The Real Estate Industry and its Trends in Pakistan
Real estate at this point in time is one of the most flourishing sectors in Pakistan. It refers to the buying, selling and planning of property according to demand and supply trends. The real estate market in Pakistan can be divided into four categories residential, commercial, agricultural and industrial. Each category holds equal importance in the smooth functioning of the country. According to statistics Pakistan spends more than 2% of its Gross Domestic Product (GDP) that accounts to more than $1.5 billion on its real estate construction work. In recent times, with an increase in rural to urban migration, there has been a rise in real estate investment opportunities and a need for more sophisticated urban planning. Urbanization has resulted in the birth and development of the concept of housing societies, which the real estate business is known as more commonly by the locals. Bahria Town, a popular brand now, is the largest real estate investor in Asia.
The real estate trends in Pakistan can be unpredictable, reaching record highs and lows in a fraction of few years as compared to the steady trends of other markets all over the world. As per the fundamentals of economics, the real estate market too is affected by a number of external factors such as the country’s political situation, foreign investment, taxation policies, infrastructure facilities etc. For example, following the attack of 9/11 when FDI and remittances by expatriates increased; the real estate market experienced an evident boom.
In 2015, despite taxes such as the Capital Gains Tax imposed by the Federal Budget of 2014-2015 the real estate experienced tremendous growth. Investment in residential properties increased by five to seven percent and commercial properties saw a rise by fifteen to twenty percent throughout Pakistan.
In the following years, reduction and suspension in taxes such as that on building materials and sale of residential buildings in the Federal Budget of 2015-16 proved to be exceptionally beneficial for the industry. With improved security conditions, increase in Foreign Direct Investment and elaborate projects such as the CPEC, experts predicted the market to reach new heights by 2016.
However like each day comes with a new perspective, in 2017 with the Federal Budget of 2016-17 property taxes increased and revised the property evaluation mechanism resulted in adverse implications on the real estate industry.
There is no doubt that like any other developing country there is a high demand for the real estate business in Pakistan. The growth of this industry, however not steady, is very evident in the forms of improved infrastructure and better living facilities. With new opportunities and improving economy, we can easily say that the real estate sector of Pakistan still has a long way to go.