The activity in the real estate sector recently might have been slow-paced of late, but the sector has seen some key developments that can stir up investment in the sector. For one, benefits of China Pakistan Economic Corridor CPEC will flow to the real estate industry. Also, the rationalization of taxes and the efforts to bring transparency in the sector can attract foreign investors and overseas residents to the market.

One way of real estate investment is through [b]Real Estate Investment Trust[/b] (REIT). It is a security that sells like a stock and invests in real estate directly or indirectly. Its raison d’etre include bringing real estate and construction sectors in the formal economy, providing structure and discipline to infrastructure and housing projects, allowing developers to raise finance for projects beyond their financial capacity, enhance the saving rate and provide investment avenues to smaller investors.

A favorable tax regime can help in having more REITs. However, those at the helm have not been able to lift [B]REIT[/b] investment. And one factor for the negligible progress has been the increased taxes. The federal budget for 2015-16 limited the capital gains tax exemption to developmental REITs for residential purpose only, while Dolmen REIT and many others in the planning stage are rental REITs. Also, tax on dividends on REIT investments was increased to 25 percent in the FY16 budget, which also hindered the development of REITs.

While not as significant as the pros, there are cons to investing in REITs as well. As they are a traded stock, there will still be fluctuations due to share availability and property vacancy. Rising interest rates can also impact profitability. Occasionally a property will depreciate instead of gain value, also affecting dividends. Points to consider. REIT investment is very attractive because of its liquidity. Directly investing in real estate means that you are tied to a property for any amount of time.