The announcement of Pakistan’s first real estate investment trust scheme is good news for small investors looking to enter the booming property market, according to leading property website Lamudi.pk.
Pakistan, with its growing real estate sector, has fertile ground for REITs. With its current housing backlog of 100,000 to 500,000 new homes- plus significant investment potential in the development of shopping malls and commercial hi-rise buildings – REITs will provide an impetus to the property sector.
Saad Arshed, Country Director of Lamudi.pk, said: “REIT’s are expected to change the course of Pakistan’s realty market by providing an influx of investment. With the arrival of REITs, small investors can now reap huge profits from the property sector. This was not possible before due to the huge amounts of capital required for an investment.
The trusts will likely attract foreign investment from both other countries and from overseas Pakistanis who are currently investing in projects abroad. In a recent report, investors from Pakistan ranked second in real estate transactions in Dubai, with a total investment of around 7.588 billion AED. With REITs now in Pakistan, we can be hopeful of securing more interest from both national and international investors.”
An REIT is an investment vehicle where the real estate company can offer common shares to the public, and the profits of the income-generating properties are distributed as dividends to the shareholders.
There are three classes of REITs, namely rental, hybrid and developmental. Out of these, the rental REIT is the first one to be offered in Pakistan and focuses on the Dolmen Mall. , an upscale shopping mall development in Karachi. The trust will be called the Dolmen City REIT, to be listed on the Karachi Stock Exchange, and will offer an initial 9 percent dividend.