Introduction
Real Estate is a rapidly evolving sector of Pakistan’s economy, expected to grow exponentially in 2022. The country is transforming through online real estate marketplaces, digital mapping, updated land records, and adopting international best practices in client-agent relationships. The rise of blockchain and cryptocurrency has piqued investors’ interest in digital real estate alongside traditional projects. Real Estate Investment Trusts (REITs) are also becoming attractive investment options. Key trends for 2022 include the Metaverse, Tourism and Hospitality, Asset Tokenization, sustainable development, vertical housing infrastructure, and regularization of the sector. These trends present investors with opportunities to invest in affordable real estate through digital platforms and low-income housing units, ensuring more transparency and regularization.
Metaverse
The Metaverse is set to be the biggest trend of 2022, with digital real estate emerging as a lucrative investment. It offers a great opportunity for diversifying property portfolios using blockchain technology instead of traditional banking systems. Web 3.0, the era of the open crypto metaverse, allows users to own stakes in digital platforms. Benefits include earning income from digital land appreciation, renting out properties, and lower input costs compared to real-world real estate.
Tourism and Hospitality
The hospitality industry has become a prime investment opportunity due to its global tourism potential. This is crucial for Pakistan’s economy, as tourism can significantly boost economic activity. Countries like Malaysia, Turkey, Thailand, and the UAE have improved their economies through tourism. Pakistan, with its vast tourism potential, can do the same by upgrading hotel standards and facilities. Local tourism has flourished due to COVID restrictions, leading to a demand for better lodging. Investors have a great opportunity to franchise international hotel brands like Hilton and Marriott, focusing on sustainable development, construction, and infrastructure improvements.
Real Estate Investment Trusts (REITs)
REIT Schemes offer an affordable way to invest in real estate and diversify property portfolios. They are predicted to be a major trend in Pakistan in the coming years. REITs provide high dividends and long-term capital appreciation, making them practical investment options. Unlike traditional real estate projects, REITs are listed on the stock exchange, allowing direct investment in the economy. REITs are required to pay 90% of their taxable income to investors, offering higher dividends. The number of investors per REIT is limited to fifty, ensuring substantial dividend distribution. Updated REIT laws in Pakistan have eased registration requirements, boosting investor confidence.
Asset Tokenization
The acceptance of blockchain technologies has opened new avenues for digital real estate through asset tokenization. This process allows issuers to create digital tokens on a blockchain, converting ownership rights into tradable digital assets. Asset tokenization offers increased liquidity, reduced costs, faster settlements, and eliminates the need for middlemen. Its high divisibility allows investors to buy small percentages of assets, lowering entry barriers. Asset tokenization will continue to grow, presenting investment opportunities in various sectors, including real estate, commodities, private equity, and physical goods.
Vertical Housing Infrastructure Development
Pakistan faces a housing shortage of over 10 million units, with urban population growth outpacing land availability. This shortage indicates a surge in affordable vertical housing units. The government plans to invest in such units to reduce living costs, increase green spaces, and achieve a sustainable urban model. Climate change is driving eco-friendly development practices, offering investors opportunities in green infrastructure. High-rise buildings, micro-apartments, and mixed-use apartments are among the top housing trends for 2022.
Regularization of the Real Estate Sector
The government is taking steps to regularize the real estate sector to prevent tax evasion and ensure transparency. By the end of January 2022, real estate agents must register with the Federal Board of Revenue (FBR). This registration helps monitor financial transactions, impose business rules, reduce corruption, and create a competitive environment for registered agents. Agents must follow specific by-laws to counter money laundering and report suspicious activities. The government is also cracking down on illegal housing societies, ensuring transparency and security for investors.
Conclusion
In summary, the top real estate trends for 2022 include digital real estate, REIT schemes, asset tokenization, and vertical housing infrastructure development. Residential and commercial real estate costs will continue to rise, but low-investment opportunities will allow investors to diversify their portfolios. Environmental awareness and eco-friendly architecture are gaining momentum, promoting investments in vertical housing schemes. Digital real estate will disrupt the sector, with the Metaverse offering lucrative investment prospects and opportunities to diversify property portfolios.
