SECP approves Shariah-compliant developmental REIT scheme

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has accorded approval for the registration of the first Shariah-compliant Developmental Real Estate Investment Trust (REIT) Scheme in Pakistan under the revamped REIT regulatory framework, a statement said on Thursday.

Earlier this year, the commission had significantly revamped the REIT Regulation, 2015. This signifies that the amendments introduced after an exhaustive stakeholders consultation process have proven to act as the much-needed catalyst for the REIT sector.

The REIT sector was previously relatively dormant, with the launch of only one REIT Scheme since 2008. The amendments to the REIT Regulations in 2015 only yielded the launch of one rental REIT Scheme, whereas the successive amendments in 2018 could not provide the desired outcome of mobilising further REIT Schemes within the country, the statement said.

The REIT Scheme envisages investment in undeveloped land in Karachi, aiming at uplifting the area and developing the real estate, including construction and sale of apartments and commercial units by the REIT Management Company for generating income for unit holders.

Pursuant to the registration of the REIT Scheme and the approval for issuance of units, the REIT Scheme can raise funds through offer of units to the private investors for the acquisition and development of the proposed real estate.

The growth in the REITs sector will lead to better documentation, formalisation, governance, transparency and investors’ protection in the real estate sector and provide an opportunity to small investors to benefit from growth in the real estate sector, it added.

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