‘Review regulations to drive REITs’

REITS Association of Zimbabwe chairperson Mike Juru says the Rent Regulation and Commercial Premises Regulations need to reflect a commercial approach in property dealings to make real estate investment trusts viable.

The call comes amid concerns that policy inconsistencies are barring investments into the asset class.

Speaking at the inaugural two-day Capital Markets Conference held in Nyanga, Juru said the association was exploring how policy decisions could drive growth and development in capital markets, specifically focusing on the REIT sector.

Juru added that policies requiring regular income distributions to shareholders made REITs attractive to income-oriented investors.

Juru is the Integrated Properties chief executive officer.

“This mandated payout enhances the liquidity of REITs, making them a popular choice for those seeking steady income streams and contributing to market growth,” he said.

“The Rent Regulation and Commercial Premises Regulations need to be reviewed to reflect a commercial approach to treating property performance. Standard leases need to be adopted for a standard approach to the treatment of landlord and tenant issues. Further, there is a need for commercial property court to handle specifically landlord tenant issues.”

Juru said by fostering an environment that encouraged investment, provided tax incentives, and established clear regulatory oversight, governments could play a pivotal role in unlocking the full potential of these vital investment vehicles.

He said it was pivotal in REIT growth to add preferential tax rates for these trusts to meet specific criteria, such as distributing a high percentage of taxable income to shareholders.

“This incentive boosts investor interest and promotes transparent financial practices. Regulations often require REITs to diversify their holdings across various properties and sectors,” Juru said.

“This mitigates sector-specific risks and ensures a balanced portfolio, protecting investors from significant losses if one sector underperforms, thereby stabilising the REIT market. Mandatory regular valuation and disclosure requirements foster transparency in REIT operations. Investors benefit from clear insights into the performance and health of their investments, which enhances trust and encourages further investment in REITs.”

REITs have become a popular collective investment scheme, making up a significant portion of the liquidity for such assets.

According to Juru, policy-driven measures such as diversification and transparency contribute to the overall stability of REITs.

By creating a robust regulatory environment, he continued, policymakers ensures that REITs remained resilient even amidst market fluctuations, providing a reliable investment vehicle.

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