SECP proposes looser REIT rules, including investment in vacant land
The regulator's draft amendments would let investment based REITs hold plots and cut the real estate threshold to 65 per cent. They are open for public comment.
The Securities and Exchange Commission of Pakistan has published draft changes to its real estate investment trust rules. The proposals, released on 10 September for public consultation, would give REIT managers more room to build portfolios and could open the sector to more land based projects, Arab News Pakistan reported.
The draft amends the REIT Regulations, 2022. For the first time, investment based REITs would be allowed to put money into vacant land and plots, subject to regulatory requirements. TechJuice described the holding as being for at least one year during a development or investment cycle.
The share of income and assets that a scheme must tie to real estate would fall from 75 per cent to 65 per cent. The SECP said this gives managers more flexibility in structuring portfolios and widens the range of eligible projects.
Other changes in the draft
Sponsors, directors and associated entities could lend to a scheme for up to 36 months, up from 24. Investor approval requirements would stay in place. Rental and investment based REITs could get up to one extra year to list on an exchange if the delay was beyond their managers' control.
Group trusts and employee funds would be allowed to invest in schemes that are not listed. The draft also clarifies that hybrid schemes, which mix investment and rental activity, can earn rental income from the properties they hold, and it aims to simplify how schemes buy property from government bodies and development authorities.
SECP Chairman Kabir Ahmed Sidhu said the reforms are meant to create a more enabling framework that can mobilise long term capital. The regulator has invited stakeholders to send comments before the rules are finalised. For property technology and fractional ownership startups, a deeper REIT market could widen the pool of products that platforms can offer to retail investors.
Reported from Arab News Pakistan and TechJuice, based on an SECP statement.
