SECP Proposes REIT Reforms to Boost Investment and Market Growth

The Securities and Exchange Commission of Pakistan (SECP) has proposed REIT reforms aimed at increasing investment, expanding investor participation and giving Real Estate Investment Trust (REIT) schemes greater flexibility.

The proposed amendments to the REIT Regulations, 2022, seek to lower the real estate income and asset thresholds from 75% to 65%. The change could allow REITs to structure their portfolios more flexibly and include a broader range of eligible projects.

The reforms would also allow Investment-based REITs to invest in vacant land and plots, subject to applicable regulatory requirements.

The proposed framework would expand investment opportunities by allowing group-level trusts and employee funds to invest in unlisted REIT schemes. It would also extend the borrowing period from sponsors, directors and associated entities from 24 to 36 months. Existing unitholder approval requirements would remain unchanged.

SECP also plans to provide greater flexibility to REIT Management Companies (RMCs). Under the proposed amendments, RMCs could receive an extension of up to one year to list Rental and Investment-based REITs in justified cases where delays result from circumstances beyond their control.

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The amendments would also facilitate property acquisitions from government entities through legally binding agreements, subject to conditions set by SECP. The move aims to address procedural constraints that can delay such transactions.

The regulator has also proposed a provision to clarify the treatment of Hybrid REIT Schemes. Such schemes, which combine Investment-based and Rental REIT components, may earn and realise rental income from their real estate during the holding period.

SECP Chairman Dr. Kabir Ahmed Sidhu said the proposed measures would create a more enabling REIT framework. He said the reforms could help mobilise long-term capital, broaden investor participation and unlock greater potential in Pakistan’s real estate sector.

The draft amendments have been issued for public consultation. SECP has invited stakeholders to submit their comments and suggestions before the proposals are finalised.