Pakistan's REIT sector has 18 funds and Rs2 trillion of projects under development
Pakistan's real estate investment trust sector has 18 funds established and more than Rs2 trillion of projects under development, according to Muhammad Ijaz, chief executive of Arif Habib Dolmen REIT Management Company. Speaking on a Tribune podcast, Ijaz said REITs could help formalise Pakistan's largely informal real estate market while allowing investors with relatively modest capital to take part in property-related businesses — a route into an asset class that otherwise demands substantial upfront capital and is difficult to sell out of.
Ijaz said the REIT framework addresses two long-standing obstacles to property investment: the size of the capital required and the illiquidity of property assets. Under the model, real estate assets are divided into units that investors can buy, so both small and large investors can participate. He said the title to REIT assets remains with a trustee, while investors hold units that represent their ownership interest. Trustees are licensed entities, including the Central Depository Company and Digital Custodian Company, while REIT management companies run the underlying business. He cited Dolmen City REIT, Pakistan's first, which had an asset value of around Rs22 billion at launch, with 2.2 billion units issued at Rs10 each. "Those who want to invest Rs5,000 can do so, and those who want to invest Rs5 billion can also do so," he said.
Five REITs are currently listed on the Pakistan Stock Exchange, Ijaz said, with more listings expected soon. Rental REITs must be listed within their first year, while developmental and hybrid REITs must list within three years, he said. Rental REITs generally acquire built-up properties and earn income by leasing them, whereas developmental REITs develop land or projects for sale or lease. REITs are required to distribute 90% of distributable income to unit holders, he said, adding that Dolmen City REIT initially offered a yield of around 10% and that the yield for investors who bought units at around Rs11 subsequently rose substantially as the unit price increased.
Ijaz said the sector is no longer confined to Karachi. Of the 18 funds, 10 are in Karachi and eight in Lahore and Islamabad, with projects linked to Naya Nazimabad, Surjani Town, Lahore's Central Business District, the Ravi Urban Development Authority and Rifah Medical City. A 150-acre project in Surjani Town has been divided into two REIT funds, one focused on horizontal and the other on vertical development, with an emphasis on environmentally friendly urban development.
He also pointed to property-share schemes aimed at people who cannot afford an entire apartment. Under that model, a 1,800-square-foot apartment valued at Rs30 million could be divided into 100-square-foot shares worth Rs1.8 million each, with investors able to accumulate further shares and potentially sell them later. The model is being developed initially in Naya Nazimabad, with ownership and rental arrangements handled through institutional and contractual structures. Ijaz cautioned against speculative trading in property files and said the sector needs greater professionalism, institutional participation and regulatory clarity, along with more mortgage finance and institutional funding for professionally managed housing projects. He said build-to-rent could become an important business model, and argued that better taxation policies and professional project management would let construction and real estate development contribute more to growth. "Construction and real estate development should be kept in priority," he said.
