Real Estate

Factors Affecting Pakistan Property Market

Aug 17, 2019

Real estate is an important and promising industry in Pakistan. The real estate market in Pakistan has developed rapidly in both the commercial and residential sectors. This attracts not only local investors but also foreign Pakistanis. In addition, investing in real estate is the most common way to protect capital and earn a substantial monthly rent. Here are some of the factors that affect the real estate industry in Pakistan.

New taxes: A blow to real estate development :

Despite boosting the economy and job creation, housing and construction have not yet been considered a significant industry. Its contribution to GDP of 2.3% is still below the required threshold of 5%. In the election, private developers were looking forward to incentive plans but were instead charged a 16% tax on individual housing units. The tax is levied on the land costs without any other costs. This had a negative impact on real estate development as developers and contractors needed tax breaks and other incentives to double their contribution to GDP.

The Situation of Law & Order:

The law and order situation in Karachi has had a dramatic impact on real estate prices. They stagnate in safer areas compared to low-income areas where the situation is fragile. The prices in DHA have remained stable and those in phase 6 and 8 are even on the rise. While real estate prices in Gulshan, North Nazimabad, New Karachi, Lyari and Mauripur have fallen dramatically. The government is taking stringent measures to improve the situation and has tasked rangers and law enforcement agencies to provide a safe environment for the Karachites. Property prices are expected to be more stable, but investing in the Karachi market remains an uncertain option.

Favorable Investment Climate for Expats:

The government has recently approved an investment program for foreign Pakistanis seeking to invest in small and medium-sized enterprises in Pakistan. Because of this favorable government stance, investors and expats return to the market and property prices are likely to escalate in the coming weeks. As mentioned above, the real estate industry contributes positively to the country's economic growth, and it is the government's duty to legislate so that investors have a level playing field and avoid risks to the sector.

Other Affecting Factors:

Let us find out the current market position based on the factors mentioned above.

  • A rare interest of foreign investors
  • No state interest
  • FBR Review
  • Stability of the local currency against the USD
  • Political instability
  • Demand and supply gap in favor of the rare demand with a high supply of the buyer
  • The lack of real investment - It keeps the market weak
  • Artificially created claims of group manufacturers that lead to market instability.
  • Fake Buyer within groups
  • Reduced real estate times - 4 to 6 hours

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