Sindh Real Estate News and Land Insights

Karachi | ReNews Pakistan
Pakistan’s real estate investment trust sector is gaining momentum, with 18 REIT funds established and projects worth more than Rs 2 trillion under development, according to Arif Habib Dolmen REIT Management Company CEO Muhammad Ijaz.

Ijaz said REITs could help formalise Pakistan’s largely informal real estate sector while enabling investors with relatively modest capital to participate in property related businesses.

He said the REIT framework addressed two major challenges associated with real estate investment, namely the need for substantial capital and the limited liquidity of property assets.

Under the model, real estate assets are divided into units that can be purchased by investors, allowing both small and large investors to participate in property related investments.

Ijaz said Dolmen City REIT, Pakistan’s first REIT, had an asset value of around Rs 22 billion when it was launched, with 2.2 billion units issued at Rs10 each. He said investors could participate with Rs 5,000 while those with much larger amounts could also invest through the same structure.

He explained that the legal title of REIT assets remained with the trustee, while investors held REIT units representing their ownership interest. Trustees are licensed entities, including the Central Depository Company and Digital Custodian Company, while REIT management companies are responsible for managing the underlying businesses and assets.

Ijaz said five REITs were currently listed on the Pakistan Stock Exchange, with additional listings expected. Rental REITs are required to be listed within their first year, while developmental and hybrid REITs are required to be listed within three years.

He distinguished between rental and developmental REITs, saying rental REITs generally acquire completed properties and generate income by leasing them, while developmental REITs develop land or projects for sale or lease.

According to Ijaz, REITs are required to distribute 90% of distributable income among unit holders. He said Dolmen City REIT initially offered a yield of around 10%, while investors who purchased units at around Rs11 later saw a substantial increase in yield as the unit price rose.

Under the model, investors can purchase a fractional share of a property. For example, an apartment measuring 1,800 square feet and valued at Rs 30 million could be divided into 100 square foot shares worth Rs 1.8 million each.

Ijaz said investors could accumulate additional shares over time and potentially sell them later. The model is initially being developed in Naya Nazimabad, with ownership and rental arrangements managed through institutional and contractual structures.

He said the REIT sector was no longer limited to Karachi. Of the 18 REIT funds, 10 were in Karachi while eight were in Lahore and Islamabad. Projects include developments associated with Naya Nazimabad, Surjani Town, Lahore’s Central Business District, Ravi Urban Development Authority and Rifah Medical City.

Ijaz said a 150 acre project in Surjani Town had been divided into two REIT funds focusing on horizontal and vertical development, with an emphasis on environmentally friendly urban development.

Ijaz also called for greater availability of mortgage finance and institutional funding for professionally managed housing projects. He said the build to rent model could emerge as an important business model, allowing people to access professionally managed rental housing without bearing the financial and administrative burden of constructing their own homes.

He said Pakistan’s real estate sector had significant potential if supported by better taxation policies, institutional investment and professional project management.

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Karachi | ReNews Pakistan
The Sindh government plans to expand the number of properties covered by the urban property tax record from around 397,000 to 2.15 million, as part of efforts to broaden the property tax base and improve revenue collection.

The proposed $150 million Sindh Property Revenue Enhancement Programme includes digital and administrative reforms aimed at expanding the property tax base across 20 local councils in the province.

Under the proposed programme, $110 million has been allocated for Programme for Results, while $40 million has been earmarked for Investment Project Financing.

The programme is expected to focus on improving property records, expanding the number of taxable properties and strengthening the administrative systems used for urban property tax collection.

The expansion of the property tax database would bring a substantially larger number of urban properties into the formal tax record. Digital reforms are also intended to improve the identification and documentation of properties and address gaps in the existing tax base.

For local governments, a broader and more reliable property tax base could provide additional resources for municipal services and urban infrastructure, while improved digital records could strengthen the administration and monitoring of property related revenues.