PAKISTAN: Two companies in Pakistan have collaborated to launch the first Islamic hybrid hotel REIT in the country, marking a milestone in the real estate and hospitality sectors while also signaling the potential for more Shariah compliant hotel REITs in the region.
JS Investments, a private-sector asset management company, partnered with Gohar Group of Companies, a real estate group, to jointly launch the Shariah compliant JS Hotel REIT – a first of its kind, featuring a 139-key premium hotel operated under a franchise agreement with a multinational hospitality brand. The project is in Hyderabad, Sindh, and aims to align with environmentally responsible construction and green infrastructure in urban Pakistan.
The investment agreement between JS Investments and Gohar was signed following approval from the Securities and Exchange Commission of Pakistan. Through its owners and partners, Gohar committed both land and equity as a founding strategic investor.
“As the manager of Pakistan’s first hotel REIT, we are pleased to offer investors a professionally managed and regulated investment vehicle backed by international hospitality standards,” said Iffat Zehra Mankani, CEO of JS Investments.
The fund is now open to both local and international accredited investors, offering exposure to new asset classes that contribute to the country’s economic and infrastructure development, Iffat added.
JS Hotel REIT follows JS Investments’ launch of JS Rental REIT in 2022, which was anchored by a commercial office tower in Karachi, as part of the company’s mission to broaden access to regulated real estate investments.
Globally, the universe of Shariah compliant REITs with exposure to hotels remains niche, with active examples primarily in Saudi Arabia: for instance, Jadwa REIT Al Haramain Fund, managed by Jadwa Investment, focuses on hospitality and related properties in Mecca and Medina including multiple hotel assets; and Musharaka REIT Fund, managed by Musharaka Capital, invests in a mix of assets that include hospitality and hotel assets in its portfolio.
In other jurisdictions, the challenge for Shariah compliant REITS in the sector continues to be in terms of maintaining compliance with Shariah thresholds, as hotels can derive revenue from non-Halal activities.
