First of all I like to thank the God almighty who gave me strength to develop a Thesis on the topic “Prospects of Real Estate Investment Trust in Pakistan” then I like to give a vote of thanks to the Institute of Business & Technology, which provided me with the opportunity to conduct a research on this critical issue. I highly value the help provided and the efforts made during this research by the faculty members specially the advisors.
I further express gratitude to all my teachers for their valuable guidance and supervision during this study. I am especially thankful to most respected Dr. Noor Ahmed Memon for his professional, constructive and enlightening guidance in the completion of this research work. Indeed it was a sense of colossal support and help to have supervision of such a great scholar who guided me during the course of this research. In last I appreciate the help and support of my family members and my friends without which, it could not be possible.
INSTITUTE OF BUSINESS AND TECHNOLOGY
ABSTRACT SUBMITTED BY:Hassan Hameed
DISCIPLINE:MBA (Banking and Finance)
TITLE OF PROJECT REPORT: Prospects of Real Estate Investment Trust In Pakistan
MONTH OF SUBMISSION: November 2010
NAME OF PROJECT SUPERVISOR: Dr. Noor Ahmed Memon
This research thesis will provide information about the basic concept behind Real Estate Investment Trust and about the benefits. Further I will discuss the basic valuation of the REIT. Other aspects that will be covered in this course of the study will be about the launching of this fund in Pakistan its prospects and the obstacles. This research will provide benefit not only to the real investors who want to diversify the portfolio but an effort would be made to find out the methodologies to launch REIT in Pakistan.
This research study not only helped me in understanding the investment opportunities available in Pakistan, but also the problem faced by the small investors and would help in developing and creating awareness among them. 1. INTRODUCTION
A country needs large scale of investment to support its economic growth and this objective cannot be achieved without boosting investment in productive activities. The quantum of investment is largely dependent on the saving rate that is driven by the philosophy “incentive for savings”. The declining returns on the National saving schemes (NSS) and markup being paid by financial institution and high rate of inflation have become serious impediments for boosting saving rates.
Historically, people use to keep their investment in National Saving Schemes or in the saving accounts of the commercial banks. Other modes of savings were currencies mostly U.S $ and affluent people also tends to invest in real estate. However, with the recent declining trend in the NSS and bank deposits with the effect of shooting inflation people are desperate to search for other alternatives. However the investment in productive facilities by the corporate has picked up, but very few new companies is being listed at local stock exchanges. In recent past, corporate were issuing term finance certificates (TFCs), but relatively low interest rates reverts them back to bank borrowing.
Before exploring the various potentials for investment lets have a closer look of the conditions and trends prevailing in the economy. A broad based economic recovery, further strengthening of macro economic stability and a near elimination of external account vulnerability has been the major success for Pakistan. However, the country still faces many challenges like increased Balance of trade deficit, further investment in industrial sectors or foreign direct investments, reducing of poverty, improving social indicators investments for achieving higher GDP growth rate and improving...