SECP proposes reforms to support REIT growth, long-term real estate investment

Securities and Exchange Commission of Pakistan (SECP) has proposed a series of reforms to support the growth of Real Estate Investment Trusts (REITs). The changes are designed to encourage long-term investment in the country's real estate market.

What reforms has SECP proposed for REITs?

SECP has proposed lowering the minimum required share of income from real estate and related assets from 75% to 65%. It also wants to extend the maximum loan tenure for financing from sponsors, directors and related entities from 24 months to 36 months, giving REITs more flexibility in how they structure financing and asset income.

What other changes could affect REIT listings and land holdings?

The regulator is considering an additional one-year period for listing rental and investment real estate schemes. It has also proposed allowing real estate schemes to hold vacant land and plots for at least one year.

Who would gain access to invest in REITs under the proposal?

SECP has proposed allowing specified group trusts and employee funds to invest in unlisted real estate schemes. This change could potentially broaden the investor base for Pakistan's REIT sector.

The regulator also plans to simplify the process for real estate schemes to acquire properties from government and development authorities.

Why is SECP proposing these REIT reforms?

SECP Chairman said the proposed reforms aim to promote long-term investment and build a more transparent, organized real estate market. The regulator has invited stakeholders to submit comments and proposals on the amendments, and will factor in this feedback before finalizing the reforms.