ISLAMABAD, Feb 1: The Securities and Exchange Commission of Pakistan (SECP) on Friday notified the Real Estate Investment Trust (REIT) Regulations 2008.
The REIT rules will provide an opportunity to the general public to pool funds for investment in the real estate sector.
The REIT regulations in Pakistan are introduced in a trust structure where the property itself will be vested in the name of the trustee and the REIT Management Company (RMC) will manage the real estate on behalf of the unit holders.
The RMC will have a minimum of 20 per cent stake in the scheme and will receive a management fee for managing the real estate.
People will be allowed to invest through units of the REIT scheme, which will be listed on stock exchanges.
According to the REIT regulations, two types of REIT schemes are envisaged in Pakistan — developmental and rental. One scheme is allowed to carryout only one project at a time.
In a developmental scheme, RMC will construct a project and sell the property afterwards and the sales proceeds will be distributed among the unit holders.
In the rental REIT, RMC will buy a portfolio of properties and rent it out. The unit holders will receive returns through annual dividends out of the rental income.
REITs have been provided with a tax exemption, if 90 per cent of the income is being distributed among the unit holders.
The REIT will initially be allowed in Islamabad, Rawalpindi, Karachi, Lahore, Peshawar and Quetta.
According to the regulations, REIT funds should have a minimum size of Rs5 billion.
Started in 1960’s in the United States, REIT schemes are now available in 15 countries worldwide. Pakistan is the first country in the emerging markets to introduce REIT, said a SECP spokesman.