The growth of real estate investment trust (Reit) funds in Saudi Arabia is likely to decelerate in 2019 according to a recently published report.
The study, produced by real estate consultancy Knight Frank, shows that 2018 has been a mixed year for Reits. While the number of listings and the market capitalisation of Reits have both grown in the last 12 months, the performance of the funds has been less impressive.
Listings rose by a third since the first quarter of 2018 and market capitalisation grew by 50% to surpass $3 billion. However, the Reit index had fallen by 20% at the end of 2018, in contrast to the 10% growth in the all share index of the Saudi stock exchange.
Nevertheless, the emergence of the Reit market has been a positive step for Saudi Arabia’s real estate market, states Knight Frank, citing new regulations for the use of Reits as an important step in the government’s drive to increase private sector participation and transparency in the sector.
Knight Frank also forecasts some positive signs for investors, despite a likely slowdown in the number of listings. These signs include greater transparency, improved corporate governance and better quality portfolios among the Reits that remain in 2019.
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