Pakistan's real estate market braces for prolonged downturnBreaking

June 20, 2024

Ayesha Saba

Pakistan's commercial real estate market faces significant headwinds, as stagnant prices and economic challenges dampen the investor sentiment. Experts warn that the sector is bracing itself for a prolonged downturn, with implications for both investors and the broader economy. Talking to WealthPK, real estate policy expert Hassam Ali at All Pakistan Real Estate Association, argued that the commercial real estate sector, once a thriving hub of activity, now languishes in a state of stagnation, with no immediate signs of recovery on the horizon. He argued that a combination of factors, including cumbersome regulations, lack of government support, and changing market dynamics, contributed to the sector's demise. "Until the government adopts progressive policies and modernizes its approach to the sector, we cannot expect any meaningful revival. The investors are wary of entering the market due to the high costs associated with regulatory compliance and lack of incentives for development.

This has led to a significant drop in new projects and a surplus of unsold commercial properties." He further argued that significant reforms are needed to revive the sector. These include improving political stability, implementing more effective and transparent regulations, and providing incentives to attract investment. "Without these changes, the commercial real estate market in Pakistan is unlikely to see a recovery before 2030," he said. Talking to WealthPK, Marketing Head of Rawaha Real Estate and Builders, Khawaja Umair said the absence of supportive measures and strategic planning has left the commercial real estate market vulnerable to external shocks. The economic challenges facing the country, including inflation and currency depreciation, have exacerbated the problems in the commercial real estate market. "Rising interest rates and unstable asset values have made it difficult for the investors to secure financing for new projects, leading to a vicious cycle of underinvestment and declining property values," he added.

He agreed that significant reforms are needed to revive the commercial real estate sector. The government must adopt a more proactive approach, including reducing regulatory burdens, offering tax incentives for new developments, and investing in infrastructure to support commercial growth. Umair highlighted the real estate sector's potential to attract billions of dollars in direct investments. According to him, Pakistan's commercial real estate sector is in a dire state and is unlikely to recover before 2030. He advocated for a partnership between the government and the private sector to bring about a revolution in this industry. Without these changes, the prospects for revival remain bleak, leaving investors and businesses facing an uncertain future.

Credit: INP-WealthPk