ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has granted the very first Shariah compliance certificate to two Estate Investment Trusts (REITs), marking a significant stride in harmonizing the real estate sector with Islamic financial principles.
The entities granted this prestigious recognition are Signature Residency REIT and Rahat Residency REIT.
In a momentous alignment with Pakistan’s Federal Shariah Court (FSC) directives, which advocate for the facilitation of lending activities under an interest-free framework, the SECP unveiled the “Guidelines for Offering Islamic Financial Services 2023.”
This visionary policy framework was designed to empower conventional financial institutions to transition into Shariah-compliant business models. Since its inception, the guidelines have sparked a notable influx of entities seeking certification as Shariah-compliant enterprises.
The Signature Residency REIT is a closed-end developmental REIT boasting a fund size of Rs. 825 million and an indicative life of 4 years. Its focus centers on constructing apartments and retail units to be sold, generating returns for investors. Similarly, Rahat Residency REIT, also a closed-end Shariah-compliant developmental REIT, features a fund size of Rs. 1,650 million with an indicative life of 5 years.
Under the REIT structure, investors will partake in a Shirkat ul Aqad partnership, leveraging it for real estate acquisition. Contracts for construction, financing, sale, and redemption will be executed in adherence to the guidelines set by Shariah Advisors.
The issuance of Shariah compliance certificates to REIT developments represents a momentous stride towards bridging the real estate sector with Islamic financial markets. This regulatory-backed, transparent investment alternative caters to Shariah-conscious investors, fortifying the intersection of ethical finance and property investments.
