Ayesha Saba

Pakistan's real estate sector – a key economic contributor – struggles to attract investment due to weak property rights enforcement and poor dispute resolution mechanisms. Experts warn that unless these issues are addressed, the sector's growth and broader economic contributions will remain constrained.

Talking to WealthPK on the condition of anonymity, an official from the Islamabad Estate Agents Association said property rights are the cornerstone of economic stability and growth. "When the property rights are insecure or disputed, it deters investment. Investors need assurance that their assets are legally protected and that any disputes will be resolved efficiently and fairly," he said. In Pakistan, however, convoluted land records, overlapping claims, and the absence of a centralized digital database exacerbate the problem.

These issues often lead to prolonged legal battles, leaving the investors wary of committing substantial resources. A critical aspect of this challenge is the outdated land management system. An official emphasized that reliance on manual records and lack of transparency allow for fraudulent practices such as land-grabbing and double registration of properties. According to him, adopting modern digital land record systems would not only protect the investors but also improve the overall business climate in the country.

Establishing robust legal frameworks, enhancing property rights protection, and implementing effective dispute resolution mechanisms are essential steps. Ali Raza, a property law specialist, underscored the importance of robust dispute resolution frameworks, mitigating an investor's concerns. He said the existing judicial processes are overburdened and slow, causing undue delays in resolving property-related disputes. "For a thriving real estate sector, swift and impartial dispute resolution mechanisms are essential.

Establishing dedicated property tribunals or arbitration panels can provide the investors with quicker and more reliable solutions," he suggested. Moreover, there is a need for clear legislative reforms to streamline property ownership and transfer processes, reducing the scope for ambiguity and litigation. "Real estate is a critical sector that directly affects the construction, banking, and other related industries.

International investors view these issues as a significant risk, leading to reduced foreign direct investment (FDI) in the real estate sector. "Pakistan has immense potential to attract investment, especially from overseas Pakistanis and Chinese stakeholders through initiatives like CPEC. However, this potential will remain untapped unless systemic barriers are addressed," Riaz noted. To build investor confidence, he agrees that comprehensive reforms are necessary.

This includes digitizing land records, modernizing legislation, and establishing efficient arbitration mechanisms. Such measures will not only address the immediate concerns but also position Pakistan as a more competitive and attractive destination for real estate investment, ultimately contributing to sustainable economic growth.

Credit: INP-WealthPk