Shariah Compliant Developmental REIT Scheme okayed

ISLAMABAD: The SECP has accorded approval for registration of the first Shariah Compliant Developmental Real Estate Investment Trust (REIT) Scheme in Pakistan under the revamped REIT regulatory framework. Earlier this year, SECP had significantly revamped the REIT Regulation, 2015.

This signifies that the amendments introduced after an exhaustive stakeholder consultation process has proven to act as the much-needed catalyst for the REIT schemes in the sector. The REIT sector was previously relatively dormant, with the launch of only one REIT Scheme since 2008. Amendments to the REIT Regulations in 2015 only yielded the launch of one rental REIT Scheme, whereas successive amendments in 2018 could not provide the desired outcome of mobilizing further REIT Schemes within the country.

The REIT Scheme envisages investment in undeveloped land in Karachi, aiming to uplift the area and develop the real estate, including construction and sale of apartments and commercial units by REIT Management Company for generating income for unitholders.

Pursuant to the registration of the REIT Scheme and approval for issuance of units, the REIT Scheme can raise funds through the offering of units to Private Investors for acquisition and development of the proposed real estate. Growth in the REITs sector will be led to better documentation, formalization, governance, transparency, and investor protection in the real estate sector and provide an opportunity to small investors to benefit from growth in the real estate sector.