The real estate sector of Pakistan is considered among the top fastest growing sectors. The demand and supply mechanism in the market has attached almost 100 other industries with it.
This is the reason that every linked industry directly or indirectly has contributed equally to the skyrocketing property prices.
According to statistics, Pakistan spends approximately $5.2 billion on construction-related activities which shows that it is a growing industry that has a lot of potentials to support the economy.
Broadly speaking, the post-COVID-19 scenario has brought a sudden boom in real estate just like in other countries of the world. Prime locations of different cities recorded a high buy/selling ratio with millions of dollars of appreciation. It is argued that property rates have risen almost 5 times in recent years.
For some, the real estate sector has brought heavy profits and opportunities while for people in search, it has become a challenge to satisfy their needs according to their pocket.
Among all the major cities of country, the rates of different real estate structures have shown similar surge which is a sign that there are some universal factors steering real estate market of Pakistan.
To hunt the reasons behind this boom, ProProperty has listed some important aspects that are interchangeably responsible for real estate price hike.
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The Investment Approach
Currently, there is a trend that people have adopted an investment approach and are not ready to sell their premises in garb of increasing profit rates.
They are just investing and buying different spaces, for instance, in remote housing societies that will take years to develop. The money is just being invested with a low selling proportion.
If people start selling, this will surpass the overall investment graph thereby bringing the prices down. Market corrections viz a viz property rates is a natural process, if the buying/selling ratio equalizes each other.
People are even taking loans to invest with a long sighted approach. All these things are possibly responsible for rising property rates.
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Housing Development
The ongoing price boom is considered unexpected by many, making people more interested to invest in real estate.
The major housing development projects has given birth to new shape and structures that has attracted people ever more. We have seen that outskirts of all major cities has been flooded with housing developments, focusing on every potential buyer with easy investment options.
The residential developments in Karachi, Lahore and Islamabad as a roadmap for other major cities that have presented new ideas of residential schemes with variety of modern day amenities.
For example; the housing developments taking place in Islamabad are equally being followed in new societies like DHA Multan, Bahria Town Peshawar etc.
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The Technological Advancements
Undoubtedly, the advancement in technology and modernization has also modernized lifestyle of people.
The developments in Karachi, Lahore and Islamabad and their easy linkage with motorways modern transport system has a lot to offer to underdeveloped cities of Pakistan.
On the other hand, the technology has become easily accessible at every home across the country, the real estate portals like Zameen.com, Graana.com, news portals like ProProperty, online markets like OLX and other platforms has made every opportunity accessible to every person sitting in a remote town and even in every corner of the world.
This is actually a turning point for property market where people found their desired location with a single tap, that ultimately increased the reach of people, hence increasing the overall property rates across the country.
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Government’s Policies
The financial inflows through Roshan digital account, recently introduced amnesty scheme, and lower interest rate in this FY proved to be some factors that played their role in price boom.
Since real estate is considered as the safest investment sector, with minimal governmental intervention, people tend to invest for turning black money to white.
Additionally, home loan schemes like PM Mera Pakistan Mera Ghar has also hooked interest of people in housing sector, ultimately making the environment more competitive but resultantly it has increased the rates in general.
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Devaluation of Currency
It is a general perception that a currency note of 1000 has less value today than it had in 2018. In other words, the devaluation of rupee viz a viz dollar is a responsible factor in increase of a 5 Marla plot that had approximate rate of 15lac now costs more than 35lac.
The higher profit rates has attracted people to invest more and more. Consequently, the earned profit is reinvested in real estate that makes the situation more complicated for a common man, says CEO Eighteen Housing.
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Concerns of Social Security
In a country like Pakistan, social security has always been a top priority for public. Social security in terms of safe housing is something every person dreams of.
Therefore, the introduction of low cost housing schemes, easy loans, installment mechanisms introduced by housing societies has made a common practice for people to purchase piece of land for their future.
