LAHORE – Punjab Board of Investment and Trade (PBIT) has implemented Real Estate Investment Trust (REIT) tax policy reform through the Punjab government. REITs are mutual funds that utilise the pooled capital of a large number of investors to purchase develop and manage real estate assets. Units of a REIT fund are listed and traded on stock exchanges.
The REIT constitutes an ideal vehicle for small savers and other individuals wishing to invest in real estate while accessing the liquidity and benefits of the capital markets. REIT is of benefit to the economy on a number of levels, ensuring transparency in real estate transactions, increased participation of general public in profitable real estate projects and catalysing economic activities, eliminating housing backlog and providing quality living through standardisation and the implementation of best practices in the construction industry.
It also serves as an avenue for Foreign Direct Investment (FDI) and substantially augments government revenues. Assuming an annual incremental shortfall of 370,000 units, according to an estimate REITs could trigger additional economy activity of over $4.0 billion by filling this gap. It can also contribute positively to lowering unemployment and documentation of the economy through recording of transparent transactions.
Apparently, REITs can also fulfill the government’s objectives of generating higher revenue, creating employment opportunities for the masses and providing quality housing to the public. REIT is an attractive investment vehicle which can channel foreign investment and broaden domestic capital markets.
