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Expert: Up to 10 new Saudi REITs likely in 2017

The growth of real estate investment trusts (REITs) in Saudi Arabia is "very rapid", an expert told ConstructionWeekOnline

Up to 10 new REITs could be launched in Saudi Arabia by the end of 2017, an expert said [representational image].
Up to 10 new REITs could be launched in Saudi Arabia by the end of 2017, an expert said [representational image].

Up to 10 new real estate investment trusts (REITs) could be launched in Saudi Arabia by the end of this year, an expert told ConstructionWeekOnline.

Stephen Flanagan, partner and head of valuation for Knight Frank’s Middle East and North Africa operation, said these estimates are based on the rate of REIT growth in the kingdom.

READ: Middle East's long-term investors eyeing REITs

He explained: "REIT growth in Saudi Arabia is very rapid, [and] Knight Frank is currently working with a number of investment houses and REIT managers on the process of forming or launching different type of REITs in the kingdom.

"These REITs are diverse, with asset classes being focused on including retail, offices, hotels, and education.

"We estimate there could be another five to 10 REITs launched before the end of 2017 in Saudi Arabia."

READ: Saudi's Jeddah Tower faces further delays

Among Saudi Arabia's more prominent REITs was one created for the development of Jeddah Tower, which is due to become the world's tallest building upon completion in 2019. 

Flanagan commended the ongoing effort of the Gulf’s regulators to promote REIT uptake: "The regulatory framework is new, the regulators are still learning, and they are adopting best practice from more mature and established REIT markets. 

READ: Survey claims 43% believe GCC lacks maturity for REITs

"They are employing knowledgeable staff [...] to ensure that the regulations primarily protect investors, which is important to give confidence to the market.

"The regulators do not pretend to know everything, but are willing to discuss with capital houses and REIT managers the best ways to structure vehicles that protect investors and enable transparency." 

An excerpt of Flanagan's conversation with Construction Week will be published in the magazine's upcoming issue (#665) on 26 August, 2017.

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