Pakistan's Housing Boom and Economic Growth

Housing construction is one of the largest sectors of most major economies in the world. In the United States, for example, housing is a significant contributor to the American economy, providing millions of Americans with jobs and generating hundreds of billions of dollars of economic output each year. It is also an important source of wealth building. Beyond economic measures, homeownership and adequate rental housing also contributes to society.

The construction and sale of new homes make direct contribution to GDP, based on the value of the housing built. However, the sales of existing homes do not enter into the calculation of the nation’s domestic output, just as a used car sales do not get entered because the transaction does not represent a new production. However, purchases related to the transaction of existing home sale do get included in the GDP. For example, all payments for services rendered, such as real estate agent commissions, home inspection, attorney, and loan origination fees, are included.

Currently, Pakistan has a serious housing crisis and needs about 7 million additional housing units now, according to the data presented at the World Bank Regional Conference on Housing last year.

According to BMI research, the country’s real estate sector continues to be dominated by the two major issues of a chronic shortage of housing against a backdrop of rapid urbanization and rising population and the impact of security factors on the risk appetite of investors and developers.

The first of these factors remains as intractable as ever, with the most recent estimates identifying shortfall of 7.9mn houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture with the Punjab province, with a population of 82 million, said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of just 150,000 units.

As to the second factor, the major projects currently moving forward are being executed by risk-tolerant developers from regions such as the Gulf Cooperation Council(GCC) and government or government-linked landowners in Pakistan. This has significantly reduced the scope to provide housing at the level required to supply the backlog. Recently, however, there are reports that Malaysian developers are coming to Pakistan, according to Malaysian news agency Bernama in August 2009. The Malaysian developers are negotiating to build some 500,000 low-cost houses annually in various parts of Pakistan.

The recent Dubai debt crisis will likely hurt some Pakistani workers in the Gulf region. However, the flip side of Dubai troubles is that many of these Gulf developers will look at Pakistan where real estate investments have always been winners, regardless of the political or economic environment. The supply has continued to lag demand for housing, retail and office properties.

The Gulf and Malaysian investments in housing can potentially help resuscitate Pakistan's currently moribund economy by creating millions of new jobs directly and indirectly. Construction is one of the most labor intensive economic activity requiring large numbers of workers, creating hundreds of thousands of jobs. And when the buyers move in, they will demand all kinds of products and services to furnish their homes, thereby creating further employment opportunities. All of this is offers a great recipe for reigniting economic growth and renewed prosperity in Pakistan.

A new wave of housing construction offers an opportunity to the PPP leadership to live up to at least one of their election promises included in their "roti, kapda and makaan" platform. Looking back at the history of the political platforms that have succeeded, what comes to mind is the name of President Franklin Roosevelt and his "New Deal" , as well as the successive US Presidents' policies on "The American Dream" of home ownership for all. These policies helped reduce poverty and enhanced education and housing for a large number of people in the US. New housing construction can also help reduce poverty in Pakistan.

Related Links:

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Pakistan Real Estate Report Q4 2009

Dubai Debt Crisis

Food, Clothing and Shelter For All

What Does Pakistani Democracy Deliver?

Urbanization in Pakistan Highest in South Asia

Housing: Global and Local Perspectives

Uncle Sam Saves Fannie and Freddie

Pakistan Attracts FDI Despite Security Concerns

Witness a Failed State: Try Pakistan's M2

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Comments

I think that the construction sector has been the major sector for the economic growth of most of the countries.It can be seen that the residential construction has been one of the construction secotr which is been recovering fast from the economic downturn and I hope that it provides a good back up for the economic growth.

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Ashfaq Ali said…
I don't know why Sement price increasing day by day. Even we have big sement industry.
Riaz Haq said…
A recent World Bank report on housing in South Asia mentions lack of housing finance as one of the key impediments to more low to middle class housing.

It says that "Pakistan's finance-to-GDP ratio in below 1 percent. The ratio in developed countries is 50-70 percent, and 7 percent in India."

It adds that "in spite of active and robust financial sector reforms led by the State Bank of Pakistan [SBP] in the recent decade, the unweildy land administration environment, unprecedented rises in land prices, and inadequate mortgage lender experience with lower-income housing have prevented the market from advancing in the provision of housing and housing finance solutions."
Riaz Haq said…
Here's an Express Tribune story on housing trends in Lahore, Pakistan:

...as the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.

