The real estate of Pakistan seems to be very expensive due to increasing inflation in the country. But it isn’t the case; Pakistan is cheaper in this context. Pakistan’s real estate rates are quite lesser than many South Asian and Arabian countries like India, Bangladesh, and U.A.E. Leaving the economic angle and its debate aside, Real Estate is a profitable business endowed with a plethora of business opportunities.
If utilized with all-inclusive potential, it may unlock the doors of economic prosperity. Since Pakistan came into being, no past governments had paid the required attention to the real estate industry. Real estate had never given the status of an enterprise. There present a great many causes behind this. Sad to say, most politicians and public servants have been found involved in the business of property. They exploited their authority to snatch public money and hide this black money with investments in Real Estate.
In Pakistan, the outbreak of Covid-19 proved a blessing in disguise. Before Covid-19, the real estate industry gained little importance, but with the eruption of the Covid-19 pandemic, the incumbent Government of Pakistan paid all-embracing attention to this prime Real Estate business. The premier unveiled a flagship Construction Package on July 10, 2020, which is being appreciated by the relevant stakeholders.
In this blog, Estatex.pk tries to compare the policies of former and present governments and throws light on investment opportunities that may change the country’s fate.
Importance of Pakistan Real Estate as Industry
In the past, the governments had never given real estate the importance of the industry. Why did the former politicians formalize this business and consider it the proper industry? The answer is quite simple. They used this so-called industry to invest their black money and turn it into white money.
However, the present government didn’t follow in such footsteps but announced a significant construction package to lift this major sector. Moreover, real estate is being formalized, and subsidies are being provided to help people boost this industry.
Implementation of International Policies
Today, we live in a global village; everyone is connected in one way or the other. Many international institutions are functioning to cater to the world’s governments with their internationally accepted laws and policies. The international institutions include International Monetary Fund (IMF), World Bank (WB), and many others.
In the past, no government implemented those recommended policies. However, the incumbent government looks very dedicated to this matter. For instance, the teamwork of the Pakistan government and I.M.F. has been able to, after the collaboration of national and international experts, feasible Mortgage laws, housing finance portfolios, Repossession laws, etc., have been announced and implemented as well.
PM Construction Package & Amnesty Schemes
Throughout the history of Pakistan, no government has been able to announce such a crown jewel package. Political issues aside, the credit of this super project goes to the PM of Pakistan, Imran Khan.
The most salient feature of this package; real estate got a status of an industry. For the first 100,000 housing units, a subsidy of 300,000 per house would be provided. The people of Pakistan will get practicable loans and grants as well. Similarly, Amnesty Schemes have been introduced and extended to give the people a chance to register their construction businesses.
The Federal Board of Revenue has successfully registered 1,083 projects worth 340 billion P.K.R. so far. Moreover, FBR collected Rs. Fifty million in the form of taxes as per Interim Information Minister Syed Ali Zafar. Keeping the Covid-19 situation and the country’s economic condition in mind, the unofficial sources predict that the Government of Pakistan holds a plan to set forth a new Amnesty Scheme for the registration of more undeclared assets. Concludingly, the PM’s Construction Package is all-inclusive and is receiving admiration from every stakeholder.
Mortgage Laws & Repossession Laws
The incumbent government paid particular attention to the banking policies of the country; especially with the outbreak of Covid-19, an attempt to revamp the construction industry was brought into action.
The State Bank of Pakistan decreased the interest rate levied on the acquisition of the loan. It is now 7-8 percent only. In the past, the borrowers used to pay a considerable amount of 13-14 percent as an interest rate. In Covid-19, people had to face a severe economic crisis; so, it was difficult for them to pay their outstanding balance. Keeping the situation in mind, the banks alleviated the repossession laws as well on the instructions of the premier.
SBP Roshan Digital Account (RDA)
The introduction of the Roshan Digital Account (RDA) is a great step, indeed. For the very first time, the government of Pakistan opened the ways for the Pakistani diaspora to take part in the socio-economic activities of the country. After its launch, the government has received an enormous amount from its international diaspora in remittances.
According to the S.B.P., 181,556 accounts from 171 countries across the globe have been opened since the inception of R.D.A. As a result of new digital accounts, Pakistan successfully acquired a total of USD 1.562 billion until the end of June 2021. The opening of Roshan digital accounts and the launch of the flagship construction package both left no stone unturned in making the real estate industry boom.
Real Estate Opportunities in Pakistan
There present a great many opportunities in the real estate industry, but the following are a few of them.
Increase in Remittances- Investment Potential in the Country
A great many people deposited investments for a real estate sale and purchase. With this R.D.A., overseas Pakistani can open their digital bank accounts and invest virtually in the economic activities of Pakistan.
As mentioned earlier, Pakistan’s investment potential increased a lot with the increase in remittances from the Pakistani diaspora. According to the latest report of the S.B.P., the month of June 2021 experienced the highest amount of deposits (USD 310 million) and N.P.C. Investment (233 million). real estate finds its name among the top industries of Pakistan. A great many people deposited assets for a real estate sale and purchase. Pakistan should further develop a flexible business environment to feel no fear in investing in the country.
Cheaper Real Estate Prices in Pakistan
Owing to the high inflation rate in the country, the general folks feel that the prices of real estate are very high. But the case is different; Pakistan is cheaper in real estate. The property prices in Pakistan are considerably lower when compared with the neighboring countries. Let’s draw a brief price comparison of prices.
In Pakistan, a plot of 1 Kanal in D.H.A., Bahria Town, or any other top-notch town can be purchased at approximately P.K.R. 3 Crores. But, in a country like the United Arab Emirates (U.A.E), the exact size of the plot costs around P.K.R. 9-10 Crores. If we talk about Mumbai, India, the price of 1 Kanal plot is P.K.R. 50 Crores. Now, one can understand whether the costs of Real Estate in Pakistan are high or low.
2-3 % Vacancy Rate- Huge Demand for Houses
A significant increase in the construction of new housing societies has been experienced on the peripheries of the cities. Pakistan faces a consistent housing shortage of 2-3 percent. The country has an occupancy rate of 98 percent in terms of housing. A gap of 2-3 percent is vacant in housing units.
The demand for new houses is still prevailing in the country. Comparing the 2-3 percent, the need for urban housing in the country is approximately 350,000 per year. So, there is a golden opportunity for the investors to fill this gap and earn lush profits in return.
CPEC Road Networks Attracting New Housing Societies
CPEC, a flagship project in the history of Pakistan, holds the utmost potential to change the economic standards of the country. As we are aware of the fact, the real estate industry is one of the top treading industries of Pakistan. So, how is it possible that the real estate sector doesn’t flourish in CPEC? Pakistan will see the rise of new 25-30,000 housing units annually as per the reports.
There is a trend in Pakistan where the road network is present; a housing society is sure. Following this trend, the country is going to grow enormously in the real estate sector.
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