By Pakistan real estate is the sector that contributes the most to the economy of Pakistan, both directly and indirectly. According to the Pakistan Bureau of Statistics, the real estate sector is worth between $300 and $400 billion, or around 2% of the country’s total GDP. And this volume is just the documented economy; the informal economy that the Government of Pakistan does not properly document has a lot bigger monetary volume.
The property industry has several sub-industries, such as cement, steel, timber, fixtures, etc. are associated with it. But unfortunately, the real estate market in Pakistan is one of the least regulated. Despite being such a big industry that needs regulation on a mass level, there is no centralized body for collecting taxes or regulating real estate, and no one asks investors where their money is coming from or leaving; in fact, there is a track record of the government introducing the amnesty schemes. The market’s transactions are not disclosed to the authorities, and there is least check and balance. But on the brighter side, this makes Pakistan a tax haven; people, especially expats, invest in Pakistan real estate because of tax breaks and little or no regulation and then handsome returns on all sorts of investments.
Looking at the history of Pakistan’s real estate market, the demand for property, especially the demand for residential property, started in 2010. From 2013 to 2020, it was the era of the property boom. Hundreds and thousands of businesses directly and indirectly related to real estates, such as real estate development and marketing firms, started, and most of them had a success. But the aftermath of covid-19 and lockdowns brusted this property bubble. Like every economic sector globally, real estate also started to struggle.
Looking at the history of Pakistan’s real estate market, the demand for property, especially the demand for residential property, started in 2010. From 2013 to 2020, it was the era of the property boom. Hundreds and thousands of businesses directly and indirectly related to real estates, such as real estate development and marketing firms, started, and most of them had a success. But the aftermath of covid-19 and lockdowns brusted this property bubble. Like every economic sector globally, real estate also started to struggle.
But surprisingly, this sector didn’t do as badly as the remaining sectors. Pakistani’s especially overseas Pakistanis bought properties worth millions of dollars. As soon as prime minister Imran Khan announced the real estate amnesty scheme, a boom in high-rise development was witnessed. The sector started to recover after the shock of covid-19, and 2022 was predicted as a very good for real estate, but political tensions that erupted in the country in April 2022 again halted the progress. In the span of a few months, the inflation is now at 27.55 percent, a record-breaking number in history. There was a sharp drop in people’s purchasing power, and construction materials prices skyrocketed, making the prices of properties even more expensive.
Due to the economic turmoils, the government of Pakistan is once again knocking at the doors of the IMF for the 23rd time. Every time a long list of conditions, including new taxes and increases in prices of utilities like electricity and fuel, follows this loan. This time the conditions proposed by the funding body are even stricter, and it is expected that the real estate sector will have grave impacts on Pakistan’s Real Estate sector.
But does that mean it is no longer worth investing in Pakistan’s real estate sector? To the surprise of many, the answer is that despite all the shambles, real estate is still one of the most worthy investments in Pakistan. This sector is still the most reliable one if someone is looking for returns on investment without the risks of any major loss or losing the investment.
The rapid devolution of PKR strikes all sections of society. The hard-earned money is losing value every passing day. Even if the amount is in a bank account or the most secure safe of your home, inflation is the thief that is stealing the worth of these savings. Due to devaluation, the fiat currency of 100,000 PKR has a worth of merely 72,000 or less today (per the inflation rate of 27%). But if you had invested that 100k in real estate, you would have made an asset, and the worth of this amount has also grown. For example, MGC Divine’s 1-bed (660 sq ft.) apartment’s starting price was 4,950,000 PKR; each square ft was worth 7500 PKR. In February 2023, the price per sq ft of the same apartment was 17,800 PKR, and the apartment’s total worth is 11,748,000.
Summing it all up, if you have any margin in your budget, now is your time to invest in real estate because, in these unprecedented economic circumstances, there are no other viable options available to protect one’s money.
