El Kuwaiz Stresses Real Estate Funds: Key to Sector Financing

The Chairman of the Capital Market Authority, Mohammed bin Abdullah El-Kuwaiz, emphasized the significant financial requirements needed to realize the ambitious goals in the real estate sector, especially in the context of housing programs and ambitious ownership plans, including major projects.

Misconception of Real Estate Financing

During his participation in the ministerial session of the Future of Real Estate Forum held in Riyadh, El Kuwaiz pointed out a common misconception.

He stated, “Some people believe that real estate financing through the capital market is limited to initial public offerings and capital increases. However, this is a complete misconception because these methods constitute less than 10% of the financing coming through the capital market.”

In addition, he clarified that the larger proportion of financing comes from real estate funds, which have become one of the most important channels for financing the real estate sector in the Kingdom.

 Diversity of Real Estate Funds

El- Kuwaiz highlighted that REITs (Real Estate Investment Trusts) are just one of the various real estate funds currently available in the market. These also include real estate income funds, real estate development funds, closed-end traded funds, and other real estate funds distributed by fund distribution platforms.

This diversity offers a range of options for investors and developers alike.

Expansion Opportunities in Real Estate Sector

The Chairman underscored the significant opportunity lying ahead for the real estate sector in diversifying the types of financing. This includes capital market listings and taking advantage of debt markets.

Consequently, by doing so, the sector can leverage different forms of financing to fuel growth and development.

Growth of Managed Assets in Real Estate Funds

El -Kuwaiz disclosed that the size of the assets managed in the real estate funds sector amounts to about 170 billion Saudi Riyals as of the end of the third quarter of 2023. This represents a third of the assets managed in the capital market.

The insights shared by El -Kuwaiz highlight the evolving landscape of real estate financing in Saudi Arabia, with real estate funds playing a pivotal role in shaping the future of the sector.

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REF’s Contribution to Sakani Beneficiaries for October 2023