Globe Residency REIT: First developmental REIT starts trading at PSX

The Pakistan Stock Exchange (PSX) on Wednesday listed the Globe Residency REIT by Arif Habib Dolmen REIT Management Limited, making it Pakistan's first developmental Real Estate Investment Trust (REIT) to get its name up on the capital market.

"The REIT instrument gives investors a fresh avenue for safe investment,” said Arif Habib, Chairman of Arif Habib Dolmen REIT Management and Javedan Corporation, while addressing the business community at the PSX.

“This will also be accessible to retail investors through listings.”

On its opening day of trading, GRR gained Re0.8 to settle at Rs10.8, an increase of 8%, on a day when the KSE-100 retreated massively due to selling pressure.

A total of 14 million units, which make up 10% of the total units of the REIT scheme, were offered by Javedan Corporation Limited to the general public at a price of Rs10 per unit.

The offer for sale of the REIT Scheme was held on December 14 and 15 and it was oversubscribed by 2.77 times.

“REITs ensure documented real estate development activities in a transparent manner," added Habib.

REIT is similar to an escrow account that voluntarily secures customer advances for development and CDC acts as the trustee of the fund.

“It not only raises financial resources for development but also creates massive job opportunities through construction activities. It also contributes to the government’s revenue in form of taxes,” the veteran businessman said.

GRR is a closed-ended, listed developmental REIT with a limited life of 48 months. It offers investors the opportunity to become unit holders of Globe Residency apartments at Naya Nazimabad, Karachi. The scheme has 9 towers comprising of 1,344 apartments.

“REIT enables the conversion of open plots into developed properties, generating economic activities by over two times of the value of land,” Habib added.

Arif Habib Group has so far registered 9 REITs in total with a fund of Rs110 billion. Moreover, REITs worth Rs38 billion will be created in 2023. These will jointly generate over Rs600 billion in construction activity.

Minister for Finance, Senator Ishaq Dar was the chief guest on the occasion.

Dar, who addressed participants through a video link from Islamabad, praised the maiden listing of the developmental REIT.

"I am happy to note that the structure of the REIT guarantees full documentation of real estate development, ensuring transparency. Pakistan Muslim League-Nawaz (PML-N) has always promoted the capital market in Pakistan and we are working to steer Pakistan out of the ongoing challenging phase,” he said.

“The markets will soon see the results of our efforts which we are certain will reflect, creating space for new products and sectors.”

“I congratulate Arif Habib Group on being pioneers of REITs and the listing of Globe Residency REIT."

On the occasion, Securities and Exchange Commission of Pakistan (SECP) Chairman Akif Saeed said, "Globe Residency REIT is the first developmental REIT to be listed on the PSX and its IPO demonstrates the potential of REITs in Pakistan, the promotion of which we have been working on for the past 15 years is now garnering results."

PSX Chairperson Dr Shamshad Akhtar appreciated the efforts of Arif Habib Group to bring new products to the market and play its due role in the financial and real estate segments. She emphasized the importance of a structured and transparent corporate governance framework, citing that they bring efficiency to the business.

She said real estate is a primary industry that can bring vitality to a large segment of the economy.

“In addition to the economic aspects, we should also be mindful of the environmental impacts of our practices.”

She expressed confidence that REITs would not only invigorate the capital markets but also bring out the best operational strategies in the real estate development business.

PSX MD and CEO Farrukh Khan said, “While it is a proud day for us to list GRR on the stock market, I would like to highlight that PSX market cap has fallen from a peak $100 billion in 2017 to under $30 billion today.”

“Average daily volumes have shrunk from $200 million to approximately $20 million and despite an excellent start in the last fiscal year when eight new companies were listed, the IPOs have completely stopped. It is clear that the situation in the capital markets needs to be addressed on a war footing,” he said.

“We look forward to working with the Ministry of Finance and SECP to resolve some of the issues that are impacting the market. PSX will continue to be at the forefront in its efforts to revitalise the capital market and facilitate all such projects such as today's listing of Globe Residency REIT in the future as well."