The Center for Affordable Settlements and Housing in Pakistan (CASH) has been advocating market based funding instruments for real estate development. REIT mechanism is assuming a growing importance for this purpose. Mr. Zaigham, the Founding Chairman of CASH has played a vital role in development of REIT Law in Pakistan and its use by the Real Estate Developers, both in residential and commercial real estate. The Dolmen City REIT (DCR) is the first step in this direction. The DCR, which is the first REIT scheme in South Asia, is a closed-end, Shariah-Compliant, perpetual, listed instrument in Pakistan, rated RR-1 by JCR-VIS Credit Rating Agency and is listed on all the stock exchanges in Pakistan. DCR returns comprise property price appreciation and a growth of rental income from Dolmen Mall and the Harbour Front office building.
DCR has fund size of PKR 22.237B which is equivalent to the acquisition value of real estate in the fund. Of the total Units of DCR, 75% units were pre-subscribed while 25% were offered in IPO.
DCR owns two real estate components of the Dolmen City project with the objective of generating rental income. After accounting for operational expenses, this income is distributed amongst Unit holders as dividends. Appreciation in the value of the property provides an added benefit to investors.
Dolmen City is regarded as the finest mixed use commercial real estate development in Pakistan. It is located at the scenic coastline and cusp of the affluent Clifton and DHA residential areas in Karachi. It integrates multiple components catering to the social and commercial needs of the city.
Regulatory Framework for Real Estate Investment Trusts ‘REITs’ in Pakistan was introduced by Securities and Exchange Commission of Pakistan (SECP) in January 2008, which was subsequently replaced by REIT Regulations 2015. The regulations focus on the protection of interests of general investor in a REIT Scheme; a listed closed-end fund. The three types of REIT schemes introduced by SECP in Pakistan are: Developmental REIT: which invests in real estate to develop it for Industrial, Commercial or Residential purpose through construction or refurbishment; Rental REIT: which invests in commercial or residential Real Estate to generate rental income; and Hybrid REIT: which has a developmental component as well as a Rental component.
Zaigham M. Rizvi
Center for Affordable Settlements and Housing (CASH)