SECP proposes reforms to accelerate growth in Pakistan's REIT sector
- New SECP REIT rules aim to mobilise long-term capital and broaden investor participation by easing regulations
The SECP has proposed amendments to REIT Regulations, 2022, to boost investment, broaden participation, and offer greater flexibility in Pakistan's real estate sector.
- Reduced real estate income and asset thresholds.
- New investment opportunities for various funds and vacant land.
- Increased flexibility for REIT Management Companies.
The Securities and Exchange Commission of Pakistan (SECP) has proposed key amendments to the REIT Regulations, 2022, to promote investment, expand investor participation and provide greater flexibility to REIT schemes.
In a statement, the securities and exchange commission said the proposed reforms envisage reducing the real estate income and asset thresholds from 75% to 65%, providing greater flexibility in structuring Real Estate Investment Trust (REIT) portfolios and facilitating a broader range of eligible projects. Investment-based REITs would also be allowed to invest in vacant land and plots, subject to applicable requirements.
“The reforms would broaden investment opportunities by allowing group-level trusts and employee funds to invest in unlisted REIT schemes. The borrowing period from sponsors, directors and associated entities would also be increased from 24 to 36 months, while existing unitholder approval requirements would remain in place,” it said.
The proposed amendments seek to facilitate RMCs by allowing an extension of up to one year for listing of Rental and Investment-based REITs in justified cases where delays arise from circumstances beyond RMC’s control, it added.
Furthermore, the SECP said, the proposed amendments also seek to facilitate RMCs in acquiring property from government entities through legally binding agreements, subject to conditions specified by SECP, to accommodate procedural constraints.
Moreover, to provide regulatory clarity, a proposed provision has been notified clarifying that Hybrid REIT Schemes combining Investment-based and Rental REIT components may earn and realize rental income from their real estate during the holding period.
Chairman SECP Dr Kabir Ahmed Sidhu said, “These reforms are aimed at creating a more enabling REIT framework that can mobilize long-term capital, broaden investor participation and unlock greater potential in Pakistan’s real estate sector.”
The draft amendments have been placed for public consultation, and stakeholders are invited to submit their comments and suggestions before finalisation.
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