talk to certain government entities like the Ministry of Housing because there are certain legal issues that prevent companies and funds from owing properties. We need to resolve this issue with the Ministry of Housing,” Sheikh Abdullah bin Salim Al Salmi, executive president of CMA, told the Times of Oman.

He said the whole issue will be resolved shortly and the regulation will be announced this year. The new regulation, which was approved by Tanfeedh, will be for both conventional and Shari’ah compliant REITs. “This will be another venue for Shari’ah-compliant issue,” noted the CMA chief.
REITs are securities that sell like a stock on the bourse and invest in real estate directly, either through properties or mortgages. It provides investors an opportunity to participate in real-estate projects even with a small fund size and offers regular income and capital appreciation.

“We have already seen some appetite from the market,”Al Salmi said, adding that two investors have already approached CMA for launching REITs in Oman. These investors might be allowed to float funds even before announcing the regulation.

REITs will help the investing public to participate in the real-estate sector (despite relatively lower funds) and get a regular return. There is big potential for growth for this fund, which is also a good way of financing real-estate projects.

In fact, several countries in the Gulf region are introducing the fund in view of demand from real estate developers and investors. Oman is trying to catch on this concept. The United Arab Emirates had introduced REITs sometime back and Saudi Arabia and Bahrain have recently introduced them.