The announcement of the Annual Budget 2015-16 came with a good package for the construction industry of Pakistan. This coincided with Arif Habib Dolmen REIT Management’s launch of the first Real Estate Investment Trust (REIT) in the country; the first of its kind in the subcontinent as well.
REITs are operating in over 40 countries around the world, allowing smaller investors to participate in lucrative real estate investment collectively. Legislation on REITs in Pakistan was introduced through REIT Regulations in 2008 with subsequent amendments to make REITs safe for investors and practical for property owners and developers. Arif Habib Group and Dolmen Group have finally stepped forward to make this a reality.
Dolmen City REIT is a Shariah compliant, rental REIT scheme. REIT Units were launched for Book Building on Monday, 8 June, 2015. The value of the REIT Fund is PKR 22,237 million with an issue of 555,925,000 Units in the IPO. The floor price of the Book Building portion was PKR 10 culminating at a market determination of PKR 11 per Unit. Arif Habib Dolmen REIT Management Ltd has offered 25% of the REIT’s stake to the public. Please note that Dolmen Group and Arif Habib Group are equal partners in the REIT management company..
To get the necessary details on the Initial Public Offering (IPO) of REIT, Zameen.com sat down with Arif Habib Dolmen REIT Management CEO, Mr. Muhammad Ejaz. According to Mr. Ejaz, REITs provide investor an opportunity to invest in well managed, income producing real estate which would normally be out of financial reach of the average investor. The SECP regulations are focused to ensure that the investors’ interest is protected at all times and that the property is a viable business proposition with flawless title documentation.
Expected capital gains from the REIT property would be reflected in the Net Asset Value (NAV). He said the assets of the REIT were currently offered at PKR 22 billion, significantly lower , which offers an attractive yield to the investors. With a total area of roughly 1.6 million square feet in the form of Dolmen Mall Clifton and The Harbor Front, 9% rental yield is expected during the first year. Rental agreements with tenants have a 10% annual escalation improving returns further every year. This coupled with the increase in the property value make the REIT a lucrative long term investment
Mr Ejaz felt bullish about the future of REITs becoming highly successful in Pakistan. REITs would not only encourage savings and widen the investment prospects for average investors but also improve the quality of real estate in Pakistan on the whole. With several REITs in the pipeline, Mr. Ejaz anticipates REITs becoming the preferred mode for real estate development and ownership model in the country.
Here at Zameen.com, we are excited to hear that REITs are finally going to be part of the country’s real estate sector. Please stay tuned to learn more as soon as we have new information. Until then, please let us know your thoughts in the comments section below.