Real Estate Investment Trusts get Ministry of Finance backing
THE Ministry of Finance and Economic Development has pledged its support towards the growth of the Real Estate Investment Trusts (REITs) initiative through the implementation of different regulatory frameworks that promote its expansion.
The Zimbabwe Stock Exchange (ZSE) has established the REITs Association of Zimbabwe following the growing demand for real estate securities.
The association held its inaugural conference last week in Bulawayo where the inaugural interim board was announced.
REITs are investment securities that enable the issuer to pool investors’ funds for the purpose of investing in real estate. In exchange, the investors receive units in the trust and as beneficiaries of the trust share profits from the real estate assets.
In his presentation during the conference, the Ministry of Finance and Economic Development financial inspector Mr Matthew Sangu said the Government commends the ZSE and capital market players for the vital initiative to establish a REITS Association that will ensure an orderly engagement of investors, issuers, and market participants in the REIT market.
He said the ministry is impressed by the performance of the only listed REIT, Tigere Properties, and its contribution to the property sector.
“Government recognises the role of REITs in deepening capital markets through diversification of financial instruments available to investors, improving financial inclusion, mobilising resources for infrastructure development and inflation hedging.
“In that regard, I reaffirm Government commitment and support on establishing robust and stable capital markets platforms in line with the aspirations of the National Development Strategy and the country’s Vision 2030,” said Mr Sangu.
“The Government is determined to support the expansion of the country’s REIT market through various initiatives, which include regulatory support, issuance of prescribed asset status, and liquid assets status as incentives for capital raising in the REITs market.”
He said to address liquidity challenges faced by pension funds and life assurance companies in paying Capital Gains Tax when real estates are transferred to REITs class, the Government will continue considering offering tax incentives to such funds and companies.
Giving an example of the National Railway of Zimbabwe (NRZ) Contributory Pension Fund Mr Sangu said they were exempted from paying Capital Gains Tax when it transferred its assets to a REIT through SI 167 of 2022.
Mr Matthew Sanga
“We envisage that such incentives will encourage investments into the REITSs markets and ultimately contribute to economic development by providing an alternative source of financing, supporting job creation and economic growth, and playing a role in economic recovery efforts,” he said.
“Vision 2030 is real, we are hopeful that the growth prospects on the REITs market continue on a positive trajectory, creating investment resources for the development of the real estate sector and ultimately economic growth and development.”
The first REIT to list on the ZSE in December last year was Tigere REIT affiliated to Terrace Africa Asset Management.-chronicle
