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The Role of REITs in Saudi Arabia's Real Estate Sector:
Bakhsh, Ibtihal
Bakhsh, Ibtihal
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Abstract
This paper examines the critical role of Real Estate Investment Trusts (REITs) in Saudi
Arabia’s rapidly evolving real estate sector within the framework of Vision 2030. Introduced
in 2016, REITs have transformed the investment landscape by democratizing access to real
estate assets, aligning with the Kingdom’s broader goals of economic diversification and
modernization. The study highlights the contributions of REITs to market growth, particularly
in enhancing investment accessibility, liquidity, and regulatory transparency, while providing
steady income streams to investors. It also addresses significant challenges such as asset
concentration, regulatory constraints, and market volatility. The research conducts two
performance analyses of Saudi REITs to assess their contributions to the real estate market and
economic growth. The first analysis evaluates key financial metrics such as NAV, dividend
yields, and occupancy rates, providing a comprehensive view of REIT performance. The
second employs research-based models, including Sharpe, Treynor, and Jensen's ratios, to
measure risk-adjusted returns, portfolio efficiency, and performance against expected market
returns. Findings indicate a mixed performance, with certain REITs excelling in income
generation and portfolio resilience, while others struggle with inefficiencies and external
pressures. By aligning with Vision 2030 goals, REITs are positioned to contribute significantly
to economic stability and infrastructure development, despite needing improved diversification
and risk management strategies. This research underscores the strategic importance of REITs
in fostering sustainable economic growth in Saudi Arabia’s dynamic real estate sector.