The real estate industry is following a new strategy: Real Estate Investment Trusts (REITs), and investors are keen to understand more about it as per the meeting held with the regional investors and stakeholders. We usually hear many questions and confusions regarding REITs that whether REITs will be accepted in the UAE market and it will bring higher revenue and income soon or no. in the following article, we will be answering these questions at best by the market view and thinking.
The UAE investors, especially in Dubai, have realized the importance of REit benefits and included them in the portfolio based on their importance. The GCC market is not mature like other markets, and our vase is low, but the Reits benefits have got fantastic understanding and acceptance in the region.
There is great interest and demand for the real estate mutual fund investment means by keeping in mind the barometer reading of the REITs public listed companies number. The number of the products is quite limited till now, but the growth can be seen from the positive investor’s outlooks.
The Reits is still emerging, but its compliance has tailored made fund portfolios for the investors, especially the locals, as per their need. It is obvious in the asset’s new mix by adding funds to the required portfolios.
The regional Reits is expanding and adding new healthcare and education sectors, which was only restricted to the residential and office plans. Thus investors, whether local or international, have options of choosing from great product diversity.
We can realize the importance of the step taken by ENBD Reit in buying a Dubai remains community new school worth Dh55 million. The student housing capacity is also acquired with the funds for Dh129 m in May 2017.
The emirate REITs, which are the first REIT of UAE, are done with the three schools’ three deals in the last years. The British Columbia Canadian School, a leaseback and sale contract located in the Dubai Investments Park, is the latest proof.
Due to the rising demand for schools in the UAE, the educational sector serves as great news for REITs. More than 1000 schools are opening up in the upcoming 5 years in Abu Dhabi, Dubai, Jeddah, Cairo, and Riyadh as per the industry report, and the private sector will supply 350 of them.
The untapped market is health care due to the high investment capital associated with either the medical instruments or the construction of a hospital by buying the property. The Reits can expect great returns and profits in the UAE health sector with a growth rate of 60% in 2021 and the UAE agenda of 2021 vision to make healthcare a world-class standard; click here to get the detail.
Moreover, the fund manager can identify high asset classes that are less impacted by the market, and REITs can do diversification and expansion. This is an untapped opportunity, and REITs can cash on that. A recent example is five holdings, Reit hospitality of worth Dh 2.1 billion, which is huge and new in the UAE.
We can expect a positive outlook in the future as the UAE real estate industry is growing and becoming mature with time. The Reit has been accepted in the region by the investors for providing returns with less risk. It will grow further with the Dubai expo 2020, local benefits, and UAE’s strategic location.