Ayesha Saba

Pakistan’s Real Estate Investment Trust (REIT) sector is now witnessing renewed investor interest, signalling a shift towards structured and transparent property investments.

In an exclusive interview with WealthPK, Sagheer Mushtaq, CEO of ISE Towers REIT Management Company, said a key incentive driving this growth is the REITs’ exemption from the 29% corporate tax as long as they distribute 90% of their profits to investors.

“This makes REITs an attractive investment vehicle.”

He noted that REITs offer structured, well-documented, and transparent investment opportunities compared to the informal real estate sector, which remains riddled with opacity and unreliable documentation. He stated that Pakistan’s REIT journey has been slow and marked by regulatory hurdles. “Between 2008 and 2015, no REITs were launched due to procedural challenges and lack of market readiness.

The first amendment in REIT regulations came in 2015, which enabled the launch of a REIT, but real momentum only picked up after major reforms were introduced by the Securities and Exchange Commission of Pakistan (SECP) in 2021, backed by incentives from the Federal Board of Revenue and relaxed investment limits from commercial banks,” he explained.

As a result, Mushtaq said Pakistan now has more than 15 registered REITs, with notable names such as Dolmen REIT, TPL REIT, and Global Residency REIT already listed. “In addition, around 30 management companies are currently engaged in developing REIT funds, signalling a growing interest from both institutional and retail investors.”

Awareness among end-users is limited, and investor confidence is still evolving, he cautioned. “Many buyers remain more inclined toward informal property deals facilitated by agents rather than documented REIT structures, primarily due to limited information and entrenched practices in the real estate market. “Access to verified land records and legal documents also remains a barrier, deterring potential investors,” Mushtaq underscored.

However, he added that SECP has taken steps to address these concerns, with updated REIT Regulations, 2022 strengthening transparency requirements, governance mechanisms, and fund movement rules. Still, more work is needed to document the wider real estate sector, discourage the informal market, and build investor awareness.

“Pakistan’s REIT market remains in its infancy compared to matured global models. We cannot compare ourselves with the US, where REITs have matured over decades. But with consistent reforms and awareness campaigns, REITs can play a vital role in channelling investments into real estate and transforming one of Pakistan’s most undocumented sectors,” noted the CEO of ISE Towers REIT Management Company.

Credit: INP-WealthPk