Riyadh- Saudi Capital Market Authority unveiled a draft on real estate investment traded funds instructions. The draft prohibits the investment of real estate funds in white lands, or urban lands that are not being developed by their owners. These updates coincide with the Ministry of Housing beginning to survey the white lands included in fees.
Fees up to 2.5% of the total land value are forecast to be imposed on annual basis.
CMA announced it was seeking comments by August 23 before eventually publishing a final version of the rules for “real estate investment traded funds”.
The draft regulations cover the management, operation and ownership of the funds, specifying for example that they would not be allowed to invest more than 25 percent of their assets outside Saudi Arabia.
Minister of Housing of Saudi Arabia Majed al-Hogail stated earlier that notifying of lands subject to fees should be done at the specialized website. “Estimating the land value is based on several standards basically the location of the land, services provided, construction regulations applied on it and availability of public facilities near it”, Hogail added.
Capital Market Authority also revealed, in a statement, that these instructions aim at organizing the issuance of real estate investment traded funds, whose basic investment purpose is represented in investing in structural developed real estates that achieve regular profits. The authority added that when these instructions were prepared, a comprehensive study of best practices and international standards was carried out.
45 days earlier, Saudi Arabia issued an official list of lands’ fees. This list shows the state’s determination to put an end to land manipulation.