Key Points
- Commission engages builders’ body on advance deposit regulation
- Existing framework under Companies Act 2017 remains in abeyance
- Proposals include NOC requirement and escrow account mechanism
- Aim to balance investor protection with sectoral growth
ISLAMABAD: In line with the government’s vision to promote real estate, Pakistan’s corporate watchdog on Friday launched a consultation process involving the country’s builders association.
The Securities and Exchange Commission of Pakistan (SECP) has initiated consultations with the Association of Builders and Developers of Pakistan (ABAD) on developing a regulatory framework for real estate companies, particularly those seeking advance deposits from the public for new projects.
The meeting, chaired by SECP Commissioner Muzzafar Ahmed Mirza, was held in Karachi, with ABAD Chairman Muhammad Hassan Bakshi and his team of industry experts.
According to an SECP statement, the session discussed how to operationalise provisions of the Companies Act, 2017, which require prior approval from the SECP before companies can announce or advertise real estate projects. The law also stipulates that advance payments from the public must be kept in escrow accounts.
Officials said the framework has remained in abeyance since being legislated, prompting the regulator to engage with stakeholders to resolve ambiguities and practical hurdles. SECP representatives underlined the need for a trustee mechanism to strengthen safeguards, enhance transparency in project financing, and protect the interests of small investors.
Industry stakeholders raised ground realities and sector-specific challenges, calling for measures that can ensure investor protection while supporting growth in housing and infrastructure development. The SECP stated that the consultation marks a step toward a balanced framework that would enhance confidence in real estate investments and improve regulatory oversight.
Broader reform context
The deliberations are part of the SECP’s wider efforts to regulate Pakistan’s real estate sector through formal capital market structures. In recent years, the regulator has promoted Real Estate Investment Trusts (REITs) as a more transparent and investor-friendly vehicle, encouraging developers to move away from unregulated advance deposit models. SECP’s initiatives aim to channel real estate financing into regulated frameworks, bridging the gap between property development and formal capital markets.
Analysts told Dawn that the SECP’s current focus is to curb misuse of public advances and address long-standing investor complaints, while also paving the way for increased institutional participation in housing and infrastructure financing. The trustee-based oversight being discussed with ABAD is viewed as complementary to these reforms.
