What are REIT Funds

REIT funds in the UAE are established as per the local Federal laws or offshore under the laws adopted by the UAE financial free zones, including-

• The Abu Dhabi Global Market
• The Dubai International Financial Centre

Let’s delve into the details of the primary REIT regulatory conditions mentioned under the SCA Regulations.

SCA Regulations for REIT funds in the UAE

The Securities and Commodities Authority (SCA) Regulations for real estate ETF in the UAE ensure transparency, investor protection, and market stability. Below are the key regulations in brief:

Asset Allocation

At least 75% of the REIT’s total assets must be invested in income-generating real estate.

Leverage Limit

REITs can borrow up to 50% of their total asset value.

Dividend Distribution

A minimum of 80% of net income must be distributed to shareholders annually.

Property Development Cap

REITs cannot invest more than 30% of total assets in property development.

Listing Requirement

Public REITs must be listed on a regulated stock exchange (e.g., Nasdaq Dubai, DFM, or ADX).

Sharia Compliance (if applicable)

Islamic REITs must follow Sharia-compliant investment guidelines.

Regulatory Oversight

The SCA monitors and enforces compliance to protect investors.

Why Choose a Real Estate ETF?

Stated below are the top benefits of choosing a real estate ETF:

Regulated Framework

UAE REITs are governed by the SCA, ensuring transparency and investor protection.

Steady Income Stream

REITs provide regular dividend payouts via rental income, ensuring a stable income for investors.

Portfolio Diversification

They offer exposure to real estate without directly owning properties, contributing to the diversification of investment portfolios.

Affordability

REITs enable investment in large-scale properties with minimal capital compared to direct property ownership.

Liquidity

Unlike physical real estate, REIT shares are traded on stock exchanges.

Tax Benefits

The UAE offers a tax-free environment, enhancing REIT investment returns under specific conditions.

UAE’s Real Estate Market

The UAE's strong economy and real estate sector ensure opportunities for capital appreciation.

Best Real Estate ETF in the UAE

The following are the top REIT funds to invest in:

1. Emirates REIT

This is the largest Shariah-compliant REIT funds company in the UAE, established in 2010. The DFSA licenses Emirates REIT. It is the first UAE real estate investment trust and is listed on Nasdaq Dubai. Managed by Equitativa, it primarily invests in income-generating commercial properties, including offices, schools, and retail spaces.

Emirates REIT’s portfolio features premium properties in prime locations such as DIFC and Dubai Marina. It allows investors to gain exposure to Dubai’s real estate market while ensuring compliance with Islamic finance principles. The REIT generates revenue through rental income and aims for capital appreciation. Despite market fluctuations, Emirates REIT has been playing a significant role in the UAE's real estate sector.

2. ENBD REIT

ENBD REIT is one of the REIT funds to invest in, listed on Nasdaq Dubai and managed by Emirates NBD Asset Management. Investors have a diversified portfolio of income-generating real estate assets across the UAE. The REIT focuses on high-quality commercial, residential, and alternative property sectors, including offices, education, and industrial assets.

ENBD REIT aims to generate stable rental income and long-term capital appreciation for its shareholders. Its portfolio includes properties in key business districts such as Dubai International Financial Centre (DIFC) and Dubai Media City.