“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.

“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”

Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.

“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”

Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.

Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.

Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.

Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.


http://tribune.com.pk/story/328177/the-rise-of-pakistans-middle-class-as-crime-rises-property-developers-beef-up-security/
Riaz Haq said…
Here's a 2011 Dawn Op Ed on cement industry by Pakistan Cement Industry Association leader Tariq Saigol:

While the private sector performed magnificently whenever provided with an enabling environment, the response of the present government remains mired in confusion and inertia. Installed capacity was a paltry nine million tons in 1990, much of it being grossly inefficient as it was based on the outmoded wet process technology. As demand rose, the industry responded by launching a massive expansion programme. Over time, the installed capacity rose to nearly 44 million tons, a magnificent feat by any standards and a credit to the entrepreneurial spirit of the private sector.

However a number of adverse developments from 2007 onwards have brought the GDP growth to some two per cent. It is being reported by the media that the revised allocation after the latest cut, is a measly Rs180 billion. High inflation combined with slump in real estate and increase in the cost of production due to weakness of the dollar, resulting in a spike in coal prices, electricity and freight rates and accounting for 70 per cent of the cost, has adversely affected consumption while production cost soars, retarding construction activity in the private sector.

The current economic environment including low public spending has had disastrous consequences for the cement sector.

Local sales during the first half of the current fiscal year have witnessed an eight per cent year on year drop to around 10.1 million tons. Simultaneously, exports fell from 5.6 million tons to 4.6 million tons. The bad news does not end here. On top of low volumes, the average cement FOB prices fell to $48 per ton during the corresponding period— a level low enough to hardly break even.

Consequently cement sales through the sea route alone declined by about one third. Cement sales to India were also hard hit on account of non renewal of BIS certification (a quality control licence). Burdened with high energy and freight costs as well, the manufactures are desperate for some government support.

But no support is forthcoming. One would expect the government’s economic planners to appreciate the tremendous odds against which the industry is battling. If care of the cement industry is in short supply, then some thought may be given to the enormous exposure of the banks which have provided financing to the tune of $1.5 billion to the sector during 2003-2008.


http://www.dawn.com/2011/03/14/opportunities-missed.html
Riaz Haq said…
Here's a blogger' view Pakistan's cement industry:

Cement is one of the most important industries of Pakistan. Limestone and gypsum are the main raw materials for manufacturing of cement and they are present in abundance in Pakistan along with good supply of Natural gas. This great potential makes the country capable of producing cement not only for local use but also for export as well. Pakistan cement industry has exporting cement to the neighbouring countries like U.A.E, Afghanistan, India, Iraq and Russia.

At present there are 22 cement plants are operating in Pakistan with the production of approximately 9.403 million tonnes. Out of these 22 cement plants, 17 are private and 5 are publicr. 11 new plants are also in planning stage and the capacity of these plants is estimated around 12.988 million tonnes. The industry has achieved a growth of 32% with the domestic demand increasing by around 24.95% and the exports by nearly 111.86% according to the financial year end June 30, 2007 ratings. Recently the country has been able to export to some of the African countries as well.

Cement industry is divided into two main regions; the northern and the southern region. Northern region is producing 35.18 million tonnes and southern region is producing 8.89 million tonnes of cement per year.

Per capita consumption of cement is an indicator of rate with which any country is developing. Unfortunately per capita consumption of cement in Pakistan is less if we compare it with other developing countries. It is about 131 kg per person annually; whereas world average is about 270 kg. This less consumption is due to the negligence given to the construction sector. However in last few years consumption of cement showed some rise due to increased commercial activities, infrastructural development and increasing demand of constructing houses.

Local demand for the year 2007-2008 was 20 million tonnes. Pakistan has started exporting cement few years back and has earned repute as a premium quality cement producer in the global market in this short period. Pakistan exported around 7.716 million tonnes of cement in 2007-2008 and earned a foreign exchange of 459 million dollars. There is surely a great potential of growth in this industry in Pakistan.


http://pakistan360degrees.contentcreatorz.com/cement-industry-of-pakistan/
Riaz Haq said…
Here are highlights of a presentation on Pakistan's cement manufacturing sector:

Beginning with just 500,000 tons in 1947, Pakistan's cement production almost tripled from 16 million tons in 2000 to 44 million tons in 2010.

