In Pakistan, the real estate sector is one of the least regulated. Except for the CDA, PDA, and others, 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.
The Pakistan Bureau of Statistics estimates that the country’s real estate industry is worth $300 to $400 billion, or around 2% of Pakistan’s total GNP (GDP). It is not a little cash that is not in use, making the economy suffer greatly.
Savings on real estate are assets for private or corporate investors but liabilities for the Pakistani economy. The market’s transactions are not disclosed to the authorities.
In general, the underground economy occurs owing to high taxes, overregulation, official ban of any activity, and corruption, among other factors. Still, it is the reverse in Pakistan, particularly in the real estate sector. People are investing because of tax breaks and little or no regulation.
Other parts of the real estate market suffer from a lack of adequate checks and balances. In Pakistan, nobody regulates capital investment in the real estate industry, which raises a few questions:
Is real estate capital flowing throughout the economy? What is the source of the capital that is flowing into real estate?
Do the buyer and the seller each pay taxes?
The answer to this is simple when a person retires and receives a pension they make direct investments in the real estate market, and most people prefer to put their savings in real estate rather than in banks because the latter lose value over time.
Real estate is one of the safest bets for investors because it allows them to earn profits for years, whether or not there is construction development or the investment they made is no longer in circulation.
Real estate is crucial to the growth of economies in developed nations, but this is not the case in Pakistan. Many governments or politicians believe real estate is the biggest economic sector everywhere, according to research conducted by the Pakistan Institute of Development Economics.
Real estate is a prominent economic indicator all around the world
The rationale is simple: we require real estate in order for me to work. We require shopping and motels in order to travel. Everything is for sale. Even industrial production is real estate. Real estate is where it all starts.
In fact, real estate is where every human activity starts so real estate development must be permitted. Nobody is advocating that one should solely build real estate.
However, crippling the real estate industry, as we have done over the previous three years, cripples the economy. For balanced development, we must provide an equal area for real estate.
In conclusion, regulation—not excessive regulation—is necessary for the real estate market. Whether it is white or black money, there needs to be a good check and balance on where it flows.
Second, the government has to establish rules dictating how long it takes to build after purchasing a site. Fine or other penalties must be imposed by the government in cases of noncompliance.
