Real Estate Investment Trusts (REITs) in Pakistan are still in their early stages compared to global markets, yet they present an attractive opportunity for investors looking to capitalize on the country’s growing real estate sector.
Regulated by the Securities and Exchange Commission of Pakistan (SECP), REITs offer a structured and transparent means of investing in income-generating properties. With new regulations and an increasing number of projects in the pipeline, the Pakistani REIT market is gradually expanding.
Active and Notable REITs in Pakistan
1. Dolmen City REIT (DCR)
- Type: Rental REIT
- Description: Pakistan’s first publicly listed REIT, launched by Arif Habib Dolmen REIT Management Limited (AHDRML). The REIT generates income primarily through rental earnings from Dolmen Mall Clifton, one of the largest shopping malls in Karachi.
- Status: Listed on the Pakistan Stock Exchange (PSX) since 2015.
- Management: Arif Habib Dolmen REIT Management Limited, a collaboration between Arif Habib Group and Dolmen Group.
- Focus: Generating stable rental income from high-end commercial properties.
2. Globe Residency REIT (GRR)
- Type: Developmental REIT
- Description: Launched by Arif Habib Dolmen REIT Management Limited, this is the first developmental REIT listed on PSX. It focuses on residential apartment construction in the Naya Nazimabad housing project in Karachi.
- Status: Listed on PSX in December 2022.
- Project Cost: Estimated PKR 20 billion, with a fund size of PKR 2.8 billion (split between debt and equity).
- Management: Arif Habib Dolmen REIT Management Limited.
- Focus: Development and sale of residential apartments, with profits distributed to unit holders.
3. Silk Islamic Development REIT
- Type: Developmental REIT (Sharia-compliant)
- Description: A project launched by Arif Habib Dolmen REIT Management Limited in collaboration with partners such as Yunus Brothers, Liberty Group, and Fatima Group. It is focused on Sharia-compliant housing developments in Karachi.
- Status: Launched in 2021, but specific PSX listing details remain unclear.
- Management: Arif Habib Dolmen REIT Management Limited.
- Focus: Islamic-compliant real estate development.
Emerging and Potential REITs in Pakistan
4. TPL REIT Fund I
- Type: Hybrid/General Purpose REIT
- Description: Managed by TPL REIT Management Company Limited, this fund targets a mix of commercial and residential projects, with a focus on sustainability and LEED-certified developments.
- Status: Introduced as the first fund by TPL RMC, but PSX listing details are not widely confirmed.
- Management: TPL REIT Management Company Limited (regulated by SECP since 2019).
- Focus: Sustainable real estate and urban housing solutions.
5. SB Global REIT
- Type: Likely Developmental or Hybrid REIT
- Description: Managed by SB Global REIT Management Company Limited, this Lahore-based firm was incorporated in 2016 to unlock Pakistan’s real estate investment potential. However, no publicly listed REIT schemes have been introduced so far.
- Status: Under development, no confirmed PSX listing as of early 2025.
- Management: SB Global REIT Management Company Limited.
- Focus: Providing diverse real estate investment opportunities.
Regulatory Framework and Market Potential
SECP Regulations and Updates
The SECP introduced REIT Regulations in 2008, which were revised in 2015 and 2022 to promote REIT growth. The 2022 amendments expanded REIT investment categories, allowing funds to invest in agriculture, mobile towers, and renewable energy projects beyond traditional real estate.
Market Size and Growth
- As of 2022, there were reports of around 11 REIT projects worth PKR 600 billion in various development stages.
- The market is dominated by Arif Habib Dolmen REIT Management Limited, which pioneered and actively manages Pakistan’s leading REITs.
- Listing Requirement: All REITs in Pakistan must be listed on PSX, ensuring transparency and accessibility for public investors.
Taxation of REITs in Pakistan
1. Tax Benefits for REITs
- REITs enjoy tax exemptions under specific conditions set by the SECP.
- Rental income of REITs is generally exempt from corporate tax if at least 90% of profits are distributed as dividends to unit holders.
- Developmental REITs may receive capital gains tax exemptions on asset sales under certain conditions.
2. Tax Implications for Investors
- Dividends from REITs are subject to withholding tax, which varies based on the investor’s residency status and tax classification.
- Capital gains from selling REIT units are taxable under Pakistan’s Capital Gains Tax (CGT) regime.
- Institutional investors such as mutual funds and banks may have different tax treatments compared to individual investors.
FAQs About REITs in Pakistan
Q1: What is the minimum investment required for REITs in Pakistan?
Yes, there is a minimum investment, but it varies. REIT shares are available for purchase on the Pakistan Stock Exchange (PSX), and the minimum investment depends on the current stock price of the REIT, which can start as low as a few hundred rupees per share. For example, as per PSX trading rules, you can buy even a single share, making it accessible to small investors.
Q2: Are REIT investments safe in Pakistan?
Yes, REIT investments are generally considered safe. REITs in Pakistan are regulated by the Securities and Exchange Commission of Pakistan (SECP) and must follow strict compliance and transparency guidelines, reducing risks for investors. The SECP’s REIT Regulations 2015 ensure that all REITs meet specific operational and financial standards.
Q3: How are REIT dividends taxed?
Yes, REIT dividends are taxed at the individual level. Dividends from REITs are subject to a withholding tax (typically 15%), though rental REITs that distribute at least 90% of their profits as dividends are exempt from corporate-level taxation under Pakistani tax laws. This exemption is outlined in the Income Tax Ordinance of 2001, encouraging higher dividend payouts.
Q4: Can non-residents invest in Pakistani REITs?
Yes, non-residents can invest in Pakistani REITs. Foreign investors are allowed to buy REIT units listed on the PSX, provided they comply with regulations on foreign capital inflows managed by the State Bank of Pakistan (SBP). In 2023, foreign investment in PSX-listed securities, including REITs, was reported at over $200 million, showing growing international interest.
Q5: How do I buy and sell REIT units?
Yes, you can buy and sell REIT units easily. REIT units are traded like regular stocks on the Pakistan Stock Exchange (PSX) through a brokerage account, requiring only an account setup with a licensed broker. The PSX facilitates over 1 million trades daily, ensuring liquidity for REIT transactions.
