Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has allowed modaraba companies to deal and trade in real estate projects, news sources reported on August 24. As per the new development, the modaraba firms will be allowed to invest in projects authorised by the specific development firms.
According to reports, the SECP has permitted all multipurpose modaraba enterprises with up to one-third (1/3rd) of their total assets invested in real estate will have to comply with the following conditions:
The investments shall be made only in assets recognized by development authorities, i.e., Karachi Development Authority (KDA), Capital Development Authority (CDA), Rawalpindi Development Authority (RDA), Lahore Development Authority (LDA) and/or any other development authority in any city of Pakistan and should be accompanied by NOC relating to real estate project from the aforesaid authority
The purpose of investment can be to develop properties for rental or development or a mix of both objectives (rental and development).
Furthermore, in the case of a Modaraba created specifically for real estate investment or where real estate investment accounts for one-third (1/3rd) or more of the Modaraba’s total assets, the firm must have at least two directors with a minimum of five years of experience dealing with real estate projects. Similarly, before investing, an independent valuer’s valuation report must be acquired.
Furthermore, it has been specified that the prospectus of the Modaraba company shall contain information relating to the management experience of the Modaraba company’s sponsors in the real estate business, the type of real estate project to be undertaken, potential locations of the real estate, investment objectives, valuation report, feasibility study, the legal status of the property, funds required, sponsors contribution, and compliance with the sponsors’ lock-in period requirement.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
