No doubt that the year 2016 seemed optimistic, and on reasonable grounds, as market analysts reassured that investment would continue to rise in 2016.
The reason being growth in investor’s interest and customer confidence in real estate markets, due to the improvement of the security situation in the country and the government’s supportive policies. Pakistan’s real estate industry had projected to hit new heights in 2016, based on increased Foreign Direct Investment (FDI), CPEC development projects, and sturdy housing demand.
However, things took a turn; when the Federal Budget for 2016-2017 was announced in June. Property taxes had increased, the obsolete District Commissioner’s (DC) property valuation rates were taken over by the FBR market prices set for documentation and tax purposes.
The prevailing rut in the real estate market can be dated back to 2017; an unusual combination of political turmoil, confusion in tax policy, and economic and financial policy volatility first triggered the effects and eventually came to a resounding halt.
A distinctive aspect of the real estate sector in Pakistan is that the industry reaches unprecedented highs and lows within a few years. Whereas in other parts of the world, it moves with more or less steady growth.
From 2017-2019 real estate has been a complete disaster and merely had no prospects for the coming years.
In the year 2020, several factors played a huge part in setting off the stability of the real estate industry. From the PTI’S measures to reduce the influx of black money that also meant less investment in real estate to the uncertainty caused by COVID-19, 2020 has seen it all. Not only was it the least profitable time in terms of selling a property because the prices were down, but there was also the problem on unemployment due to COVID-19 and individuals’ unwillingness to invest their resources.
Although there are a few positives to be noted, previously foreign investment was on the low due to the lack of authenticity, and people were scammed into buying property. But projects such as DHA, Bahria Town, and Gulberg have been able to rope in massive investments in the past few years. Moreover, in 2020, we also witnessed the dollar stabilize the inflation rate significantly drop since then. NAYA Pakistan, which intended to provide housing for low-income families. An investment in this would also have tax breaks for developers and get much of the charges waived off.
The Real Estate Market Reforms 2021
So what will finally end this rut? Several recently introduced reforms and improvements to Pakistan’s real estate sector, which are in many ways directly linked to Pakistan’s economy but they are producing negative outcomes such as less investment, speculative purchases. However, to broaden the tax base, the government has to develop long-term policies. This is how taxing taxpayers now would be harmed;
- It would squeeze the tax base as individuals begin to use cash payments instead of banking transactions to cover their money
- The other would park their wealth outside Pakistan to purchase properties in other countries, and invest cash in offshore firms. There is a need for a strategic plan to reform the system, as fast-track reforms can have negative effects on the economy, especially real estate.
future of real estate business in Pakistan , Lahore real estate forecast 2020, Pakistan property news prices, Pakistan real estate forecast 2021, Pakistan real estate market 2020, property prices in Pakistan 2020, real estate problems in Pakistan, real estate sector analysis in Pakistan.