At 145 Kg per person, Pakistan's cement consumption is up from 75 Kg in 2003, but still about half of the world per capita consumption average of 270 Kg.

http://www.slideshare.net/msaadafridi/cement-industry-of-pakistan
Riaz Haq said…
Here's an excerpt of a report in The Nation on shares market rise on the news of increasing cement sales:

The local bourse broke the 14,000 level on an intraday basis for the first time since 16th May 2008. The positive sentiment was on the back of expectations of the issuance of the much awaited SRO on capital gain tax rules. Additional impetus also came after the release of the robust cement dispatches data and easing of Consumer Price Index (CPI) to 10.8 per cent in March-12. As a result, the KSE 100 Index gained 113 points (up 0.8 per cent WoW) to close at 13,875 level. Volumes improved by 5 per cent WoW to 387mn shares indicating the upbeat investor sentiments. Foreigners, on the other hand, offloaded shares worth $1.6 million. Pakistan Bureau of Statistics (PBS) released CPI figure for the month of March-12 during the week. CPI clocked in at 10.8 per cent YoY in March-12, down from 11.0 per cent in February-12. The marginal improvement in the headline inflation came on the back of ease in food prices.
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Release of robust cement dispatches numbers kept the cement stocks in the limelight once again. Consequently, LUCK and DGKC both outperformed the market by 11.6 per cent and 6.9 per cent respectively. Conversely, HUBC underperformed the market by 2.4 per cent on news that the company’s dividend payments may get delayed after FBR froze the company accounts.

Though the market increased by 0.8 per cent during the week but it managed to cross 14,000 points level on intraday basis during the week. Cement stocks remained in the limelight on the back of increase in export price to Afghanistan and expectations of healthy earnings. Restoration of gas supply to Engro Corp new plant also kept the stock in investors’ radar. While lower than expected inflation numbers for March did not have any impact on the market sentiments.
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As per monthly data released by All Pakistan Cement Manufacturers Association (APCMA) total dispatches witnessed a modest rise of 4 per cent YoY to 23.63m tons in 9MFY12 as against the total dispatches of 22.81m tons in the corresponding period last year. During the 9MFY12 growth in overall industry dispatches was primarily on account of 8 per cent YoY rise in local dispatches to 17.39m tons in comparison of the local dispatches of 16.04m tons in the same period last year. Local dispatches were higher in north zone by 7 per cent YoY to 14.09m tons and in south zone by a sharp 13 per cent YoY to 3.30m tons. On MoM basis, local dispatches were seen substantially higher by 32 per cent MoM mainly because of the reconstruction activities in flood affected areas, normal construction and on going work on mega projects.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/09-Apr-2012/cement-sector-outperforms-others-at-kse
Riaz Haq said…
Here's a Nation story on awards for Bahria Town developments in Pakistan:

Bahria Town has won five highly prestigious awards under various categories in Kuala Lumpur, Malaysia at the award ceremony for “Asia Pacific International Property Awards 2012-13”, the world’s most prestigious competition recognised as the highest standard of excellence throughout the global industry. Bahria Town was the only property developer from Pakistan to win the prestigious property awards. Out of the five accolades two received were in the “Five Star” category whilst the other three were ranked as “Highly Commended”, another great achievement and proud moment Bahria Town earns for Pakistan. The awards are a sure proof that Bahria Town standards are at par with the global standards, says a press release. Speaking on the achievement, Malik Riaz Hussain, Chairman Bahria Town, said “This is an extremely proud moment for not only Bahria Town but the entire nation. We are honored to be a part of a historical moment in real estate sector of Pakistan. The accolades are a testament of the exceptional standards maintained in all our developments. We will Inshallah continue to deliver world class projects exceeding everyone’s expectations.”

