Search SaudiArabiaPR.com

Home >> Banking & Investments

Knight Frank Saudi Arabia releases Saudi Arabia Real Estate Investment Trusts Q1 2018 Review.

Sunday, April 29, 2018/ Editor -  

Share

Home >> Banking & Investments

Saudi Arabia, April 29, 2018:   The REIT market in Saudi Arabia continues to expand and now surpasses a market capitalisation of USD 2 billion. The number of listed REITs doubled in the last two quarters; with 12 REITs listed on the Tadawul at the end of Q1 2018.

Raya Majdalani Knight Frank Saudi Arabian Research Manager, commented, “REITs initially traded at a significant premium to Net Asset Value (NAV). This was mainly attributable to large amounts of capital seeking exposure to these REITs compared to the size of the investable universe. Following initial buoyancy, most REITs have pared back early gains and are currently trading below listing price. As a result, price to NAV has dropped over the last two quarters, moving closer in line with more mature markets.” 

To date the investment strategy for REITs in Saudi Arabia has on the whole been non-thematic, partly as a result of a chronic lack of good quality assets with long term, sustainable income. In common with more mature REIT markets, it is likely that thematic REITs will take the lead over diversified REITs in the longer term. Although the blended approach provides important long term benefits, thematic REITs allow investors to gain exposure to specific real estate sectors in line with a specific risk/return profile. This will be particularly important for investors seeking exposure to non-cyclical, defensive sectors such as healthcare and education.

The regulatory framework will remain a critical priority that generates challenges as well as opportunities for fund managers and investors in the REIT market. Strengthening and adapting regulations, which has proven to be favourable in more mature jurisdictions, will remain a requirement for the REIT market. In Saudi Arabia, this will be particularly important in light of the government’s drive to enhance the investment environment as part of the wider strategic reforms.

Stefan Burch, Knight Frank General Manager, commented, “While it is still premature to judge the ramifications for the wider real estate market, REIT regulations signal an important step in the government’s drive to enhance the investment environment as part of the wider strategic reform agenda.”

In 2018, we expect more REITs to be listed given the number of approvals that are currently in the pipeline. As more REITs are listed, we expect the level of competition to increase in the market, which would translate into a greater focus on the adoption of best-in-class practices in terms of quality of the underlying portfolio, asset management and corporate governance. 


Previous in Banking & Investments

Next in Banking & Investments


Home >> Banking & Investments Section

Latest Press Release

IHG signs world's largest Crowne Plaza® in Makkah

Aramco CEO to Bloomberg: Speaking to credit rating agencies before landmark bond ...

Saudi Plastic and Petrochemical Exhibition 2019 set to launch with government an ...

Lenovo Offers Security Solutions in Global Smart City Race at Intersec 2019

Young Saudi women take centre-stage in brand-new television drama

Implementation Date Announced for Long-Term Residence Permits

Saudi Ministry of Environment, Water and Agriculture signs contract for the firs ...

Honor 10 Lite Packs Stylish Looks and Flagship Performances Into New Device

M Hotel Makkah by Millennium honors its employees on its 2nd Anniversary

Nissan Energy demonstration hits the spot

Introducing Burberry Bespoke Fragrances

The Kingdom of Saudi Arabia's Minister of Energy, Industry, and Mineral Resource ...

Turkish Airlines reached the 80.2% Load Factor in December 2018.

Saudi Visa Application Process in Dubai Restricted to Holders of UAE Residence P ...

Global Energy Forum: His Excellency Khalid Al-Falih's address on day three

World No.2 completes all-star field, with four of golf's top five setting sights ...

Rolls-Royce Motor Cars Achieves Historic Business Record

Breakbulk Middle East 2019 reinforces the collaboration between UAE and Saudi Ar ...

SHUAA successfully issues and places USD135 million (SAR 506 million) Sukuk for ...

Sony Unveils Newest Products and Introduces Latest Efforts from Entertainment B ...