As a result, people are drastically investing in housing which has increased its demand ultimately increasing the price tag.
The middle class seems to be more interested to purchase land than a house because the purchasing power is dented due to the aforementioned factors.
- Real Estate as Safe Haven for Tax Avoidance
The economists argue that Pakistan has a large informal economy. Similarly, the property market has huge portion due to unreported profits due to incompetent regulatory bodies and FBR’s weak property valuations.
These traits of real estate has made it easy for individuals to conceal their wealth or to invest in property via third party, which helps them to minimize tax liabilities.
In other words, real estate of Pakistan is more like a commodity than an opportunity, where investors buy in bulk and sell chunks of property for higher gains that smoothen the flow of illicit money; uncounted and unchecked.
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The CPEC Factor
CPEC being a flagship project between Pakistan and China is a game changer for every industry of the country. Heavy infrastructural development, railways and road networks and other investments of course developed speculations in market which drives the real estate industry bringing surge in its prices.
This is a long term factor that would continue to steer realty since people are attracted by these development indicators and their trickling interest heavily determine rise and decline of prices in real estate.
It could be claimed that the skyrocketing property rates would continue to climb, particularly in this FY that will obviously impact the upcoming financial year as well.
The striking factors like political chaos or economic meltdown can hamper the situation altogether, which is not likely to be possible.
Globally, property rates are on the rise, the inflation rate and unanticipated global economic recovery has taken every sector in its fold.
These indicators along with the above mentioned factors forecasts a bright picture for real estate sector of Pakistan but at the stakes of increasing affordability percentage, making it difficult for common people to purchase.
Dear Author
you have failed to address the Most Lethal Factor in these Skyrocketing valuation of Real Estate.
that is called Monopoly , its like raging bull that FBR or State Departments are unable to put a nose ring constitutionally. In fact government welcomes foreign investors to come , play and be a part of that monopoly.
As per growing population , Pakistan Rank # 6 in the world.
& Area wise 33rd , Supply and Demand must be very high due to more people wanting to buy a house to live in , that’s not the case as always, large majority of population still do not own homes.
But question arises , i mean few years back those properties were just lime.
That turn into Gold now. how come. Apart from inflation 4X to 7X Property rates.
Its never ending debate, but i would like you to acknowledge few other factors when it comes to Luxury.
first question should be , Do modest standard living in developed countries is interrelated as luxury and lavish life style in Pakistan.
If so then Price of Real Estate in Clifton Karachi, DHA Phase 1 Lahore, Sector E7 and F7 Islamabad normal house costs around 5 Million US $
Now you decide with quality of Life , Security and Standards is it worth to buy Luxury and live in Pakistan instead of getting 5 million $ worth house in Canada or US.
It began from Musharraf Era until today
Fallacy in rat raced monopoly to get personal gains , everyone is following the suite
i disregard the commercial industry but housing for residential purpose should be as high as it is
artificially hiked up to 10X of the worth comparing economy and social growth with HDI
but that unfortunate and years to come this bubble is only going to consume people
with painful nod. Rich gets Richer.
you have mentioned websites lets take for instance
Zameen site, once i saw a property in my neighborhood at the price tag of 40m
i called that guy since i knew him, he informed me that listed site is sold already . i said who did you sell, he replied to zameen dot com , in their blue area Islamabad office
same property with same Photo was uploaded again with 65m in a week by zameen team themselves.
This does not sound right to me, since there is no check and balance.
The more people involved the more price tag grows.
Few years back i decided to buy domain , Karigar.com
when contacted ISP Naya Tel , they said this domain is sold
& guess who booked that domain Naya Tel themselves
they wanted to resell it to me for my project worth 10m PKR
we have to get our ostrich head out of sand and address these issues which will help in social development of public of Pakistan.
These malice practices and policies will lead to no where but dead end of corruption and instability in the economy of Pakistan.
being actual and factual rather then fairy tale that has northing to do with reality