Real estate is a major and growing industry in Pakistan, and Pakistan spends $5.2 billion on construction. Despite the improvement, we have seen many people in Pakistan still lack primary living facilities, i.e. houses. It thus clearly demonstrates that there is a great need for growth in the real estate market so that all sources of income can afford the need for life.

The State Bank of Pakistan (SBP), in its report on ‘The State of Pakistan’s Economy’, recently noted that the combined contribution of the construction and housing sectors “has been consistently higher than nine-percent over the past decade”. Reason for the growth are:

  1. Population Growth
  2. Urbanization
  3. Deformation of Family System

Pakistan’s real estate state has made a major contribution to its economic development. According to the World Bank calculation, the size of the country’s real estate assets is between 60 and 70 percent of the country’s total wealth; if these figures are extended to Pakistan, the approximate size of the real estate sector is between $300 and $400 billion

Fast Facts About Housing Market of Pakistan

  • Roughly 30-35% of the country’s employment is directly or indirectly affiliated with the construction
  • Only 32 million houses have been built in Pakistan since 1947
  • Demand of annual housing of around 700,000, out of which only 50 percent is met every year
  • 1% of housing units developed annually cater to 68% of Pakistan’s total population-(people who earn a monthly income of Rs 30,000)
  • 56 percent of housing units target 12 percent of the population, comprising individuals with a monthly income of Rs 100,000 and above
  • Asia’s lowest at 0.25 percent mortgage finance to GDP ratio, with a 3.4 percent regional average; around 3 percent in Bangladesh and 11 percent in India. The SBP estimates that the house price to income ratio is 20:1 in Pakistan (compared to a global average of 5:1)
  •  Increased levels of urbanization and migration have resulted in the development of second-tier city centers.

Since 2011, according to estimates, the prices of plots in Pakistan have nearly tripled, whereas house prices have surged by 139%. Experts identify this market dynamic as having been fueled by intensive speculation. They say that investors in Pakistan treat real estate as a commodity: property is purchased in bulk, and later sold for higher gains.

Family Size & Types of Housing – Featured

Large Family Size – Future High Potential for the Housing Market

Family Size Total Female Male
SINDH 5.6 2.7 2.9
ISLAMABAD 6.0 2.8 3.1
PUNJAB 6.4 3.2 3.3
PAKISTAN * 6.5 3.1 3.3
BALOCHISTAN 7.0 3.3 3.7
FATA 9.0 4.4 4.6

Market prices of Residential property in Pakistan (source: Zameen, 2019)

PKR – Price per m2 in – (Land & Construction)
Year Islamabad Rawalpindi Faisalabad Karachi Lahore Multan
2011               21,743               23,885               16,609               47,738               23,595               46,554
2012               24,456               28,105               17,793               62,409               28,772               47,964
2013               36,005               38,330               18,514               87,198               40,214               53,960
2014               38,782               41,194               18,751               96,821               45,467               57,286
2015               39,191               41,194               22,561             113,527               50,407               61,796
2016               42,787               41,312               23,864             127,660               55,897               62,388
2017               40,645               42,485               22,873             139,802               56,683               65,369
2018               42,453               36,737               26,070             136,282               59,923               67,113
2019               45,951               48,890               26,802             130,469               61,613               73,840
2020               48,534               51,258               31,743             133,569               64,788               79,179

Appropriate for a diligent investor

The new real estate market is very appropriate for a diligent investor. It’s not all gloom and doom in the plots market, as DHA Peshawar has doubled and in some cases, tripled the investment in two years and is currently at an all-time high. Similarly, investment in DHA Lahore has been bottom-up and is a lucrative opportunity if you want to invest in property. Besides this DHA Multan offer a great opportunity to invest in plots, it may not be as large as DHA Peshawar, but it will definitely be a region that will see a potential increase in 2021 and 2022.

Factors Impacting Housing prices in Pakistan.

Rate of risk-free return Capital value tax
Buyer’s profession Stamp duty
Housing scheme repute Corruption level
Sector development Withholding tax
Transfer fee Capital gain tax
Widening gap Market sentiment

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