Current Analysis of Pakistan Real Estate Market

Despite all the internal and external challenges, Indigo Developers see a bright future of real estate in Pakistan. The change, which was the main slogan of the current ruling party, cannot happen overnight. One has to look more rooted in the economic plethora, combined with corruption, injustice, nepotism, and self-centered thoughts of corrupt existing and past leaders.

The problem of Pakistan is not the scarcity of resources, but unwillingness on the part of policymakers to tap the same, properly utilize and manage their equitable distribution, absence of effective administrative and justice systems to check socio-economic injustice.

A recent research survey has indicated that after the amendments in the Income Tax Ordinance-2001, over 16,000 out of 18,500 real estate developers have winded up their operations in the local real estate market.

Pakistan real estate market is continuously losing its value, and a fall in property prices can be seen across the board mo matter its Lahore Karachi, Islamabad.  We believe that real estate is currently going through an unprecedented phase where the actual transactions of property have come to a standstill. The effects of amendments in Income Tax Ordinance-2001 regarding property valuation are becoming visible, and especially as the third quarter has ended. The demand in the real estate market is continually weakening, and investors are just speculating with no aim to invest.

Real estate is like a commodity in our country; speculative investors buy property in bulk and then sell it later at an unreasonable profit.  A careful and robust way is required when determining to invest in residential or commercial real estate. Location of a project plays a primary role in determining the market value. Investors should avoid suburban areas and have a low geographic location, as those assets are more vulnerable for false price appreciation and the transaction took place only in the form of file transfers rather than changing of ownership.

One of the prime causes for sky-high property prices in Pakistan was the unrestricted inflow of black money in the real estate sector. It was the usual routine to buy properties in Pakistan with black money. But FBR now asks the source of income; therefore real estate sector is not a safe haven anymore for black money. As the influx of black money has stopped, the property prices are in free fall.

Future of Pakistan Real Estate Sector

Property prices in Pakistan will continue to fall this year, stagnant in 2017, and will start to show gradual gains in 2018. In 2025, property prices will be back to the pre-budget 2016 level. The real estate market is not expected to return to normalcy until the next elected government. The market has been down by about 35 percent since January 2018, and the activity level is low. Realtors fear the market can come down to 50 % then prevailing market value  

NON-FILERS Buyers/Purchasers:

From now onwards, Non-filers persons can purchase property worth PKR 5 million or more subject to the rules laid below.

Non-Filer buyer of the property is bound to file returns within the range of 45 days. The time range will start from the day of the property bought. If the Non-filer buyer of the property fails to file the return within the specified range, an automated assessment will be carried out to question his income source. And the non-filer buyer will have to pay 5% net property amount as a fine or penalty. The percentage will be applied as per the Federal Board of Revenue prevailing rates.

If a purchaser of the property buys property worth PKR 5 million or more, then its mandatory for him to disclose his source of income and property transaction must be through banks. The real estate prices in Pakistan was enjoying an upward trend until 2016. After that, the property market is witnessing rates saw a consistent recession.  We expect that the property prices will keep on falling, of a further 40-50% decrease in the real estate prices.

What is the Best Real Estate Investment in Fragile economy plus Border Situation

Smart Investors should stay focused to invest in downtown Gulberg properties, apartments, and hotel rooms, as they must be knowing that annual growth of Gulberg Real Estate is 20% to 30% on the minimum side plus there are always buyers in this area.

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