Islamic Fund Management
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Based on face-to-face interviews with selected market participants, REITs remain
underdeveloped in Pakistan due to several reasons, namely:
1. Tax regime for the real-estate sector: The imposition of additional taxes on real estate
(Federal Budget 2016-2017 and Finance Act 2016) had led a significant decrease in
property transactions.
2. Stringent capital requirement: RMCs must have a paid–up capital of not less than
PKR50 million before applying for a licence. They must also have an equity base of at
least PKR50 million before seeking approval for the offering document of the REIT.
3. Restriction on additional new projects: REIT Regulation 2015 (Clause 14(v)) clearly
states that a REIT cannot comprise more than one project (i.e. real estate on a single or
multiple sites having exclusive ownership, lease, utilities and easement rights according
to the law), and this restriction must be stated in the trust deed.
4. Extensive due diligence imposed by the REIT Regulations: Identification and
transfer of property to the trust is a mandatory condition for the approval by the SECP.
Since the real estate investment requires huge cost, therefore, the fund should be made
allowed to raise money before identification and transfer or purchase of the property.
4.3.3 Investment and Commercial Considerations
The development process in launching an Islamic fund in Pakistan varies from one AMC to
another, depending on the AMC’s internal requirements and approval processes. Decisions to
launch a certain category of funds also depend on the needs of investors. As the largest Islamic
fund manager in the country, Al Meezan Investment’s approach to developing and launching a
fund is highlighted i as an example.