The Securities and Exchange Commission of Pakistan (“SECP”) has notified amendments to the Real Estate Investment Trust Regulations, 2022 (“REIT Regulations”) to simplify procedures, improve governance and control mechanisms, and encourage greater transparency and objectivity in the operations of REIT Schemes.
The amended regulations establish clearer timelines for the transfer of real estate and shares of special purpose vehicles, promoting early listing of REIT Schemes to enhance their visibility and development as a capital market asset class. In addition to strengthening the roles and responsibilities of REIT Management Companies (RMCs) and trustees, the amendments address regulatory arbitrage across different REIT structures and enable better synchronization with the Shariah governance framework. The SECP has also streamlined procedures for the registration of trust deeds and the approval for registration of REIT Schemes.
Key areas addressed by the amendments include refining the definition of real estate to clearly distinguish between its passive and active components, as well as introducing income and asset test requirements in line with international best practices. These requirements ensure REIT schemes are primarily invested in and derive income from real estate.
The amendments follow an exhaustive stakeholder consultation process, which included the issuance of a consultation paper, multiple in-person sessions and virtual meetings with key stakeholders—such as RMCs, trustees, banks, mutual funds, law firms, and consultants—further consultations based on the notification of draft amendments, and a conclusive consultation session in Karachi.
The REIT Regulations provide the framework for the establishment, operation, and management of REIT Schemes by RMCs. A REIT Scheme is a fund in which an RMC pools money from investors for investment in real estate projects. By becoming unitholders of a REIT Scheme, investors gain a proportional share in the ownership of income-generating real estate projects, entitling them to rental income and/or capital gains.
The notification of amendments to the REIT Regulations can be accessed on the SECP website.
