Saudi CMA approves rules for real estate funds

The Capital Market Authority (CMA), Saudi Arabia’s market regulator, has approved rules for real estate funds listed on the kingdom’s stock exchange, as part of wider efforts to boost investment in the housing market.

The real estate investment traded funds (REITs), publicly offered and traded on the Saudi stock exchange Tadawul, will invest in residential, commercial, industrial, and agricultural real estate.

They will also periodically distribute a percentage of net income in cash to unit holders, according to a statement on the Saudi bourse on Sunday.

Saudi Arabia has been seeking further investment in the housing sector, as the tumble in oil prices triggered a slowdown in government projects. The kingdom is looking to fund the construction of about 1.5 million homes planned over the next seven or eight years.

Earlier this year, the Saudi government announced a new tax on undeveloped land, under which a 2.5 percent tax will be levied annually on the value of unused land designated for residential or commercial use.

The land tax is expected to combat land hoarding and restore balance to supply and demand within the Saudi property market, in a bid to ease the lack of affordable housing in the kingdom.