Real estate is considered as a backbone of Pakistan’s economy as it is the 2nd largest employer
after agriculture and contributes over 9 percent to the national GDP of the country. [ CITATION
sbp18 \l 1033 ] Over the years, the sector is faced with many ups and downs.
Before Pakistan got its independence, real estate agencies were already present in old karachi
(Bandar Road). Real estate sector started to grow in 1950s with development of areas like Tariq
Road, Sindhi Muslim Society, Nursery and PECHS. Later in 1960, Defence Housing Authority
(DHA) and Amnesty Scheme of ZA Bhutto during 1973-1974 gave further boost to the real
estate market. However, the sector went into declining stage after the year 1977 until early 1990s
due to post-election riots, disastrous flood in DHA and afghan war making the economy suffer.
Real Estate started to grow again and there was significant development in 1994. Nevertheless,
this lasted for only four years because of the power crisis and heavy rain causing recession for
the market, followed by unfortunate incident of 9/11. After the incident, there was an upturn in
the market and the real estate broke all the career records by growing drastically. This led to
massive increase in the prices and hence people were not willing to purchase a property in early
2000s. Due to sky-high prices the real estate industry went into recession in year 2005 until July
2010. The sector started to recover and there was a boom during the year 2012. [ CITATION Fai18 \l
1033 ]
The year 2015 turned out to be good for the real estate investors since property prices started to
increase by 15 to 20 percent, attracting investors to enter the market to earn huge profits. Also,
new housing schemes were introduced along with reduction in the shortage of houses. [ CITATION
Ila18 \l 1033 ]
In 2016 the sector faced the crises since government implemented new tax laws and announced
Federal Budget 2016-17. FBR valuation rates were introduced for the collection of advance tax
(on property more than Rs. 4 million) and capital gain tax which were increased from 2 to 4
percent for filer and non-filer. [ CITATION sbp18 \l 1033 ]
New property taxes stalled the real estate activities and people were reluctant to buy or sell
properties. Also, there were decrease in property prices. [ CITATION Gha16 \l 1033 ] [ CITATION
Sha16 \l 1033 ]
It was expected that the real estate sector will stabilize after the elections in 2018. However, the
new measures by PTI government led to constant decline of the sector. The measures under
Finance Act 2018 was that the ban was imposed on non-filers on purchasing property above Rs 5
million. [ CITATION sbp18 \l 1033 ]
The reasons for imposing such measures was to end black money investments in real estate
sector, reduce property prices and award the tax payers. However, this resulted in low real estate
transactions and incomes of estate agents [ CITATION Gha18 \l 1033 ] and gave death blow to
luxury or high-end property market.[ CITATION Gha181 \l 1033 ]
The year 2019 was also a nightmare for real estate sector when PTI government announced the
Tax amnesty scheme. Under the scheme individual had to prove source of income if buying
property worth Rs. 5 million, non-filer was also allowed to buy property by paying 5% of the
property price as penalty, and 1% Tax was imposed for those declaring their properties which
was 1.5 times more than the FBR rate. The new amendment disappointed investors, dealers and
sellers of property resulting in slow down of the sector. [ CITATION Gha19 \l 1033 ]
The real estate industry in Pakistan had suffered a lot since 2016 due to many reasons such as
unrealistic policies, political and economic instability. However, the year 2020 is considered as
ray of hope for the sector. It is expected that there will be boom of investments along with
various developments across the country. Some of the projects that will play an important role in
the flourishment of the real estate sector of Pakistan include
Bahria Town, a pioneer residential society that have become a top brand. After its success in
Lahore, Karachi, and Islamabad it has recently launched in Peshawar. This will greatly affect
real estate sector by bringing in more investment, jobs and profits. [ CITATION UPN19 \l 1033 ]
Another project is Gwadar which will be game changer for real estate sector by bringing in
investment opportunities in different housing and commercial projects that are being planned out
in Gwadar. [ CITATION UPN20 \l 1033 ]
Dubai-based Emaar, Eighteen (a joint venture of the Egyptian Ora Developers and the
Pakistani Saif Group and Kohistan Builder) and Naya Pakistan Housing Programme (NPHP)
that includes building 100,000 housing units for low-income families, are some of the other
projects that will positively contribute to the real estate sector of Pakistan. [ CITATION Zam19 \l
1033 ]
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