Decks have been cleared for the advent of real estate investment trusts (REITs) in Qatar's capital market with the recent cabinet resolution allowing realty investment funds.
"The broad contours for the REITs are already there and the new cabinet resolution will help in fine tuning the regulations desired for the investment structure," an analyst with a leading investment house said.
As per the global practices, at least 75% of the gross income of the REITs has to be generated from the real estate related sources and are required to distribute at least 90% of their earnings from the realty investments directly to investors.
The cabinet resolution No 28 of 2020 allowed real estate investment funds that will specialise in real estate investment in the various regions and this decision will provide an opportunity that was previously unavailable to middle and limited income citizens to invest in the real estate sector.
"REITs appear to be a strong contender for the next fund structure to be introduced on the Qatar Stock Exchange, backed by the listing regulations issued in 2015," the Capital Market Report 2020 of Qatar Financial Center (QFC) had said.
REITs are basically entities which develop and own ‘income generating’ real estate properties and generate income in the form of dividends. Their return depends on which type of REITs – whether equity, debt or hybrid.
Market experts are of the view that in the medium to long term; there are opportunities for capital growth from high-yield income-producing assets; even as uncertainties exist in the short term.
These instruments (REITs) offer investors an affordable and low risk route to invest in a sector that provide long term returns through underlying capital appreciation and dividends, they said.
"The review of ownership rules and regulations in the real estate sector to accommodate non-Qatari investors and enhance transparency in the sector is expected to augur well for capital inflows to the sector," a senior official of a leading realty research and valuation company said.
The QFC Regulatory Authority had passed amendments to its collective investment schemes to allow retail real estate funds, including REITs.
"In Qatar, regulations are in place for offering and listing investment funds and ETFs, so exposure to real assets can be offered to investors seeking diversification of their portfolios and protection against inflation," the report had said.
The Gulf Cooperation Council region has witnessed a spate of listings of REITs in the recent past. Although several players in the region are open to launch REITs, they are now cautious, given the present uncertainty in the market.
A PricewaterhouseCoopers study had said REITs are underpenetrated in the Middle East, but expected to grow gradually as the real estate market in the region matures in terms of quality of and access to assets, financing, governance and regulations.
The REITs provide alternative investment vehicles, which would help diversify the portfolio, market sources said, adding Shariah-principled REITs could be tailored in the Qatari market.
Considering the regulatory limits on the realty exposure of the banks, they said the investment pool from REITs could help the lenders reduce their concentration risks, while at the same time real estate sector could get much needed funds.
As per the global practices, at least 75% of the gross income of the REITs has to be generated from the real estate related sources and are required to distribute at least 90% of their earnings from the realty investments directly to investors.
The cabinet resolution No 28 of 2020 allowed real estate investment funds that will specialise in real estate investment in the various regions and this decision will provide an opportunity that was previously unavailable to middle and limited income citizens to invest in the real estate sector.
"REITs appear to be a strong contender for the next fund structure to be introduced on the Qatar Stock Exchange, backed by the listing regulations issued in 2015," the Capital Market Report 2020 of Qatar Financial Center (QFC) had said.
REITs are basically entities which develop and own ‘income generating’ real estate properties and generate income in the form of dividends. Their return depends on which type of REITs – whether equity, debt or hybrid.
Market experts are of the view that in the medium to long term; there are opportunities for capital growth from high-yield income-producing assets; even as uncertainties exist in the short term.
These instruments (REITs) offer investors an affordable and low risk route to invest in a sector that provide long term returns through underlying capital appreciation and dividends, they said.
"The review of ownership rules and regulations in the real estate sector to accommodate non-Qatari investors and enhance transparency in the sector is expected to augur well for capital inflows to the sector," a senior official of a leading realty research and valuation company said.
The QFC Regulatory Authority had passed amendments to its collective investment schemes to allow retail real estate funds, including REITs.
"In Qatar, regulations are in place for offering and listing investment funds and ETFs, so exposure to real assets can be offered to investors seeking diversification of their portfolios and protection against inflation," the report had said.
The Gulf Cooperation Council region has witnessed a spate of listings of REITs in the recent past. Although several players in the region are open to launch REITs, they are now cautious, given the present uncertainty in the market.
A PricewaterhouseCoopers study had said REITs are underpenetrated in the Middle East, but expected to grow gradually as the real estate market in the region matures in terms of quality of and access to assets, financing, governance and regulations.
The REITs provide alternative investment vehicles, which would help diversify the portfolio, market sources said, adding Shariah-principled REITs could be tailored in the Qatari market.
Considering the regulatory limits on the realty exposure of the banks, they said the investment pool from REITs could help the lenders reduce their concentration risks, while at the same time real estate sector could get much needed funds.