Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has introduced potential changes to the REIT Regulations, 2022, with the intention of fostering investment, enhancing investor participation, and offering increased flexibility to REIT schemes.

According to Securities and Exchange Commission of Pakistan, the planned reforms include lowering the real estate income and asset thresholds from 75% to 65%. This adjustment aims to provide more flexibility in structuring REIT portfolios and facilitating a broader range of eligible projects. The reforms also propose allowing investment-based REITs to invest in vacant land and plots, subject to the applicable requirements.

The proposed changes aim to broaden investment opportunities by permitting group-level trusts and employee funds to invest in unlisted REIT schemes. Additionally, the borrowing period from sponsors, directors, and associated entities would be extended from 24 to 36 months, while maintaining existing unitholder approval requirements.

To assist RMCs, the proposed amendments include an allowance for an extension of up to one year for listing Rental and Investment-based REITs in cases of delays due to uncontrollable circumstances. The amendments would also aid RMCs in acquiring property from government entities through legally binding agreements, subject to SECP-specified conditions. Furthermore, a provision has been included to clarify that Hybrid REIT Schemes, which combine Investment-based and Rental REIT components, may earn and realize rental income from their real estate during the holding period.

Chairman SECP Dr. Kabir Ahmed Sidhu stated, “These reforms are aimed at creating a more enabling REIT framework that can mobilize long-term capital, broaden investor participation and unlock greater potential in Pakistan’s real estate sector.”

The draft amendments have been released for public consultation, inviting stakeholders to submit their comments and suggestions before the finalization of the reforms.