In Pakistan, the Future of Real Estate

The real estate sector is widely regarded as the economic backbone of any country. It is, like most countries throughout the world, one of the strongest structural pillars of Pakistan's economy, with real estate accounting for 70% of the country's wealth. As a result, the business sector and governments pay special attention to this sector.

Pakistani real estate has exploded in popularity in recent years. A reviving economy, favourable government incentives such as tax cuts, volatile gold prices, and the burgeoning success of CPEC have positioned real estate as Pakistan's fastest expanding sector in 2021.

To assess the real estate agency prospects in Pakistan, we must first consider the fundamentals of financial stake and investment ideology, as well as the variables that promote or impede real estate development.

What is the definition of real estate?

To comprehend and define real estate, we must first define the term "real estate" in its broadest sense.

The phrase "real estate" refers to a plot of land as well as the infrastructure or structures built on it. In a broader sense, this word may also refer to air rights above ground and underground rights.

Real estate refers to the building, sale, and purchase of a property in business terms. It can be split into the following groups due to its diversity:

• Real Estate for Business
• Real Estate for the Home
• Real Estate for Industrial Use
• Vacant Land Pieces (Farms, Ranches, etc.)
• The importance of real estate

Real estate is one of the most important sources of economic growth. Its close economic and financial closeness provides micro and macro cash flows, equity building, tax benefits, competitive risk-adjusted returns, and a strong inflation hedge.

The volatility in real estate rental and sale prices, as one of the most important sectors of the economy, has a direct impact on the wealth of property owners/tenants and their consumer expenditure. As a result of these factors, governments around the world are seeing this sector as an important factor in their economic strategy.

Pakistan's real estate market

For the past few decades, real estate investment has been the most tempting and rewarding sector in Pakistan. It provides little investment risk, substantial profit margins, and the assurance of safe investment returns.

A Quick Overview of the Industry

Pakistan is the world's fifth-largest country, with a population of 220 million people, a labour force of over 60 million people, and a burgeoning middle class.

A total of 36.38 percent of the 220 million people live in cities, while 63.62 percent live in rural areas.

Due to increased migration from rural to urban regions and a 2.4 percent yearly population growth rate, there is an ever-increasing need for housing.

According to the Pakistan Economic Survey (PES), Pakistan's construction industry accounts for 2.53% of the country's overall GDP (GDP).

7.61 percent of Pakistan's total working force is employed in the sector.

Dynamics

Traditional real estate agents who deal with clients through real estate business cards in regional marketplaces occupy the majority of space in the real estate Pakistan market. With the introduction of more public-focused initiatives and the stimulation of technology in real estate operations by trusted and dependable companies like Agency21 and Graana.com, the trend is poised to evolve.

Pakistani Real Estate in 2021

In 2021, Pakistan's real estate dynamics are expected to improve. Several factors have led to real estate's status as the most thriving economic sector. We are seeing a greater number of investments from both domestic and international investors, resulting in an increase in building activity and property deals around the country. However, government-led measures, such as tax reforms and the "Naya Pakistan Housing Scheme," are a primary driving force behind the real estate sector's rapid growth.

Government Assistance

The importance of the real estate business in Pakistan has increased dramatically in the last two years as a result of the ruling government's favourable incentives. Many incentives have been granted to builders and developers as a result of revolutionary tax policy reforms, resulting in an overall improvement in construction activity. The following are some of the key incentives granted by the government to boost the real estate sector:

• The construction industry has been given industrial status.
• Purchase of building materials is exempt from withholding tax.
• Capital gains tax exemption
• Various national and private banking programmes exist to aid in the financing of homes throughout the country.

Housing Scheme of Pakistan (Naya Pakistan)

Prime Minister Imran Khan's government's centrepiece project is the Naya Pakistan Housing Program. Its goal is to find a long-term housing solution for Pakistan's 20 million homeless people. The programme demonstrates what the Pakistani government is doing for the real estate market.

The efforts inherent in this programme have provided Pakistan's real estate market a significant boost. More real estate employment are on the way, as the industry anticipates a large manpower need in the near future.

What does the future hold?

Due to a variety of variables, including those mentioned above, Pakistan's real estate business is poised to reach new highs. In the next years, a growing population and increased demand for housing give fantastic opportunities for real estate enterprises to expand and succeed. Similarly, the real estate sector is expected to boost other connected industries, bolstering the country's economy.

In addition to the promising prospects, the China Pakistan Economic Corridor (CPEC) has boosted the construction industry by bringing in a slew of infrastructural development projects.

Growth Predicted

Despite the fact that the Covid-19 restrictions resulted in a worldwide decrease in Gross Domestic Product (GDP), public sector infrastructure spending, and Foreign Direct Investment (FDI), the outlook for Pakistan's real estate sector remains largely positive, thanks to unprecedented reforms by Prime Minister Imran Khan's ruling government, which included reforming, improving the sector's regulatory environment, and providing incentives and relief packages for the industries associated with redevelopment.