What is a REIT?
A business that owns, manages, or finances income-producing real estate is a real estate investment trust (REIT).
Based on mutual funds, REITs combine the capital of many investors in Dubai, among other countries. As a result, individual investors can now benefit from dividends from real estate investments without having to invest in, manage, or finance any real estate themselves.
Benefits of REITs for Property Investors
- Managing Properties Without Stress
The average investor can own commercial properties thanks to REITs. The investor also benefits from having seasoned property managers manage their properties to generate income without typical landlords’ hassles.
Rent collection, marketing, tenant supervision, and facility maintenance are all handled by a carefully chosen management team. Investors in REITs only need to take their dividends.
2. Gains from Appreciation
Even though equity stock price increases won’t be as significant in a strong market, commercial real estate has historically appreciated steadily over time, which has helped REITs perform well in the past.
The prices of commercial real estate and REIT share prices are typically less affected by short-term inflation and interest rate changes than equity stock prices.
3. Earnings from Dividends
In the case of equity stocks, management decides on dividend payments and profit reinvestment. In contrast, REITs return 90% or more of profits to investors. Consequently, investors can choose how to use their dividends.
If investors decide to reinvest, they primarily buy more shares. They can also use their dividends to fund a trip if they’d prefer. While dividends are typically constant, REITs offer the chance for higher dividends as rents rise.
4. High Liquidity
The main reason anyone would want to invest in REITs is liquidity. It is well known that real estate has a favourable risk-return profile as an asset class. This indicates that compared to other investments, it offers excellent returns and lower downside risk.
However, real estate has a significant disadvantage relative to other asset classes because it is highly illiquid. As a result, investors must wait weeks, if not months, to withdraw money from their real estate investments.
This is where real estate investment trust (REIT) investing can help. The securities that REITs sell are listed on numerous international exchanges. They can therefore be purchased and sold, thus encouraging investors to put their investments in REITs to enjoy high liquidity.
Real Estate Investment Trusts allow investors to diversify their potential risks, particularly those with small investment amounts. This is so because the properties that these trusts own are so diverse.
They own homes, apartments, condos, office space, retail stores, and other real estate in various markets. As a result, they are sufficiently diversified to guard against the risks that any particular micro market may pose. This has led many investors to favour REITs as a preferred option.
Best REITs to Invest in Dubai
The best REIT to invest in Dubai offers high liquidity, diversification, and potential for high dividends. All the companies listed below have a long history in the city and are well-positioned to take advantage of the Dubai real estate market.
1. SEDCO Capital
SEDCO Capital, based in Saudi Arabia, has launched an increased offering of its real estate investment trust fund, increasing asset value by SR702 million ($187 million).
The offering span will last five days, until December 16, according to the company. The cost per unit is set at SR10.
2. Al Rajhi Capital
Al Rajhi Capital, which has its main office in Riyadh, is a closed joint stock company with a paid capital of SAR 500 million. It was established on March 18, 2008, and the Saudi Arabian Capital Market Authority has governed it since June 19, 2007.
3. Al Bilad Capital
Al Bilad Capital Fund stands out by offering a method of investing in Saudi company shares with returns permissible under Shariah law. Additionally, Al Bilad Capital does not charge redemption fees, giving you the flexibility to redeem at any time.
4. Emirates REIT
Emirates REIT is UAE’s largest publicly traded Sharia-compliant Real Estate Investment Trust (REIT). It was the first REIT established in the UAE in 2010 and currently manages nearly USD 734 million in assets. Emirates REIT is incorporated in the DIFC and is DFSA-licensed.
5. ENBD REIT
ENBD REIT, a real estate investment trust, provides investors with a steady stream of dividend income. This income is typically derived from rental income from investment properties, with the possibility of capital growth and increases in the value of the equity.
As of December 2021, Emirates NBD Asset Management, the fund manager, had approximately US$ 6.1 billion in assets under management, making it one of the top asset managers in the GCC.
6. GII REIT
GII Islamic REIT (CEIC) Plc is a Dubai International Financial Centre (“DIFC”)-an incorporated closed-ended investment company. According to the laws and regulations of the Dubai Financial Services Authority (“DFSA”), the REIT is regulated as a Qualified Investor Fund. The DFSA classifies the REIT as a Domestic Fund, an Islamic Fund, and a Real Estate Fund.
7. Al Mal Capital
Al Mal Capital, an asset management subsidiary of Dubai Investments, brings us to a close with a bang. According to reliable sources, this subsidiary raised Dh350 million ($95.37 million) through the public offering of its real estate investment trust.
With so many REITs to choose from, which one is the most suitable investment for you? Each of the REITs mentioned above has its unique benefits and drawbacks, so it’s essential to do your research before making a decision.
Land Sterling has been in the real estate industry for over ten years. Our team of leaders and experts offers top-quality services, including project management, and has delivered over 10,000 projects. Contact us today to get a quote for all the best REITs you can invest in Dubai.
1. What’s a paper clip REIT
A “paper clip REIT” boosts a REIT’s tax benefits while enabling it to manage properties that such trusts ordinarily aren’t able to.
2. How is a REIT purchased?
You can invest in a publicly traded REIT listed on a significant stock exchange by purchasing shares through a broker. Additionally, you can buy shares of a REIT exchange-traded fund or mutual fund.
3. Are REITs preferable to rental housing?
The simplicity of purchasing REIT shares as opposed to rental properties is arguably its most significant benefit. Without dealing with the hassle of purchasing, managing, and selling real estate, REIT investing enables one to share in value growth and rental income.
4. How do novice investors buy REITs?
Opening a brokerage account, which typically takes just a few minutes, is all it takes to get started. Once that happens, you can buy and sell publicly traded REITs like any other stock.
5. How many REITs are there In the UAE?
A few new entrants have recently drawn attention to the REIT market. In the GCC, there are currently 18 REITs that are listed, including those from Abu Dhabi, Saudi Arabia, Bahrain, and Oman. Since 2014, all have established regulatory frameworks to allow for REITs.