Pakistan’s Securities and Exchange Commission (SECP) faced an unexpected setback in its real estate modernization initiative. An Islamabad investor rejected buying units in a newly registered real estate investment trust (REIT) unless the broker could ensure his specific units were “Margalla-facing.”
The controversy shows the main tension over the Securities and Exchange Commission of Pakistan’s recent draft changes to the 2022 REIT Regulations. Authorities aim to expand the reach of REITs past the present Rs 82.7 billion market value by permitting trusts to own undeveloped land and parcels.
Long-time landholder Chaudhry Zafar said, “My son told me the government is finally letting people buy land through shares,” and added, “I was prepared to put Rs 50 million into the new land fund. But when I asked the broker to assign me the units that face the Margalla Hills rather than the main drain, he told me the stock market doesn’t work that way.” Senior Equity Broker Tariq Mahmood devoted more than two hours to clarifying that a REIT share denotes a fractional, pooled beneficial interest in a trust, meaning every share confers the same rights and value.
Mahmood recounted that Zafar grabbed a red pen and marked an “X” on the upper-right portion of the glass partition, insisting his Central Depository Company (CDC) record show he owned that particular corner parcel. The episode demonstrated Zafar’s lack of grasp of how REIT shares function.
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Conventional real-estate buyers find that the intangible world of capital markets does not provide the tangible, communal, and commercial advantages traditionally associated with owning land in Pakistan. In Islamabad’s Sector C-14, a corner lot overlooking the Margalla range commands a 25 percent higher price. Zafar contended that if every REIT share is identical, the SECP is effectively demanding mountain-view rates for plot-of-ditch land.
He stated that he would not know what he’s selling if he sells 10,000 units on his smartphone tomorrow. A senior capital markets analyst in Karachi noted that for the average Pakistani investor, real estate isn’t just an asset class, it’s a physical status symbol. A stock ticker has no sun orientation, making it difficult for investors to understand the value of REIT units.
The meeting concluded without a transaction. Zafar offered to pay the broker a 5 percent off-the-record cash commission to manually override the trading system and insert a “Margalla View” tag next to his CDC account number. When informed that such an action was legally and algorithmically impossible, Zafar withdrew his capital and left to meet a file dealer in Sector F-11.
The SECP’s latest draft amendments to the REIT Regulations, 2022, aim to allow funds to hold vacant land and plots, which would widen the REIT footprint beyond its current market capitalization. However, this change may not be enough to convince traditional investors like Zafar to invest in REITs. They prefer to own physical properties that provide them with a sense of status and control.
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