Bahria Golf City Islamabad triumphed with two Five Star honors. It won the “Best Five Star Golf Development” award for the master planning and provision of complete international standard facilities and amenities along with the 18-hole USGA standard golf course. While the Sheraton Golf & Country Club in Bahria Golf City won for “Best Five Star Leisure Architecture”. Bahria Golf City Islamabad is a branded golf resort community with Sheraton Hotel, villas, apartments and plots to be launched soon.

Bahria Town’s first project in Karachi, Bahria Town Icon, also to be Pakistan’s tallest high-rise building was ranked ”Highly Commended High-rise Architecture”. Green Valley, Pakistan’s first Premium Supermarket, also a project of Bahria Town with its flagship store at the Mall of Lahore, won a “Highly Commended Retail Interior” award for its outstanding retail environment.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/20-May-2012/bahria-town-puts-pakistan-on-global-real-estate-map
Riaz Haq said…
Here's a UNHCR report on new houses for Dera Ghazi Khan flooad affectees:

The UN refugee agency has joined local authorities in handing over ownership of 400 new one-room homes to a fishing community in Pakistan left homeless by devastating floods in 2010.

The families receiving the new shelters belong to the Jam community, which for decades has lived along the banks of the Indus River in makeshift huts, or simply under their boats. Their homes and what few belongings they had were washed away by the floods that inundated large areas of Pakistan in 2010. UNHCR wrote about their plight in a story published on this web site in May last year.

"We're not used to such houses," said Zakir Hussain, who moved into the Boat Model Town with his family several months ago. "At first, we experienced a bit of culture shock, but now we are so grateful to have a solid roof over our heads."

The land for the new development was provided by the government of Punjab province and each unit consists of one common room, a small kitchen and separate toilet.

The families' new ownership of land and property is complemented by the gradual restoration of many basic rights that this marginalized group have been denied for decades. There are also plans for them to receive national identity cards, and they will have their own community centre, a mosque and water supply as well as access to health care and education.

The shelters are part of nearly 4,000 one-room houses that UNHCR has constructed for flood victims in areas of Punjab that were damaged in the floods. The agency's flood response interventions targeted the most vulnerable among the flood victims, including people with disabilities, female headed households and families unable to rebuild their own houses.

"We used to drink river water and we had no health and sanitation facilities, no schooling for the children," said Zakir's wife, Bashir, recalling their former lives. "For us, who were born and grew up on the boats, having a home and being able to live a normal life is like a dream."

Speaking at the handover ceremony, UNHCR Representative in Pakistan Neill Wright thanked the government of Pakistan and, in particular the Punjab administration, for providing the land. "Access to shelter is a basic human right," he said. "I am proud that together with government and non-governmental partners, UNHCR has been able to support the government in assisting some of the most vulnerable victims of the devastating 2010 floods."

In addition to the shelters in Punjab, UNHCR has constructed nearly 30,000 additional homes in the provinces of Sindh, Balochistan and Khyber Pakhtunkhwa, which were also affected by floods in 2010 and again in 2011.


http://www.unhcr.org/4fbcd6f09.html
Riaz Haq said…
Here's an ET report on housing market in Pakistan:

In Pakistan, average monthly expenditure on rent per household has increased at an annual rate of over 13% for the last nine years, according to the Pakistan Bureau of Statistics (PBS).

A look at the Household Integrated Economic Survey (HIES) released by the PBS reveals that an average Pakistani family spent Rs888 every month on house rent in 2001-02; which rose to Rs2,693 in 2010-11; signifying an annualised increase of 13.12% over a period of nine years.

Interestingly, in the same period, annual rise in average house rent in rural areas was 2.7% higher than the corresponding increase in urban areas – even though 85.63% of the populace of rural areas lives in owner-occupied houses. In contrast, 75.79% of the urban population lives in houses that they own.

Urban housing

The highest number of people living in rented houses in urban areas belongs to the third quintile of the population in terms of income distribution at 22.38%. The third quintile in income distribution is representative of the middle class in a society.

The lowest number of people living in rented houses in urban areas – 15.93% – belongs to the fifth quintile of the income distribution. This suggests that the richest people in urban areas are most likely to own the house they live in.

The HIES figures also reveal that the poorest people, belonging to the first quintile in urban areas, end up spending 83% more on house rent as compared to a comparable group living in rural areas. Similarly, the richest people belonging to the fifth quintile living in urban areas tend to spend 220% more on average house rent per household, as compared to a comparable segment of the population living in rural areas.

