Pakistan’s REIT market hits inflection point

Pakistan’s US$1.9 trillion real estate market has long operated on cash and opacity. Now, a decade after the nation launched its first Islamic REIT, the sector is entering a new phase of regulation and digital reform that could transform how Pakistanis own property, with Shariah structures leading the way.

“We’re now at an inflection point,” Naeem Illyas, CEO of DigiEstate and an independent director and the audit chairman of Arif Habib Dolmen REIT Management, told IFN Investor.

Pakistan launched its first Islamic REIT in 2015, marking the start of a sector that remains unique in the global landscape – dominated by Shariah compliant structures. The Securities and Exchange Commission of Pakistan (SECP) updated REIT regulations in 2022 and is preparing another round of revisions in consultation with stakeholders.

Naeem believes these efforts will “further strengthen the framework and ecosystem” for REITs, which could soon double in number.

“From July 2025 to June 2026, we expect at least four or five new REITs to be listed on the Pakistan Stock Exchange (PSX),” he noted. “That would effectively double the current listings, and about 75% of them will likely be Islamic.” There are at least 25 REIT management companies in the Republic, with about PKR2 trillion (US$7.08 million)-worth of projects in the pipeline, according to Naeem. Only two are listed on the PSX.

Despite being a tremendous asset class, real estate has unfortunately largely been sidelined as it remains in the informal economy due to its cash-based nature, thereby making much of the country’s real estate activities beyond the reach of banks and regulators. But the government’s ongoing push toward digitization and financial inclusion could change that dynamic.

“The formalization of the economy through digital payments, digital wallets and merchant onboarding will help convert Pakistan’s cash-based real estate into a formal sector,” believes Naeem.

Naeem’s own firm, DigiEstate, is pioneering another initiative which could add another dimension to the Republic’s real estate landscape: the tokenization of real-world assets. The company recently completed testing its Islamic real estate tokenization platform under the SECP’s regulatory sandbox. The system enables investors to buy fractionalized tokens of property starting from as little as US$20.

“Tokenization democratizes access,” Naeem said. “We’re moving from brick-and-mortar investment to blockchain-based ownership.”

Although the sandbox phase currently limits participation to accredited investors, DigiEstate plans to open the platform to retail investors once full licensing is granted by Pakistan’s newly established Pakistan Virtual Asset Regulatory Authority. With the SECP already greenlighting DigiEstate’s issuance of tokens, the next phase of testing involves secondary trading of tokens which he expects would be approved by the end of 2025, with public access likely early next year.

The early response has been promising. “We haven’t even announced publicly, but developers have already offered around US$2 billion worth of properties for tokenization,” he said. Under the sandbox, DigiEstate’s mandate only allows it to tokenize up to PKR300 million (US$1.06 million)-worth of assets.

Beyond property: A digital asset ecosystem

DigiEstate’s ambitions extend beyond real estate – the firm, through different arms, is exploring the tokenization of other asset classes including metals, agricultural commodities and even carbon credits, revealed Naeem. The company is working with Pakistan’s Ministry of Climate Change and provincial governments to digitize carbon credits for trading on both domestic and international exchanges.

 “The market is ready,” Naeem said. “Millennials and Gen Z understand digital assets. They’re comfortable transacting online. We’re just giving them a regulated, Shariah compliant way to own real estate.”