Lahore/ Karachi: The state bank of Pakistan this Wednesday took another step towards promoting real estate activities. Risk weight was reduced from 200% to 100 % to improve the financing of the construction and housing sector in fulfillment of the government initiative to improve construction activity.
This new development will help banks finance real estate developmental activities. Relaxing restrictions for investing and allocating shares into the real estate development sector will help make sure that investments are more easily secured for further real estate ventures.
This change is also expected to bring benefit to the capital market since more sponsors for companies will review listing on the stock exchange.
Real Estate Investment trusts help improve the funding in real estate housing and construction projects by collecting funds so relaxation for estimated risk is expected to improve the overall construction activity to boost the real estate sector.
This development will help banks and development finance institutions to invest better in REITs for a 15% of their equity as compared to the general 10% that was previously observed thereby the investment for the REIT’s will not just improve but the DFI’s and Banks will also have an opportunity to diversify their investments.