ISLAMABAD: The Real Estate Investment Trust (REIT) Management Companies (RMCs) have the potential to attract foreign investment through the private sector and boost business opportunities in real estate, renewable energy, and agriculture productivity in Pakistan, said a renowned expert.
The REIT is an investment platform where an entity holds income-generating properties and distributes the earnings to investors.
Ali Asghar, CEO, TPL-RMC, a leading provider of REIT management services in Pakistan, told WealthPK that while the concept of “Shop Below—Home Above” has been popular in Pakistan, his company is going to provide quality construction with a healthy environment.
He noted that Pakistan is fast moving towards urbanisation, and people from rural areas are settling in cities which are expanding horizontally. He said the prevailing challenges require the construction sector to expand cities vertically.
Ali said the TPL-RMC launched Pakistan’s first hybrid REIT in 2021 to raise $500 million from local and international investors to tap into the country’s growing needs of the real estate sector.
He said the real-estate stakeholders in Pakistan usually operate in single-sole proprietorships or partnerships or something like that, with the majority not even operating as private limited companies.
“In this entire scenario, when someone wants to attract foreign direct investment (FDI), it will only come when that particular sector is corporatised,” he explained.
Ali said the REIT can also do a service to Pakistan in terms of roping in all the unofficial wealth into this sector.
“Neither local nor foreign investors will invest savings in any project which has anomalies in structuring. To open this sector even to foreigners, it is the need of the hour to encourage an environment of investment in dollar-strapped economy of Pakistan,” he said.
Ali mentioned that there are instances in Pakistan’s real-estate market where developers slipped away after taking investors’ money. However, in this formal structure, when someone takes advance sale money, or do pre-sales and off-plan sales, it all comes thorough a proper mechanism.
Unlike the conventional real estate sector in Pakistan, the REIT structure includes proper disclosures and transparency for investors, with oversight from a regulator. “When an investor comes to the REIT, it is like a licensed thing with transparency, governance, reporting and liquidity,” Ali said.
He said the biggest advantage being an investor with the REIT is that even a person who can’t afford to buy an apartment can at least take exposure in the real-estate sector by investing into these funds.
Ali explained that the REIT gives taxpayers an opportunity to invest in real estate without having to hold real estate directly.
Talking about approaching foreigners and expatriates to attract investment, Ali said Pakistan has been going through a partial shutdown of economy where investors are waiting for the revival of the IMF (International Monetary Fund) loan program. Secondly, he said, overseas Pakistanis who used to invest heavily through remittances in the real-estate in Pakistan could not get proper repatriations earlier.
The recent amendment to Foreign Exchange Manual allows expatriate Pakistanis to withdraw their investment through Roshan Digital Account.
