KARACHI: The State Bank of Pakistan (SBP) has revised investment regulations for banks and Development Finance Institutions (DFIs), introducing updated limits for investments in Real Estate Investment Trusts (REITs). The changes were announced through BPRD Circular Letter No. 22 of 2026, dated October 23, 2026, as part of the central bank’s regulatory framework for financial institutions.
Under the revised Regulation R-6, a bank or DFI’s investment in any single REIT cannot exceed the lower of two limits: 5 percent of the institution’s Tier-I capital or 20 percent of the REIT’s total units. This means each institution must assess both thresholds and apply whichever results in the smaller permitted investment.
The revised rules also address investment policy requirements. Banks and DFIs must maintain approved policies that consider their financial capacity, investment risks, expected returns and exit strategies. These factors are important for evaluating potential investments and managing exposure to different asset classes.
A Real Estate Investment Trust allows investors to participate in property-related investments through a professionally managed structure. In Pakistan, REITs operate within a regulatory framework overseen by the Securities and Exchange Commission of Pakistan.
The SBP’s revised investment limits are relevant to banks, DFIs and REIT managers assessing institutional investment strategies. However, the immediate impact on individual REITs, property market activity and investment returns will depend on how financial institutions apply the updated rules.
Investors should not assume that the regulatory change will automatically affect REIT prices or returns. Banks and REIT managers will need to review their investment positions against the revised thresholds and consider the requirements when planning future allocations.
