Stakeholder stress updating laws, easing taxation to boost sector
By Shahram Haq
Published in The Express Tribune, July 5th, 2020.
Real estate stakeholders have voiced unanimous hope that the realty segment could uplift Pakistan’s economy and assist in enhancing foreign direct investment if it receives due importance from the government.
Pakistan is one of the few countries in the world whose real estate sector has ample room to drive its economy because only 0.5% of the country’s area falls under planned land, said Graana.com Chief Executive Officer Shafiq Akbar.
Talking to The Express Tribune, he stated that at present, roughly 4,000 square kilometres of Pakistan’s land is classified as planned area out of a total 881,913 square kilometres occupied by the country.
“The total value of this planned land stands at roughly $2 trillion with the potential to further grow to $4 trillion if the country markets it properly,” Akbar said. He added that the demand for housing units over the next 10 years would stand at around 20 million units.
“Over five million jobs will be created in the realty sector and allied industries if the investment required to fulfil this demand comes from locals and abroad,” he said.
Citing World Bank’s research, Akbar said three out of every 10 jobs created in the construction sector are in allied industries hence there was a need for efficient policy-making and proper town planning because urban areas of Pakistan will grow as much as 68% by 2050.
Real estate sector has been the best investment hub for local and overseas Pakistanis for the past many decades as the country possesses massive amount of land. Currently, Pakistan ranks as the 33rd largest country by area, Akbar pointed out.
However following imposition of different taxes, this sector is tumbling. The incumbent government wants to promote the construction sector instead of real estate to lower housing unit shortages in Pakistan.
“Realty sector possess massive potential however countless challenges are hindering its growth,” he lamented. “Outdated laws, lack of regulations, complicated taxation, scarcity of entrepreneurship ecosystem, lack of public private partnerships, abundance of real estate related court cases and difficulties in real estate transactions discourage investors.”
According to industry experts, realty sector has gone from one of the best performing sector to being almost dormant in Pakistan.
He highlighted that people do not have proper information due to which they end up making dead investments most of the time.
As investments are dead and money changes hands frequently for profits, there is little job generation and the allied industries remain dormant or partly active.
Imarat Group of Companies Chief Development Officer Atif Masood was of the view that transformation of real estate sector through technology utilisation was the need of the hour. He further mentioned that laws on real estate are five to six decades old but the market has undergone rapid transformation therefore, there is dire need to update or amend the laws. Estate Agency 21 Director Sharjeel Ahmed said that in order to survive in an ever changing world of opportunities with the modern tech-hungry investor as your target, the only way forward is to keep evolving and growing to compete with global market trends.
“This sector is lucrative but corrupt practices at different levels starting from estate agents to government authorities have turned its market to doldrums.”
He said that strict implementation of laws and proper checks and balances can help get rid of people who loot investors by fear mongering.