After six years, Pakistan is preparing to launch a real estate investment trust (REIT) as part of the incumbent government’s efforts to promote the construction industry in order to stimulate the economy.
According to a Bloomberg report, Arif Habib Dolmen REIT Management Pvt. will issue two REITs to raise Rs. 8 billion ($51 million) via private placements. They will be launched for a housing project in Karachi. One of these will be aimed at villas, and the other for apartments and commercial buildings.
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Arif Habib Dolmen had also created Pakistan’s only REIT in 2015.
The CEO of the company, Muhammad Ejaz, told the media that it plans to purchase the land in about two months, partly from Silkbank Ltd.
The government is also considering an amnesty scheme under which tax evaders will be forgiven if they invest in construction projects. It has simultaneously been incentivizing banks to increase their outstanding mortgages by at least five percent by December.
Ejaz stated that this is a developmental REIT with an expected internal rate of return of more than 30 percent. He added that older REITs in Karachi currently offer a maximum of 12 percent dividend yield.
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Pakistan has also revised rules to make REITs a more attractive investment. In his budget this month, the Minister for Finance, Shaukat Tarin, lowered the dividend payment tax on the REITs from 25 percent to 15 percent.
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