ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued the first-ever certificate of Shariah compliance to two Estate Investment Trusts (REITs), namely Signature Residency REIT and Rahat Residency REIT.

Earlier this year, in pursuance of Pakistan’s Federal Shariah Court (FSC) judgement, wherein the FSC directed the government to facilitate all lending activity under an interest-free system, the had SECP issued Guidelines for Offering Islamic Financial Services 2023. These guidelines facilitate conventional financial institutions intending to convert themselves into Shariah-compliant business models.

Since the issuance of the guidelines, a number of entities have applied for certification as Shariah-compliant companies.

The Signature Residency REIT is a close-end developmental REIT with a fund size of Rs. 825 million and a 4-year indicative life. It aims to build apartments and retail units on land, generating income for investors through the sale of these units to customers.

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Similarly, Rahat Residency REIT is also a closed-end Shariah-compliant developmental REIT with a fund size of Rs. 1,650 million and an indicative life of 5 years.

Investors will enter into a Shirkat ul Aqad partnership under REIT for acquiring real estate and executing contracts for construction, financing, sale, and redemption in accordance with Shariah Advisor guidelines.

The issuance of Shariah compliance certificates to REIT developments is a significant step towards connecting the real estate industry with Islamic financial markets and providing Shariah-conscious investors with a regulated, transparent investment alternative.

Copyright Business Recorder, 2023

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Shahid Khan Aug 26, 2023 11:29am
The paid certificates are just fraud
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E Aug 26, 2023 05:35pm
@Shahid Khan, we can not call it fraud till we have investigated them on available information. By fraud I am assuming you mean the islamic nature of these instruments and resulting certification. Mufti taqi islami has issued and studied banking matter and given his verdict being implemented by islamic banks.
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Muhammad Shoaib Aug 27, 2023 09:31pm
Its a new opening for interest free shariya compliance activities in construction industry. Good news for common people and investors of pakistan. Wam welcome on board.
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