The Dubai International Financial Centre (DIFC) recently revealed that in accordance with the enactment of Investment Trust Law No.5, it was now prepared to launch domestic and international Real Estate Investment Trusts (REITs).
Following growing demand for collective investment products with real estates as underlying assets, the new Trust Law No. 5 was implemented to introduce a new investment vehicle for use by funds to facilitate the establishment and operation of Real Estate Investment Trust (REITs), reported Khaleej Times.
Similar to equity based collective investment funds, REITs are companies that invest their assets in real estate holdings, while investors gets a share of the earnings from the portfolio of real estate holdings that the REIT owns.
Investors, however, have no control over when the company will sell its holdings or how it will manage them.
According to statement from the Dubai Financial Services Authority (DFSA), passage of the law was approved by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai, earlier this month.
“In many of the world's major capital markets, REITs have become the most favored method for attracting public ownership in property investments," explained the Knott Chief Executive of DFSA, David Knott.
"They provide a convenient form for listed and tradable property ownership with transparent pricing and liquidity,” he added.
The “Middle East as a region has relatively higher exposure of real estate in private portfolios. In this context, the introduction of REITs will be welcomed by both investors and real estate developers,” said an unnamed real estate investment analyst.