MEA July 2017

MEAMARKETS / July 2017 103 , In short, a REIT is a Real Estate Investment Trust. CEO of Emirates REIT, Sylvain Vieujot, reveals more as he talks about his firmwho recently won the Sharia Compliant Fund of the Year 2017 award. The Right Time to Invest in Real Estate A REIT is a Real Estate Investment Trust. It is a company that owns real estate, manages it, and distribute the profits (rents less expenses) to the shareholders. It is a form of mutual real estate investment. CEO of Emirates REIT, Sylvain Vieujot begins by detailing how Emirates REIT became the UAE’s first DFSA regulated Real Estate Investment Trust. “There is a very large real estate market in the Emirates, which is quite a new thing for this country. In 2008-2010 many investors were investing directly into real estate, and now there was a good opportunity to start a professional investment agency to take care of this. “REIT is a Real Estate Investment Trust, and it is very common in America, Europe and Asia. Having managed the holding of the French REIT, we thought there was a good opportunity to take some of the best assets you find in this type of market, which is very high quality real estate.” Sylvain is keen to tell us the benefits of investing in a REIT, rather than in a property fund or in actual properties, which he does in his own words. “You would invest in a REIT for the same reason you would invest in property. It is a good possession for your capital, the price is good due to inflation and it provides a regular income. With a REIT, you get the same advantage in that you invest in real estate, but you are assured that: With REIT, you get better quality real estate, it is self- managed and it has liquidity. There are two points here. Firstly, you don’t have the manage the asset yourself, or find the property. Secondly, in terms of liquidity, you are essentially trading on the stock market. “When you invest directly, you must go through the agent, find the property, and you would normally need to invest 100’s of millions to invest in and buy a property. If you are in an apartment, you know that it will take a few months at best to sell it. Here, you can buy a property on the Shari’a stock market if you have authorisation that you have the pro-rata of the total rent. If you want to sell the shares, or invest more then you just move your portfolio.” Sylvain is eager to reveal what exactly REIT shares are and if they are different to normal shares, plus he tells us how important it is to be a Shari’a compliant business. “Shares in a REIT are typically categorised ‘between a bond and a stock’. They are usually priced between 150 and 250 basis points, which is more than a government bond. They will also have potential for capital appreciation according to the adjustment in value of the underlying assets. This can however lead to volatility in the share price in the short term. The underlying quality of such an investment is the security of the dividend payment based on a recurring cash-flow generated by the long leases on the properties. You can trade REIT shares just like normal shares. “In terms of Shari’a compliant investors, anybody can buy a share of the market, but here are local institutions who invest in Shari’a compliant investors and banks. While there is liquidity, we manage Shari’a compliance because real estate is very naturally Shari’a compliant for a pool of investors. Bringing this insightful interview to an end, Sylvain detail the firm’s plans, in his own words. “As we are regulated, I cannot disclose anything concerning future developments. However, I can say that now is a good time to invest in real estate facilities in the UAE and we are working on that. There are many new developments in the UAE, in terms of new properties and they have a very attractive rent, as we distribute 7% per year. There is a high potential for depreciation, because apartments may not be at their best in terms of capital management.” Name: Sylvain Vieujot, CEO Company: Emirates REIT Management (Private) Limited Email: [email protected] Address: DIFC, Index Tower, Level 23, Dubai UAE Phone: +971 4 405 73 48 UA170120