Real Estate in Pakistan

The real estate sector in Pakistan has great potential and important factor in growth of economy. Annually 5.2 billion dollars are spent on construction that gives output about 2% of GDP. Urbanization is expending every year so better management and planning would play key role in expansion of real estate business.

Real estate business observes many trends in last few years.One of trends is price hike that raised question about legitimacy of housing and accommodation needs while taking into account expanding urbanization.

In all major cities of Pakistan real estate market is being fallen constantly leading to decreasing demand of real estate, so market is full of just speculations about price with less interest in doing business. Another factor causes in decreasing real estate business is amendments of Tax Ordinance 2001 in 2016 enacting from 1^st July 2016, according to which only State Bank of Pakistan would responsible for valuation of property and land. These amendments cause prevailing uncertainty and investment from overseas Pakistanis is falling which results declining inflows of remittances.

Another dismal prospect of these amendments is diminishing number of real estate developers. Most of the investors have shifted their business to abroad a few remains with wait and look strategy with un-promising future. There is misconception about property prices among masses, income tax causes decrease in property price. But many countries of Europe, Canada, USA and Australia the situation is inverse.

Other cause of decrease in property price is FBR’s ban on inflow of black money. In past black money caused rise in property price abnormally. The capital gain tax has been increased upto 10% with time frame of 5 years, which previously was 5% with time frame of 2 years leading to decline in real estate market. In long future it is estimated that 50% or more decline would be observed in long future.

Present scenario of price fall in DHA is as follows, in phase 9 prices have been decreased about 15% and in DHA Karachi and Islamabad decline is 20% and 15% respectively. Moreover, the property business has been reduced by 80%, that was at the peak in June 2016.