The Securities and Exchange Commission of Pakistan (SECP) has proposed a series of amendments to the REIT Regulations, 2022, aimed at making Real Estate Investment Trusts (REITs) more flexible, attracting greater investor participation and encouraging long-term investment in Pakistan’s real estate sector.
Under the proposed SECP REIT reforms, the regulator plans to reduce the minimum real estate income and asset requirement from 75% to 65%. The proposed change would provide REIT schemes with greater flexibility in developing and managing their investment portfolios. Investment-based REITs may also be permitted to invest in vacant land and plots, subject to applicable regulatory conditions.
The amendments would further expand investment opportunities by allowing group-level trusts and employee funds to invest in unlisted REIT schemes. SECP has also proposed extending the borrowing period from sponsors, directors and associated entities from 24 months to 36 months, while existing unitholder approval requirements would remain applicable.
The proposed reforms would provide additional flexibility to REIT Management Companies (RMCs). In justified circumstances beyond an RMC’s control, Rental and Investment-based REITs could receive an extension of up to one year to complete their listing.
SECP has also proposed allowing RMCs to acquire properties from government entities through legally binding agreements, subject to specified regulatory requirements. The measure is intended to facilitate property transactions and address procedural challenges.
The proposed framework also includes clarification for Hybrid REIT Schemes, allowing schemes that combine rental and investment-based components to earn and realise rental income from real estate during the holding period.
SECP Chairman Dr Kabir Ahmed Sidhu said the proposed changes are designed to create a more supportive REIT framework, attract long-term capital and broaden investor participation. The amendments have been placed for public consultation, with stakeholders invited to submit feedback before the regulations are finalised.