Home ownership and per-capita incomes

“Rise in per-capita income does not seem to display any correlation with the percentage of owner-occupied houses in Pakistan,” economist Kaiser Bengali said, while talking to The Express Tribune. “In many cases, someone who works as a peon and earns a low monthly income can still own a house in Pakistan. This is so because people belonging to certain professions – such as the civil service, military, police, government teachers, journalists etc – receive free or subsidised land from the government or other trusts.”

Data supports Bengali’s view. Pakistan’s Gross National Income (GNI) per capita, formerly known as the Gross National Product per capita, increased by 9.62% annually between 2002 and 2011; but the number of persons living in owner-occupied houses over the same period remained almost stagnant at around 79% of the population.

Bengali says an overwhelming majority of Pakistanis can afford to live in their own houses because the free-market mechanism does not actually operate in the country’s real estate sector. Many people receive land on subsidised rates, he informs us, because of professional affiliations. “The government announces housing schemes regularly for its employees in different ministries and departments. That enables people to acquire land at negligible costs,” he says; adding that land is the primary expense in real estate, because physical structures can be built gradually over an extended period of time.


http://tribune.com.pk/story/414818/real-estate-the-pakistani-housing-and-accommodation-market/
Riaz Haq said…
Here's an Express Tribune report on extraordinary customer interest in Bahria Town projects in Karachi:

People from all over Pakistan gave an overwhelming response to Bahria Town Karachi Project, according to the registration process which concluded on Friday.
According to a press release, people swarmed the Bahria Town offices, branches and customer support centres as soon as it announced the registration process. However, the registration process reached its peak as the deadline approached.
The BT has announced three projects – Bahria Town Icon, Bahria Town Tower and Bahria Town Karachi – in the megacity with the aim to contribute to the economic activity in the country and lay foundation of a prosperous Pakistan.
“The Bahria Town commits to complete and hand over the projects on the stipulated time,” says the press release. All projects will have 100% power backup, a foolproof security system, spacious parking and complete maintenance.


http://tribune.com.pk/story/613784/bahria-town-karachi-projects-received-overwhelming-response/
Riaz Haq said…
Here's an Express Tribune story on real estate sector in Pakistan:

After passing through a correction phase of nearly five months, the real estate market in Lahore is once again on the path of growth. However, there are a number of reasons why the extent of the growth may not meet investors’ expectations.
For the past few years, developers, after failing to find a suitable place in Lahore, have tended to focus on neglected but other populous cities of Punjab including Multan, Faisalabad, Gujranwala and Sialkot.
Hashu Group is one of them, Bahria town, city housing schemes (once a part of Bahria town) are the others. The latest name is the Defence Housing Authority (DHA). Since DHA is the most trusted name for any investor – in Pakistan and overseas – people find a reasonable alternate to invest.
Gujranwala, Multan and Bahawalpur are three cities where DHA has planned to establish housing societies, among which the sale and purchase for DHA Gujranwala has already kicked off. Such developments are observed as a positive for the long-term growth of the real estate sector.
“This spread out is good for the market in general,” said Mian Talat, chief executive officer at Talat Enterprisers, a real estate firm. “People now have more choices to invest and live according to their convenience.
The correction in the Karachi Stock Exchange is also a factor behind the recovery of the real estate market recovery.
Common investors of both markets believe that the KSE may crash any time. Given the situation, investors tend to switch to the real estate market. When stock index starts declining, many investors switch over to the real estate market and this is what is happening exactly now”, Talat added.
Few years back, Lahore, Karachi and Islamabad/Rawalpindi were the only places where investors found some room to put their money in for some profits. However, these cities are now pushing their limits — Lahore’s boundaries are now merging with some of its districts due to various factors.
Property prices in Lahore, despite almost a 20% correction in these five months, are quite abnormal. It is hard to find a piece of one kanal of land in a decent housing scheme below Rs10 million. If the same amount of land is located in a prime location inside a housing schemes then the price exceeds Rs20 million.
“Since Lahore is one of the major beneficiaries of the real estate boom, it is unlikely that real estate activities are stalled in the future. This is due to developments of housing schemes in other cities”, said Waseem Tariq, Chief Executive Officer of F-1 Properties. “The price fluctuation mechanism for real estate, as per our expectations, will be solid now.”


http://tribune.com.pk/story/675018/real-estate-market-hits-growth-trail-again/
Riaz Haq said…
Sheikh Arshad took round of the Expo hall and discussed the matters related to construction activities with the stall holders. In the end, he distributed souvenirs among the participants and the organisers of the Dream Home Expo 2015.

