KARACHI: State Bank Of Pakistan Allows Foreign Investment In REIT Schemes Pakistan has allowed Real Estate Investment Trust (REIT) Residents’ Management Companies (RMCs) to entice foreign investment in various projects including real estate, agribusiness, mobile towers, and renewable energy, through privately negotiated agreements before the projects’ units are available for trading on the stock market.
It is mandatory for each Real Estate Investment Trust (REIT) scheme to be listed on the Pakistan Stock Exchange within three years of registration. In the three years between the date of registration and going live at the Pakistan Stock Exchange (PSX) the central bank has amended the foreign exchange manual to allow Real Estate Investment Trust (REIT) companies to invite foreign investment and allow investors to withdraw investment.
Non-residents are permitted to engage in Real Estate Investment Trust (REIT) schemes that are listed on the stock exchange and through new public offerings according to a circular issued by the State Bank of Pakistan (SBP) on Friday.
It has been agreed to give Residents’ Management Companies (RMCs) general licenses to issue their units through private placements and to transfer them to non-residents in order to enable foreign investment in Real Estate Investment Trust (REIT) schemes in addition to the current regulations.
Since the government changed Real Estate Investment Trust (REIT) legislation in June 2021 a small number of management companies have established about a dozen real estate development and rental schemes valued at more than Rs600 billion. During the period 2022, the Securities and Exchange Commission of Pakistan (SECP) issued 16 licenses to establish Residents’ Management Companies (RMCs).
There was an anomaly; Muhammad Ejaz, CEO of Arif Habib Dolmen REIT Management Limited (AHDRML) Foreigners can now invest in Real Estate Investment Trust (REIT) schemes during the three years between the scheme’s registration and listing on the stock exchange thanks to the latest amendment to the foreign exchange manual.
Nevertheless, foreign investors were allowed to invest and divest in Real Estate Investment Trust (REITs) while their units were available for trading on a bourse he said.
Everyone was thinking of approaching foreigners to entice investment according to Ejaz but the abnormality was keeping them at bay.
As investors are waiting for the revival of the International Monetary Fund (IMF) loan program we may not be able to attract foreign investment immediately amid a partial shutdown of the economy.
As a result, overseas Pakistanis invest heavily in real estate with remittances, but these funds were previously unavailable for repatriation. Foreigners can now withdraw their investments as well through the Roshan Digital Account (RDA) according to the latest amendment in the foreign exchange manual.
Residents Management Companies (RMCs) can now create projects and solicit investments in agriculture, cell towers, and renewable energy thanks to new rules specifically the Real Estate Investment Trust Regulations 2022, which were unveiled in December 2022.
As opposed to (NON-REIT) projects every Real Estate Investment Trust (REIT) project must be fully documented.
Eight years after the regulations were published two Real Estate Investment Trust (REIT) schemes have been listed on the Pakistan Stock Exchange (PSX). The first listing occurred in 2015 the second listing occurred in 2022.
According to management companies, twelve Real Estate Investment Trust (REIT) schemes are anticipated to list on the public market in the upcoming two years.
According to the most recent revisions to the State Bank of Pakistan (SBP) regulations businesses that issue shares or Real Estate Investment Trust (REIT) funds that issue units as part of fresh public offers may create foreign currency collecting accounts with banks abroad or in Pakistan as permitted to receive foreign currency subscriptions.
Within a week of the allocation of shares or units, the successful applicants’ subscription money should be transferred back to Pakistan and foreign currency accounts should be closed.
Moreover, the company shall obtain from the concerned authorized dealer the original Proceeds Realization Certificate as evidence that subscription money has been repatriated to Pakistan.
Privatized funds/Real Estate Investment Trust (REIT) funds may issue units for the rupee equivalent of subscription money sent directly to Pakistan and deposited in the fund’s rupee account (opened in the trustee’s name).
PRCs in respect of the cost of shares/units and transfer stamp money may also be issued in the case of the transfer of listed shares and units of funds under the stock broker’s original memo. Shares/units that are negotiated privately should be accompanied by documents establishing the deal and the stock exchange price at the time of the sale the regulator said.
The State Bank Of Pakistan (SBP) bank has advised authorized dealers (Ads) to make sure all their constituents are aware of the above amendments.