PAKISTAN’S REAL ESTATE: A COMPREHENSIVE ANALYSIS OF LAST 3 YEARS

Pakistan’s economy showed significant signs of recovery and expansion in 2018 in comparison with the previous years. The factors contributing to this improvement is comprised of security conditions, a good credit strength, loaded investments, diverse agriculture advancements and overall improvement in macroeconomic conditions.

However, these sectors were affected by the rise in oil prices and decline in foreign exchange reserves. A GDP growth of 5.5% was forecasted by IMF for 2018 with a projected GDP of 321 billion rupees.

The real estate sector in Pakistan was growing and became in important sector of the economy. Pakistan spent an approximately $5.2 Billion on construction annually and it accounts for 2% of the GDP. The accelerating rate of urbanization in country required planning and hence the effective management of real estate.

The Pakistan real estate market is one of those sectors which have suffered a lot during the past few decades due to several factors, there have been a lot of ups and downs in this sector, this is why almost everyone who is a part of this industry wants to what exactly would be coming next. One of the major hits which the industry took was the foreign investment that got effected because of taxation and other restrictions.

According to the economists and the real estate analyzers, in 2018 a very much stable real estate market. It in turn started offering various opportunities all over Pakistan. However, it will be good if you do not expect any major bubbles in the Pakistan real estate market. However, the societies which are potential trend changers and best to invest in the upcoming year. The China Pack Economic Corridor, popularly known as CPEC, is a link between the two countries forming an alliance for the future of business dominance in China and Pakistan. The CPEC need comes when China already has a global production market but is struggling to send shipments because of its geographic location. When you use your land, it has a dominant effect on the entire area. The impact of the project on Pakistan’s economy is profound, and the real estate sector is also affected. The 3,218 KM-long highway is under construction and still requires a lot of time and patience to complete.

CPEC’s impact on Pakistan’s economy was and is profound. That will be the reason why many industries are starting up and creating many jobs. According to a study by the Harvard Department of International Development Research, Pakistan’s development rate is to rise by 5.07% over the next decade. It is the second highest in Asia. With the support of the domestic economy, the demand for lodging facilities has definitely increased, which requires a huge amount of land. The real estate sector will prosper when more people are able to buy it. The real impact will be witnessed after 2020, when the One-to-one feature will be completed.

Nevertheless, Pakistan’s real estate sector has proven itself to be the best in all respects, and has seen a significant resurgence after a year-long churn. China is already investing heavily in Gawadar, and is calling home to Pakistanis based abroad. The main target of all these seminars and fairs is settling abroad as Pakistan is always on the lookout for good and lucrative investments in its own country. With current development taking place in Karachi, Karachi will become a hub for foreign investment for years to come, offering numerous major attractions, from the world’s 3rd largest mosque to the Rafi cricket stadium. . Projects such as Bar Ria Sports City, Bar Ria Paradise and Bar Ria Golf City are revolutionizing Karachi’s real estate market. While the world has witnessed a recession and a terrible decline in the real estate sector, Pakistan stands firmly and proves to be the best investment market in the world.

Pakistan’s high inflation seems to be driving home prices up significantly. But it is an illusion. According to Pakistan’s largest real estate portal, zameen.com, national home prices rose 5.05% in nominal terms to Rs 10,875 ($77) per square foot ($77) through the first quarter of 2019. However, after adjusting for inflation, house prices actually fell 3.98% over the same period.

According to the Pakistan Bureau of Statistics (PBS), inflation in Pakistan was 9.4% in March 2019, up from 8.2% in the previous month and 3.2% in the same period last year. In fact, it was the highest level since November 2013. In Pakistan’s major cities, the average house price in Lahore in Q1 2019 was Rs 10,402 ($73) per square foot a year ago, but it was actually declining 2.89% after inflation adjustment. In Karachi, the average house price was 13,158 rupees ($93) per square meter. In the first quarter of 2019, it increased by 4.25% year-on-year, but considering inflation, it decreased by 4.62%. Where else Islamabad home prices averaged PKR 9,985 (US $ 70) per square foot in the first quarter of 2019, up 7.01% year-on-year, but down 2.2% in real terms.

Pakistani homes have become cheaper, given the recent devaluation of the rupee. Despite national issues, the economy grew 5.4% in 2017, 4.6% in 2016, 4.1% in both 2014 and 2015, and then 5.2% in 2018, according to SBP. According to the Asian Development Bank (ADB), economic growth is expected to slow by about 3.9% during FY2019. Foreigners who work and live in Pakistan can buy or lease real estate. However, the government requires Pakistan’s Investment Commission and the Department of Trade Development to complete certain legal proceedings.

The Pakistan real estate market has developed into an important source of economic growth in Pakistan. As reported by the State Bank of Pakistan, “the sum of the direct contribution of the construction and housing sectors to the country’s GDP has consistently exceeded 9% over the past decade.” According to an article published by Pakistan-based marketing and media magazine Aurora, this sector is worth about $ 700 billion, according to estimates released by the FBR. The real estate sector not only creates high levels of direct employment, but also stimulates demand in more than 250 auxiliary sectors such as cement, steel, bricks, paints and other building materials.

Pakistan’s real estate state has contributed significantly to economic development According to World Bank research, the size of a country’s real estate assets ranges between 60 and 70 percent of the country’s total assets. Expanding these figures in Pakistan, the approximate size of the real estate sector is between $300 billion and $400 billion. Real estate did not work well in 2019 due to some financial, economic and political problems. Nevertheless, in 2020, the real estate sector achieved high growth.

Pakistani Real Estate is coming to the surface very quickly after the recent economic situation in Pakistan caused by Covid19 and the attack of locusts in 2020 has been very intense. In 2021 generally Pakistani people have started to save a little and then invest in the real estate market. However, after the economic downturn last year, consumer’s purchasing power has been greatly reduced as people have run out of savings from the pandemic to lose their jobs.With declining demand and falling prices, it is a good opportunity for those who have saved to invest more in this market. Consumers who have saved are investing at lower interest rates in order to profit at higher interest rates in the future. With this investment, Pakistan’s real estate market seems to be doing well.

Islamabad and Rawalpindi are the safest cities for real estate investment in Pakistan. Islamabad has many investment opportunities expansion of Islamabad Highway and Rawalpindi Ring Road. Along with this 38-kilometer-long ring road, a new industrial zone, housing societies are to be established. Similarly, the extension of signal-free highways provides economic value to some housing projects. Both these ventures will eventually improve logistics efficiency between the two cities.

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