The regulations have been issued by the CMA as part of financial sector's contribution to the National Program for Enhancing Economic Diversification (Tanfeedh), the CMA said in a press statement.
“The issuance of regulations would contribute in creating financial instruments for a large segment of the community to avail real estate investment,” H E Abdullah al Salmi, executive president of the CMA, said.
He said the real estate investment funds, which are collective investment schemes, would attract more foreign funds in Oman market that would benefit and stimulate Oman's real estate sector. The real estate investment funds will be available for public subscription in accordance with the regulations and the units will be traded on the Muscat Securities Market (MSM). The funds will be managed by professional entities licensed by the CMA and will be regulated and supervised by the CMA. As per the regulations, the minimum capital requirement for real estate investment funds is RO10mn.
“The funds would be offered for public subscription and the special purpose vehicles should distribute not less than 90 per cent of the annual profits to the holders of its units. Moreover, the funds would be excepted from taxes as per the income tax law,” H E Salmi said.
The investment rules direct real estate investment funds to invest in existing income generating properties, not in empty lands and in properties of commercial nature. As per the rules, these funds will need to invest minimum 75 per cent of total assets in the sultanate, while founders will be allowed to invest up to 25 per cent of total assets abroad. The CMA said that the real estate investment funds can be established in the form of investment fund or financial trust and can borrow directly through issuance of bonds or sukuk up to 60 per cent of the total assets.
Foreign investment in real estate investment funds is open up to 100 per cent but the founders will be obligated to offer a minimum 40 per cent of the capital to the public.