KARACHI: The stock exchange will witness up to five listings of real estate investment trusts (REITs) in 2023 from the Arif Habib Group alone, a company official told Dawn on Wednesday.

REITs are investment schemes that collect money from investors and deploy it in real estate projects. Ordinary investors can trade REIT units like company shares once they get listed on the stock exchange within three years of inception — a feature designed to let small investors take exposure to an otherwise capital-intensive and illiquid real estate market.

Speaking on the sidelines of a gong ceremony held to mark the start of trading in Globe Residency REIT, Arif Habib Dolmen REIT Management Ltd CEO Muhammad Ejaz said the group has registered as many as nine schemes with a collective fund size of Rs125 billion.

“Four to five of these REITs will raise funds from the public within 2023,” he said.

The number of upcoming REIT listings is unusually high in view of the fact that a total of three listings, including that of Globe Residency REIT, took place on the Pakistan Stock Exchange (PSX) in the outgoing year.

The same group launched Pakistan’s first REIT — Dolmen City REIT of Rs22bn — in 2015. The REIT sector, which had only one constituent until now, is the best-performing PSX sector in 2022 so far.

According to data compiled by Topline Securities, the REIT sector outperformed all others due to a stable dividend yield coupled with favourable changes in the regulations. Commercial banks can now invest in REIT units and count the investment towards their housing and construction finance targets. The regulatory tweak has led to a big jump in the investment of REIT units by commercial banks.

In his speech at the gong ceremony, industrialist Arif Habib recommended that the government should exempt the first-time purchasers of home, shop and office from submitting wealth reconciliation.

“Developers face problems when their end buyers insist on paying in cash. That’s because their wealth isn’t reconciled in most cases,” he said, adding that the deep-rooted, societal problem compels developers to declare understated profits.

Mr Habib also demanded that the government should tax the holdings of empty plots at a higher rate to encourage land development, which creates employment and increases the asset value by two to three times. He added that tax relief should instead be given on the development of empty plots into useable real estate.

Citing research from independent sources, he said real estate is the largest asset class in Pakistan with the investment value of around Rs90 trillion. Investments in banking deposits, stock market and mutual funds amount to Rs22.7tr, Rs6.3tr and Rs1.4tr, respectively.

Published in Dawn, December 29th, 2022