Saudi Arabia's Capital Market Authority (CMA) is studying plans to introduce rules governing the listing of real estate investment trusts (REITs), two sources aware of the matter told Reuters.

The regulator has approached market participants in recent weeks about forming a panel which will report to it on areas including how REITs work in international markets, according to one of the sources, who has been approached about the matter.

The CMA was not available to comment.

Given the early stage of the plans and the slow pace of regulatory progress in the kingdom, the sources said it is likely to take some time to draw up even draft rules for REITs, securities which trade on stock markets but which invest directly in properties and distribute profits as dividends.

It comes at a time of significant development for the Saudi stock market, with the Arab world's largest bourse set to open to direct foreign investment on June 15.

While a common investment tool in many Western markets, Emirates REIT became the first listed REIT in the region in April 2014. Bahrain's stock market said last month it had adopted a regulatory framework for listing REITs.

The Saudi building sector was worth 152.4 billion riyals ($41 billion) in 2014, providing 5.4 percent of gross domestic product, HSBC estimates. The kingdom already has more than 100 private and public real estate funds, highlighting the popularity of the asset class.

REITs would offer tax benefits, especially for foreign investors who currently have to pay a 20 percent tax on all profits generated in the kingdom, as well as a 5 percent withholding tax when repatriating dividends, according to the source approached about the CMA panel.

As they are publicly traded, REITs would also be easier for local and international investors to move in and out of, as opposed to being locked into a fund structure, he added.

Alleviating the chronic housing shortage in the kingdom is also a key issue and legislation such as a tax on undeveloped urban land has recently been announced.

REITs would provide a new source of funding for developers, who are traditionally reliant on debt financing, according to Sultan al-Kadi, research analyst at Aljazira Capital.

"For real estate investors and developers it's more about additional financing options, for financial institutions it is a new source of income, and for retail and institutional investors it is a new investment option,"