Investment timing may vary, but the true value of property lies in its location. Success in real estate is determined by the place, not the date!
The Pakistan real estate market is pivotal as we end 2024. The sector faces challenges and opportunities due to a growing population and shifting economic landscape. Affordability remains a key concern, pushing developers and policymakers to explore innovative solutions for affordable housing. This dynamic environment has caught the attention of investors and industry experts alike, who are eager to understand what lies ahead for this crucial sector of Pakistan’s economy.
As we look towards the future, several factors are set to shape the Pakistan real estate market. This article will delve into these aspects, providing insights into what the future holds for Pakistan’s real estate landscape in 2024. Let’s delve right into it.
Future of Property Market in Pakistan
Pakistan’s real estate market is experiencing a period of transformation and challenges. According to the State Bank of Pakistan, the real estate sector contributes approximately 2% to the country’s GDP, with an estimated value of PKR 5.2 trillion (USD 32 billion) in 2021. Despite its significant economic role, the market faces several hurdles, after the layer of COVID-19. Property values have declined by 15% in the last year, outpacing drops in other Asian cities. This downturn has particularly affected middle-income groups, resulting in slower market activity and fewer property transactions.
The construction sector, contributing over 2.5% to the GDP, plays a crucial role in the economy with links to over 200 industries. The real estate market is currently facing a significant downturn, with property values falling by 15% in the last year, a rate faster than that seen in other Asian cities. The city Karachi has seen a 4% decrease in property values. Pakistan’s real estate market is distinguished by its moderate rental yields of 5-6% and approximately 6% in transaction costs. However, this attractiveness is somewhat diminished by the country’s higher corporate tax rate of 29% and a property tax rate of 5%, which limit the entry of corporate entities and long-term investors into the market. Moreover, high mortgage rates, reaching up to 24%, pose significant challenges for potential homeowners.
Government Initiatives Shaping the Future
The Pakistani government has introduced several initiatives to shape the future of the real estate sector. The Pakistan Investment Policy 2023 (PIP 2023) aims to boost the investment-to-GDP ratio and increase Foreign Direct Investment (FDI). This policy focuses on improving the investment climate by maintaining liberal investment policies and facilitating investors at all stages. The creation of the Special Investment Facilitation Council (SIFC) is another significant step. This council, comprising civil and military leadership, aims to streamline approval processes and facilitate policy reforms to create an investor-friendly environment. The SIFC has identified key sectors for prioritization, including IT, agriculture, mines and minerals, energy, and defense production, with the goal of achieving $100 billion in foreign investment over the next three years.
Technological Advancements in Real Estate
The Pakistan real estate market is experiencing a digital transformation, with PropTech (Property Technology) leading the way. PropTech encompasses various aspects of real estate, from buying and selling to property management and investments. Online portals and mobile apps have become popular platforms for property listings and searches, allowing users to explore thousands of options from home. These digital solutions often integrate payment gateways, enabling secure and hassle-free transactions.
Smart home technology is gaining traction in Pakistan’s urban landscape, offering residents control over lighting, heating, security, and entertainment systems through smartphones or voice commands.
Investment Opportunities in 2024
The Pakistan real estate market, valued at over USD 300 million and contributing 2-3% to the GDP, presents diverse investment opportunities in 2024. Anticipated changes in monetary policies are expected to have a significant impact on the sector. Interest rates, currently at a high 22%, are forecasted to decrease to a more favorable range of 7-9%, potentially unlocking dormant capital and stimulating investment.
Real Estate Investment Trusts (REITs) are gaining prominence, offering investors a convenient avenue for passive income and portfolio diversification. REITs allow investors to pool resources and invest in a variety of income-generating properties, providing returns proportionate to their investment.
Pakistan Real Estate Future 2024- 2025
Despite the current downturn in Pakistan’s real estate sector, it’s important to remember that such cycles of low activity are often followed by strong recoveries and boom periods. Historically, the real estate market has shown resilience, rebounding from past challenges to offer significant long-term growth.
Recent Amnesty Schemes have further bolstered investor confidence by providing attractive tax benefits, encouraging both local and international investments. As a result, the sector remains a promising avenue for forward-looking investors, with the potential for substantial returns as the market inevitably shifts toward a period of renewed expansion.
Additionally, with Pakistan’s growing population increasing the demand for housing, investing in land is everyone’s need. As the government is planning move towards a plastic money trend, shifting towards digital transactions, there will be a chance that more liquidity in the market, further boosting real estate investments. This evolving landscape is likely to drive the real estate sector upward, presenting promising opportunities for future growth.
All these trends show that despite being at the lowest phase, the real estate sector in Pakistan is still in no loss. In the coming years, it will evolve and boom to the fullest. This shows that this is the right time to hold the property, right time to buy the property!
Qurtaba City Islamabad- A signature project by Multiworks
Qurtaba City Islamabad, a premier project by Multiworks, stands out as a beacon of opportunity in Pakistan’s real estate market. Designed to meet the needs of a growing population, this planned development offers a blend of modern amenities and strategic location benefits.
As a signature project, Qurtaba City is not only promises high-quality living but also represents a solid investment opportunity. With its comprehensive infrastructure and commitment to excellence, it provides a compelling solution for investors looking to capitalize on the sector’s rebound, making it a prudent choice in the current real estate landscape.
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Final Words
The Pakistan real estate market is poised for significant changes as it is about to end the year 2024. Government initiatives, technological advancements, and new investment opportunities are shaping the future of this crucial sector. These developments, combined with the ongoing digital transformation, suggest a dynamic future for Pakistan’s real estate sector. As the industry evolves, it will be crucial to keep an eye on these trends to understand their long-term effects on the market and the broader economy.
FAQs
Q1: What are the predictions for Pakistan’s real estate market in 2024?
In 2024, the real estate market in Pakistan is anticipated to attain a market value of approximately USD 2.11 trillion, with the residential sector being the most significant contributor, expected to reach around USD 1.49 trillion in market volume.
Q2: How is the property market in Pakistan expected to perform in 2024?
The property market in Pakistan is forecasted to reach a valuation of USD 1.98 trillion by 2024. The residential segment will predominantly drive this growth, with an estimated market volume of USD 1.28 trillion.
Q4: Is 2024 a favourable time to invest in real estate in Pakistan?
Post the anticipated elections in January 2024, political stability is expected to improve, which is likely to boost the real estate market in the subsequent years, making it a potentially good time to invest.
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