Real estate investment trusts are serial underperformers on Saudi Arabia’s stock market, hampered by low liquidity and hit harder by geopolitical shocks than the wider exchange or the property sector.
There are 19 REITs listed on the Tadawul main market and one that trades on the smaller Nomu market. They have about SAR20 billion ($5.3 billion) in combined assets as of this year, according to Derayah Financial, which operates one of the trusts.
But only a handful of the 20 REITs posted positive returns in the first three months of this year, even as the Saudi property sector logged a 37 percent year-on-year hike in transaction volumes and strong price appreciation, according to MR Raghu, chief executive of Marmore Mena Intelligence.
“This suggests that listed real estate companies are likely facing challenges stemming from factors such as high interest rates and rising construction costs, which are impacted by global supply chain disruptions,” Raghu tells AGBI.
The trusts, which allow investors to own stakes in income-generating properties while avoiding day-to-day management responsibilities, are seen as another tool to finance Saudi Arabia’s massive push to develop residential, office, hospitality and retail space.
The 20 REITs have 216 properties in the kingdom and 13 overseas, according to Derayah.
It is too early to assess how the Iran-Israel conflict and the tentative ceasefire might affect the Saudi property sector.
However, the Tadawul All Share Index fell by 7.3 percent from January 1 to June 30, with most of that decline taking place in the second quarter.
Most REITs’ shares also registered price falls in the second quarter of 2025. Many are looking at year-on-year percentage drops well in the double digits.
The S&P Saudi Arabia Domestic REIT Shariah index, which measures 12 shariah-compliant REIT securities, is down more than 7 percent so far this year. Such struggles are not new for the investment vehicle (see A history of Saudi REITs, below).
Raghu says REITs still have an important role to play in Saudi Arabia as development is a central component of Vision 2030. However, they need to overcome challenges such as “limited diversification, exposure to underperforming assets and low trading liquidity”.
“Moreover, rental yields and asset appreciation have at times lagged expectations due to market saturation in some segments and macroeconomic headwinds.”
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