Pakistan’s real estate market is always on the radar of investors whether local or overseas Pakistanis. After all, it is generally profitable. But have you ever wondered about what are the causes of a rise or downfall of Pakistani’s real estate sector?
Well, in this article, we will be discussing the factors that affect the property market of Pakistan.
Here are those key factors:
- Affordability of Consumers
- Interest Rate
- Taxes and Govt. Policy
- Investments by Overseas Pakistanis
Affordability of Consumers
As affordability of consumers goes upwards due to the rise in incomes of middle-class, more people are able to invest in real estate. This is especially true for people living in urban cities as the increasing affordability of consumers have resulted in the rise in demand for both residential and commercial properties.
Pakistan’s current Interest rate is 13.25%. So, considering this, people will be more inclined to earn a profit on their savings accounts. In general, the higher the interest rate, demand for property decreases.
Pakistan’s economy is on a downward trend. Inflation is high, the political situation is unstable, and generally, there is uncertainty in the market. So naturally, there are fewer buyers in the real estate market.
If the economy is booming, it will have a positive impact on the real estate market. Though, that is not the case as of now.
Taxes and Govt. Policy
Due to the increase in taxes on property transactions ( Stamp duty, Withholding tax, and Capital Gain tax) and the increase in property valuation by FBR, the real estate market is on a decline.
Investments by Overseas Pakistanis
Due to its attractive rate of return, Overseas Pakistanis annually invest at least $8 billion in the real estate sector. Therefore, investments made by overseas Pakistanis play a big role in the country’s property market.
But the recent destruction of under-construction buildings all over the country has created doubts in the minds of overseas Pakistanis. So the uncertain environment in addition to the slowing down of the economy has made the expats reluctant to invest in the real estate sector.