The real estate sector is a globally recognized pillar of economic strength, and in Pakistan, it stands as one of the most critical foundations of the national economy, with 70% of the country’s wealth tied to it. Consequently, it garners significant attention from both private sectors and government entities.
Recent Growth in Pakistan’s Real Estate
In recent years, Pakistan’s real estate sector has experienced tremendous growth. Contributing factors include a recovering economy, government incentives like tax cuts, fluctuating gold prices, and the success of the China-Pakistan Economic Corridor (CPEC), making real estate the fastest-growing sector of the economy in 2021.
Understanding Real Estate
To grasp the prospects of Pakistan’s real estate market, we must understand the basics of financial stakes, investment ideologies, and the factors influencing real estate development.
What is Real Estate?
Real estate encompasses land and the buildings on it, including air rights above and subterranean rights below. Business-wise, it involves the construction, sale, and purchase of properties, categorized into:
- Commercial Real Estate
- Residential Real Estate
- Industrial Real Estate
- Vacant Land (farms, ranches, etc.)
The Significance of Real Estate
Real estate is a primary driver of economic growth, offering cash flows, equity building, tax breaks, and a hedge against inflation. Fluctuations in real estate prices directly impact property owners’ wealth and consumer spending, making it a crucial focus in economic planning worldwide.
Real Estate Business in Pakistan
Real estate investment in Pakistan has been a lucrative and secure venture for decades, offering high profit margins with minimal risk.
Sector Brief:
- Pakistan is the world’s 5th largest country with a population of 220 million.
- 36.38% of the population lives in urban areas, with a rising demand for housing due to urban migration and a 2.4% annual population growth.
- The construction industry contributes 2.53% to Pakistan’s GDP and employs 7.61% of the labor force.
Market Dynamics:
The market is dominated by traditional real estate agents but is evolving with technology and public-focused initiatives by reliable names like Agency21 and 92 Properties.
Real Estate in Pakistan – 2021
In 2021, Pakistan’s real estate sector is thriving due to increased investments from local and foreign investors, driven by government initiatives like tax reforms and the “Naya Pakistan Housing Scheme.”
Government Support:
Recent government incentives have significantly boosted the sector, including:
- Granting the construction sector industry status
- Exemption from withholding tax on building materials
- Exemption from capital gains tax
- Various housing finance schemes
Naya Pakistan Housing Scheme
This flagship project by Prime Minister Imran Khan aims to provide sustainable housing for Pakistan’s 20 million homeless population, significantly boosting real estate activity and creating numerous jobs.
Future Prospects
Pakistan’s real estate sector is poised for unprecedented growth. The rising population and housing demand offer excellent opportunities for businesses. Additionally, CPEC’s infrastructural projects are further accelerating construction activities.
Projected Growth:
Despite Covid-19’s global economic impact, Pakistan’s real estate outlook remains positive, thanks to government reforms and incentives. The sector’s projected growth is encouraging for all stakeholders.
The Best Time for Investment in Pakistan
With thriving economic conditions and investor-friendly policies, now is the perfect time to invest in Pakistan’s real estate. Current tax relaxations have lowered property prices, promising significant future returns as demand rises.
