KARACHI, Feb 6: Caretaker Finance Minister Dr Salman Shah has underscored importance of reforming various laws that relate to transfer, tenancy and acquisition of immovable properties for creating an efficient and transparent real estate market to attract investment from the financial sector.

He was speaking on the occasion of launching of regulatory framework of Real Estate Investment Trust (REIT) designed by the Securities and Exchange Commission of Pakistan (SECP) here on Wednesday. SECP Chairman Raziur Rehman briefed the participants about the outlines of the regulatory framework.

“Lack of transparency and high transaction cost of properties are critical impediments for the promotion and development of REIT in Pakistan,” the minister acknowledged. All transactions under the REIT structure are required to be properly documented so as to reflect the actual money considerations paid at market price for land, construction, materials and labour.

Therefore, he said the launching of REIT was a pioneering effort as it was for the first time that an emerging economy had launched a modern financial sector product in a sector which so far had been the exclusive domain of developed countries.

“This has been done in spite of prominent property scams and lack of transparency,” Dr Salman pointed out while informing the participants of the gathering about wide ranging consultative process with critical public and private stakeholders was held for last two years.

The minister was confident that the REIT’s structure would help in regulating the existing fragmented and informal property development mechanism of real estate and bring efficiency.

He said that REIT could have been introduced much earlier and attributed the delayed enforcement to the fact that real estate was a provincial subject.

The Finance Ministry and SECP have organised a series of meetings with Sindh and Punjab governments to convince them of creating an enabling environment for modern products like REIT.

The REIT will create an environment for the real estate to get access to capital market. In Pakistan the minister informed that there was only one listed development company with a market capitalisation of Rs7 billion. “In Bombay Stock Exchange there are 11 listed real estate companies with a staggering capitalisation Rs2.83 trillion,” he added.

The SECP chairman in his address of welcome said that regulations had been framed to safeguard the interests of general public and also to facilitate the business community.