KARACHI: The Securities and Exchange Commission of Pakistan (SECP) on Friday issued the first-ever Certificates of Shariah Compliance to two estate investment trusts (REITs), including Signature Residency REIT and Rahat Residency REIT.
According to an SECP news release, a number of entities had applied for certification as Shariah-compliant companies since the Guidelines for Offering Islamic Financial Services 2023 issued by the Commission earlier this year, in pursuance of the Federal Shariah Court (FSC) judgement directing the government to facilitate all lending activity under an interest-free system.
“These guidelines facilitate conventional financial institutions intending to convert themselves into Shariah-compliant business models,” the SECP said. Investors would enter into a Shirkat ul Aqad partnership under REIT for acquiring real estate and executing contracts for construction, financing, sale, and redemption in accordance with Shariah Advisor guidelines, the Commission added. “The issuance of Shariah compliance certificates to REIT developments is a significant step towards connecting the real estate industry with Islamic financial markets and providing Shariah-conscious investors with a regulated, transparent investment alternative.”
The Signature Residency REIT is a close-end developmental REIT with a fund size of Rs. 825 million and a 4-year indicative life. It aims to build apartments and retail units on land, generating income for investors through the sale of these units to customers. Similarly, Rahat Residency REIT is also a closed-end Shariah-compliant developmental REIT with a fund size of Rs. 1,650 million and an indicative life of 5 years.
