Ayesha Saba

Given Pakistan’s high inflation rates and economic volatility, the real estate sector presents a viable investment option for those seeking financial stability. With the right strategies, investing in properties, especially in growth areas like urban centres, can shield wealth from inflationary erosion.

Speaking to WealthPK, Hassam Ali, an expert at All Pakistan Real Estate Association, said in Pakistan, where inflation averaged 30.2% in the first half of 2024, real estate has shown resilience compared to other investment options. “Unlike these alternatives, real estate offers a tangible asset that retains its value even during economic downturns, making it an attractive choice for many investors.” He explained that real estate prices typically rise alongside inflation, protecting investors from the declining value of money. “The property market in Pakistan presents a range of opportunities for both short-term and long-term investors.” Residential properties in urban centres like Karachi, Lahore and Islamabad have seen consistent annual price appreciations ranging from 10% to 15% over the last decade, according to data from Zameen.com.

Ali further said that large-scale development projects such as the Ravi Urban Development Project in Lahore and the infrastructural progress in Gwadar under the China-Pakistan Economic Corridor provide lucrative prospects for investors. “In addition to capital appreciation, rental yields provide an attractive incentive for property investment.” He noted that rental incomes tend to adjust with inflation, providing a consistent and increasing cash flow for property owners. “In times of high inflation, landlords often revise rental agreements to reflect market realities, ensuring that their income keeps pace with rising costs,” he said. He remarked that economic policies also play a crucial role in shaping the sector’s dynamics.

“Recent measures by the State Bank of Pakistan, such as cutting policy rates, have improved the affordability of financing options, stimulating activity in the housing and commercial property segments. However, he pointed out that regulatory uncertainties and inconsistent taxation policies remain a challenge that has impacted the sector’s growth. “High initial capital requirements and a lack of transparent regulatory frameworks remain significant barriers. However, the introduction of Real Estate Investment Trusts (REITs) can address these issues. By pooling resources, REITs allow smaller investors to participate in large-scale projects, thereby reducing risks and enhancing accessibility. These structures also add a layer of transparency and efficiency, attracting more investors to the sector,” he noted.

Credit: INP-WealthPk