Pakistan all set to see its first REIT on PM Khan’s Construction Push
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Pakistan has decided to start its first Real Estate Investment Trust (REIT) as Prime Minister Imran Khan seeks to revive the economy through a construction boom.
The CEO of Arif Habib Dolmen REIT Management Pvt, Muhammad Ejaz, said the firm has been planning to raise PKR 8 billion ($51 million) through private placements in two REITs for a housing project in Karachi. He added, it also intends to acquire the land in about two months, partly from the Silkbank Ltd.
Arif Habib Dolmen had created the country’s only REIT in 2015, and the industry was silent since then. However, the project is now reviving on the PM’s incentives and regulatory changes.
Pakistan is all set to acquit tax evaders if they invest in development projects, while banks have been asked to increase their significant debts by at least 5 percent by December.
Ejaz further went on to say that one of the new REITs will work on villas and the other on apartment buildings and commercial constructions. It is a developmental REIT with a predicted internal rate of return of more than 30 percent.
He said that the older REIT, which owns rental assets including Karachi’s most prominent mall and an office tower, offers a dividend yield of around 12 percent a year.
Pakistan has been reviewing rules to make REITs more attractive for investors and developers. In this year’s budget, The Finance Minister, Shaukat Tarin, reduced the interest payment tax on REITs to 15 percent from 25 percent.
“The government has chosen the right sector for growth,” Ejaz said.
The Silk Islamic Development REIT is scheduled to be started next week for the commercial and apartment building section. The second Silk World Development REIT includes the real estate developer World Group, which will construct the villas.
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