CMA, Oman issues initial approval for OMR 20mn for Aman Real Estate Fund

The Capital Market Authority (CMA) has issued an initial approval to establish the first real estate investment fund named “Aman REITs”, as part of the economic diversification initiatives of innovative finance and the financing lab supported by “Tanfeedh”. The initial public offering (IPO) of the fund is expected during the first quarter of this year.

Real estate investment trusts (REITs) are considered a qualitative addition to the gross domestic product (GDP) and would enhance investment opportunities in the real estate sector as new avenues of investment by encouraging small and institutional investors to enter the Omani real estate market, moving the financing wheel and encouraging real estate investment. This would have a considerable impact on foreign investments, as such funds provide incentives for foreign investments and attract investments from abroad, besides diversifying investment options and increasing market depth.

The idea of offering funds came from the laboratories of Tanfeedh to set out regulations for REITS which had a positive impact, according to the vision provided by leading real estate companies in Oman. They are expected to enhance the confidence of investors in the market and to stimulate the real estate business, which would reflect the actual role the sector plays in the capital market in particular and the national economy in general.

REITs will allow a foreign investor to own 100 per cent in the properties, which would increase capital flow to the local market, besides positively enhancing foreign investments.

The decision to establish REITs had a great role in increasing the efficiency of real estate products and projects, whether services, commercial or industrial and everything that attains lucrative returns without impacting the mechanism for expatriates owning properties, as the process will be similar to buying shares in stock markets.

The regulation obligates REITs to distribute not less than 90 per cent of the total profits to unit-holders and keep 10 per cent of the fund returns for operational expenses of the properties. REITs will also solve inheritance-related problems as the funds can be transferred into assets by establishing a real estate fund, which would facilitate the distribution of rights between heirs.