COMMERCIAL PROPERTY SECTOR BENEFITS FROM FIRST REIT

The recent launch of Pakistan’s first real estate investment trust brings positive signs for the commercial property sector, according to analysis by Lamudi Pakistan (www.lamudi.pk).

The REIT, which was launched on Dolmen City shopping mall and office plaza, was heavily over-subscribed. It brings a positive note for other commercial property developers who can now also enter this asset class.

The multi-million dollar real estate industry of Pakistan has many part-time investors who are looking for such investment opportunities. The launch of REITs has provided them with the platform to channel their funds and gain huge profits.

Saad Arshed, Country Director of Lamudi Pakistan, said: “The launch of REITs is a proud moment for Pakistan as it is the first country in the region to do so.

The initial public offering (IPO) of the Dolmen City REIT was perfectly timed with the announcement of the Federal Budget 2015-16, which brings relief for people engaging in real estate investment trusts. The commercial property sector had been facing a slowdown for the past year, but after the phenomenal success of this REIT opening, many new commercial developers will join this asset class.”

Rising property taxes have caused the real estate sector to stall over the past year. This was mainly due to the heavy taxes imposed by the government, which hampered real estate sector activity. Investment in the commercial property sector was almost at a standstill in the first three months of 2015, according to Lamudi’s quarterly property price report. However, with the recent amendments made in the 2015-16 budget and the launch of the REIT scheme, the commercial segment is expected to pick up.

The launch has opened up new avenues for builders and developers who can now offer shopping malls and office buildings under the banner of REITs. “It must be noted though that in order for these REITs to be successful, the government must maintain a proper regulatory framework for it and keep giving incentives such as tax deductions,” Mr. Arshed said.