REITs new gateway to real estate

The Express Tribune reported that Pakistan's REIT market is picking up pace, with 18 funds set up and more than Rs2 trillion worth of projects under development. The figures came from Arif Habib Dolmen REIT Management Company chief executive Muhammad Ijaz, who spoke on a Tribune podcast. He argued that REITs could bring more structure to the country's largely informal property sector while letting investors with limited capital join property-related businesses.

Ijaz said the model splits property into units that investors can buy, so both small and large participants can take part. He pointed to Dolmen City REIT, which he described as Pakistan's first, saying its assets were worth about Rs22 billion at launch and that it issued 2.2 billion units at Rs10 each. He noted that the entry amount ranges from Rs5,000 to Rs5 billion.

Ijaz said five REITs are currently listed on the PSX, with more listings expected soon, and that rental REITs must list within their first year while developmental and hybrid REITs have three years. He also noted that REITs are obliged to pay out 90% of their distributable income to unitholders, and that Dolmen City REIT's yield for buyers at around Rs11 per unit had grown considerably as the unit price rose. Ijaz urged caution toward speculative dealing in property files, and said the market still needs more professional conduct, institutional involvement and clearer rules.