Ayesha Saba

Pakistan's real estate sector has faced a series of challenges, dampening investor sentiment and causing a ripple effect across the economy. From the imposition of additional taxes to the dwindling purchasing power of investors, the sector has found itself struggling. Talking to WealthPK, Babar Bhatti, Vice-President of Islamabad Estate Agents Association, said the macroeconomic challenges had dampened investor confidence and hindered the growth of the real estate sector. "Despite the current headwinds, certain segments within the real estate market continue to show resilience and potential for long-term value creation. It is anticipated that the upcoming government will take measures to decrease the prevailing interest rates. This adjustment is expected to stimulate increased investment activity, particularly in real estate ventures," he opined. He further suggested that ensuring long-term policy stability and continuity through consistent regulatory frameworks and transparent governance structures was essential to build investor confidence and attract sustained investment in the real estate sector.

Bhatti added that the significant flight of capital and investments to the booming Dubai real estate market since 2022 had had profound implications for the real estate sector of Pakistan. Khawaja Umair Mumtaz, marketing head of a real estate company, told WealthPK that real estate in Pakistan had always been one of the most prominent investment destinations for Pakistanis. However, he said the year 2023 proved challenging for the sector. "Economic uncertainties, political instability and inflationary pressures have eroded the affordability of real estate assets for many individuals and businesses," Mumtaz noted. He said there had been a significant increase in taxes over the past months. "The imposition of additional taxes has exacerbated the already troubled real estate market." The realtor said that the tax measures had hit the estate community – builders, developers and clients – hard.

He stressed that policymakers should engage with representatives of the real estate industry, including developers, investors and real estate associations, to gain insights into the sector's dynamics and potential impacts of tax changes. "Furthermore, the government should provide attractive incentives to the construction and real estate sector to create more investment opportunities." "To enhance investor confidence and ensure market stability, policymakers should strive to provide clarity and consistency in tax policies," he said, adding that frequent changes in tax policies deter investment and impede long-term planning. Therefore, he said clear and stable tax policies were essential for fostering a conducive investment environment.

INP: Credit: INP-WealthPk