Pakistan’s 2021 Real Estate Prospects And Challenges

Pakistan’s 2021 Real Estate Prospects And Challenges

Real estate is a major and growing industry in Pakistan, and Pakistan spends $5.2 billion on construction, and this is an important growth in Pakistan’s real estate market.

Despite the improvement, we have seen many people in Pakistan still lack primary living facilities, i.e. houses. It thus clearly demonstrates that there is a great need for growth in the real estate market so that all sources of income can afford the need for life.

The PTI Government insists that the budget is tax-free and a significant achievement in the current scenario, although the opposition parties have rejected the budget on charges that it could not handle the financial crisis. Let’s look at the main highlights of Pakistan Real Estate Market trends in 2021

Pakistan Budget 2020-21 And The Real Estate Sector: Investment In Property

The budget is said to be a big economic booster, but it will collapse absolutely. Real estate and the building sector will continue to decline as a result;

Economy is in free fall;

Budget 2020-21 is merely paperwork that has no relation to reality. The IMF says that Pakistan’s economy will decline by 1.5 percent in 2020-21, while the government estimate is up by 2.1 percent. Given the government’s inflation target of 6.5 percent, real GDP will decline by 4.5 percent.

COVID-19 and Locust Attack are enough to kill Pakistan’s economy. The unemployment rate is still high. There’s another war with India in the picture. Who’s going to purchase land in such an unpredictable political and economic situation?

Pakistan Debt to GDP Ratio Record High;

In 2003 and 2013, there was a boom in property in Pakistan. The debt-to-GDP ratio was declining during both booms. Debt to GDP The ratio in 2003 was 50 percent, compared to 65 percent in 2013. But the debt to GDP ratio is now 86 percent and rising. So, we can see where the price of real estate in Pakistan is going.

No end users to buy real estate; common man buying power

Local Pakistani professionals & businessmen and Pakistani expatriates are the end-users. The purchasing power of local Pakistanis is declining. Whereas Middle Eastern countries have passed the law that private corporations should reduce the salaries of workers by 40%. Remittances in 2020-21 would decrease by $5 billion, the money needed to build 1 LAC houses. The current real estate crash scenario will proceed.

Economy & Future Of Real Estate Business In Pakistan

Resuming production in June, after 75 days of closure during the COVID-19 lockdown, Pakistan’s largest auto tyre maker, General Tyre and Rubber Company, net sales of PKR 3.2 billion increased by 42% in the first quarter of 2020 compared to the same time last year. This rise in sales is also partially due to government steps to curb illegal importation of tyres.

Cement sales continue to post growth in the current year as monthly sales hit a record high in October 2020 as mills shipped 5.73 million tonnes to consumers. Domestic consumption rose by 15.8 percent to 4.85 million tonnes from 4.19 million tonnes in October 2019. Exports reported a rise of 11.58 percent from 784,433 tonnes in October 2019 to 875,266 tonnes in October 2020. In the first quarter of 2020 19,3 million tonnes of cement were sold, a rise of 19,9 percent compared to the same quarter last year.

According to the latest property news, the Government announced the Rolling Spectrum Strategy 2020-2023 to assist commercial telecommunications operators in their network planning investments due to a massive rise in data usage. Mobile data traffic in Pakistan increased from 165 percent to 69 petabytes in 2017 to 128 petabytes in 2018. Data use rose from 0.34 Gb/user/month in 2016 to 1.75 Gb/user/month in 2018.

Exports rose by 10.5 percent in October 2020 over the last month, with a rise of US$ 196 million to US$ 2.1 billion. On the other hand, imports decreased by 15 percent to US$3.7 billion in October 2020 by US$647 million compared to the previous month.

Present Market Conditions & Inflations rate

At Globe Estate & Builders, we have been verifying our portfolio of construction projects that have risen dramatically since 2020 and are gaining momentum in 2021. Projects like Goldcrest, Indigo heights, and now Downtown Mall Liberty are performing far beyond expectations as investment realization continues to expand.

The new real estate market is very appropriate for a diligent investor. I would also recommend that you use our advisory services for future investment purposes. It’s a very small price to pay for choices that will help you make millions, and we’ll map our plans for you in advance and help you manage your savings.

It’s not all gloom and doom in the plots market, as DHA Peshawar has doubled and in some cases, tripled the investment in two years and is currently at an all-time high. Similarly, investment in DHA Lahore has been bottom-up and is a lucrative opportunity if you want to invest in property.

Besides this DHA Multan offer a great opportunity to invest in plots, it may not be as large as DHA Peshawar, but it will definitely be a region that will see a potential increase in 2020 and 2021.

Real Estate Support To Pakistani Economy

Pakistan’s real estate state has made a major contribution to its economic development. According to the World Bank calculation, the size of the country’s real estate assets is between 60 and 70 percent of the country’s total wealth; if these figures are extended to Pakistan, the approximate size of the real estate sector is between $300 and $400 billion. Due to several financial, economic, and political challenges, real estate did not perform well in 2019. Yet there is a strong expectation that there will be high growth in the real sector in 2020.

Real estate has slowed since 2017 due to political turmoil and volatility in economic and financial policies. The absence of incentives for investors, the imposition of a ban on non-filers buying property worth more than 5 million unless they register with the Federal Revenue Board (FBR), FBR’s tight regulation on non-filers’ banking transactions, and the levying of high property transfer taxes discouraged investors from putting their money into the sector in 2018-19. Another factor that contributed to the downturn in real estate is the inability to use the development budget that led to a contraction in the building sector and, subsequently, in the real estate sector.

CPEC is another mammoth development project that will change Pakistan’s economy and as a result, the real estate market will boom in the coming years. The special economic zones of the CPEC are yet to be completed, but the positive effects of the CPEC can be seen in the context of an improved situation in the power sector and partial completion of the Lahore-Karachi motorway.

The gap between Lahore and Multan was shortened to 3 and a half hours from an earlier 5-hour distance. Company and investors are now looking at Multan as Pakistan’s new economic center. Development of DHA Multan, DHA Bahawalpur are some of the few examples that lend credence to the fact that CPEC will turn the real estate sector in 2020.

There is no doubt that the growth of the real estate market will take place in the coming years. There are, however, some obstacles to growth in the real estate sector in Pakistan.

The Real Estate Market Reforms 2021: Housing Industry In Pakistan

Imran Khan, since becoming Pakistan’s prime minister, has made several reforms and improvements to Pakistan’s real estate sector that are directly related to Pakistan’s economy in many ways, such as:

  1. Most of these changes have been implemented to raise government tax revenues.
  2. Prevents speculative purchases in the real estate industry.
  3. As a result of these changes, there has been less investment by investors in Pakistan’s real estate industry as a result of which Pakistan’s economy is in a critical situation.

Challenges For Govt: Running Projects Progress

The real estate market has been overtaken by uneducated brokers and dealers who do not have the expertise to direct people further and in most cases leads to fraud. A federal and provincial real estate authority in the country is required to help protect the rights of land allocated persons. In addition, there is a desperate need to oversee the construction of societies by developers and builders, as it takes several years to complete the process of land consolidation. Overseeing some real estate regulators will create people’s trust, particularly overseas Pakistanis, to invest their hard-earned money in this sector without fear of scams.

The government needs to build long-term policies to expand the tax base. Taxing already taxpayers would do harm in two ways; one will squeeze the tax base as people start using cash transactions instead of banking transactions and conceal their wealth; the other, investors will park their wealth outside Pakistan and buy assets in Britain, Dubai, and invest money in offshore companies. A gradual approach to reforming the system is required, as fast-track changes can have negative consequences for the economy, especially real estate.

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