The Saudi Arabian regulator has given approval for exchange-listed real estate funds in a move seen as an effort to support property development.
The rules from the Capital Market Authority state that the funds must be closed-ended with a minimum fund size of 100 million Saudi riyals ($27 million). The funds must generate periodic and rental income and must distribute a percentage of their profits to unit holders at least once a year.
Three-quarters of the funds’ assets must be invested in constructionally developed real estates, which can be residential, commercial, industrial, agricultural or other types so long as they are “developed and ready for use”.
“Fund managers are prohibited from investing in vacant land,” say the rules.
The fund type is seen as an effort to help meet the government’s aim of building about 1.5 million homes in the next seven or eight years.
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