Real Estate Investment Trusts (REITs) are a popular investment option in the real estate industry. REITs are similar to mutual funds, but instead of owning stocks, they own income-generating real estate assets such as shopping centers, offices, apartments, hotels, and warehouses. In this article, we will discuss everything you need to know about REITs, including whether they are applicable in the UAE.
What is a REIT?
A Real Estate Investment Trust (REIT) is a company that owns and manages income-producing real estate assets. REITs enable individual investors to invest in large-scale, income-producing real estate using a small amount of capital. They also allow developers to raise capital for real estate projects. By Law, REITs must distribute at least 90% of their taxable income to their investors as dividends, making them an attractive source of passive income for investors.
Types of REITs
There are three types of REITs: Equity REITs, Mortgage REITs, and Hybrid REITs. Equity REITs own and manage income-producing real estate properties. Mortgage REITs own and manage mortgage-backed securities, while Hybrid REITs invest in both properties and mortgages.
Benefits of Investing in REITs
REITs offer several benefits to investors, including diversification, passive income, liquidity, and professional management. They also provide an opportunity for investors to invest in real estate without owning the property directly, which can require significant capital and expertise.
Are REITs Applicable in the UAE?
Yes, REITs are applicable in the UAE. The Dubai Financial Market (DFM) launched the first REIT in the UAE, Emirates REIT, in 2010. Since then, several other REITs have been established in the UAE, including the Abu Dhabi Securities Exchange (ADX) listed Manazel Real Estate Investment Company, and the DFM-listed ENBD REIT.
Read more about: Abu Dhabi Residential Market Review: Demand For Properties Drives Rise In Transactions
In conclusion, REITs offer a convenient and profitable way to invest in real estate without the high costs and expertise required to own property directly. While REITs have been a popular investment option in the US and Europe, they are also applicable in the UAE. With the growing number of REITs in the UAE, investors have more opportunities than ever to benefit from the country’s real estate market.
Just make sure you know what the management fees the REITs charge are, and that you’re happy wit them. To exit a REIT you just need to sell your units to another investor at the exchange quoted market price.