The visitors also appreciated the Jang Media Group efforts for creation of awareness and consultancy for the general public regarding the purchase of land or house of their dream through Dream Home Expo. They enjoyed food at food courts, children enjoyed puppet show and entertainment games there. The representatives of the companies who established their stalls provided consultancy and guideline to the visitors about their future land purchase and investment. The stall holders of big builders, real estate, home appliances, paint, and furniture brands told the visitors that how they can amicably utilise their budget. They vowed to participate in future Expo of Jang Media Group too.

The participants of the Expo were Izhar Monnoo Developers, Athar Marketing Network, Eden Housing Ltd, Paradise Holdings, Bahria Town, Start Marketing, Fast Marketing, Green Land Housing, Orient Group of Companies, Super Asia, SA Garden, Royal Residencia, NM estate, Athar Associates, Ali Saqlain Real Estate & Builders, Haroon Estate, LDA City, Brighto Paints, Hapilac Paints, Master City Gujranwala, Honesty Estate, Boss Furniture, Hayat Lahore, Sheranwala Heights, Sonica-Chawla Group, Venus, G M Cable, City Estate, Alfa Estate, Value Group, Royal Estate and others. It is pertinent to mention here that the Dream Home Expo 2015 was opened by the Punjab Minister for Excise & Taxation Mian Mujtaba Shuja-ur-Rehman.

http://www.thenews.com.pk/Todays-News-5-353427-Dream-Home-Expo-2015-concludes
Riaz Haq said…
THE EXPRESS TRIBUNE > BUSINESS
Pakistan's property boom is here, but is it here forever?

https://tribune.com.pk/story/1385594/property-boom-forever/

KARACHI: Everyone in Karachi believes that the safest and most lucrative investment is in the real estate sector these days since it provides the best returns with much less risk and effort.

That is why, every other day, housing schemes are being launched. It means that the property boom is here. But is it here forever? That’s the million-dollar question.

---------

It is true that per square metre prices in Karachi ($760.78) are much lower than average per square metre prices ($8,824.60) in the metropolitans.

However, we must realise that the fundamental value of a real estate investment is largely influenced by its rental value. Rent-to-price ratio in Karachi (0.54) is lower than the ratio of Dubai (0.83) only. Shanghai, Mumbai and Singapore have much lower rent-to-price ratios than Karachi.

This means that, on average, rents in Karachi have already peaked as a return on investment relative to other big cities. Furthermore, people in Karachi are already paying much more rent in comparison to their salaries.

Rent-to-salary ratio of Karachi (1.30) is only lower than the ratio of Mumbai (2.07) and Shanghai (1.88). Dubai and Singapore have lower rent-to-salary ratios.

This means that, on average, people in Karachi are paying too much rent in comparison to their income when compared with other big cities.

From Dubai back to Pakistan: the real estate investors’ journey

The only plausible reason for such high prices in Karachi is the burial of illicit money in the property market. Furthermore, tax avoidance also makes property investment a lucrative strategy.

A few changes in regulations (filer/non-filer issue) have been tried to curb the above two avenues. Otherwise, as per the rental yield analysis, fundamentals of property investment in Karachi seem very weak.
Riaz Haq said…
Why it's a good time to invest in #Pakistan's real estate. #realestate #property #Investment

https://www.khaleejtimes.com/business/real-estate/why-its-a-good-time-to-invest-in-pakistans-real-estate

Factors such as federal budget, law amendments and introduction of real estate investment trust have influenced sector's advancement
akistan's real estate industry continues to evolve as companies try to resolve real estate complexities in order to increase its growth, experts have revealed.

Factors such as the federal budget, law amendments and the introduction of the real estate investment trust have influenced the advancement of the industry. According to reports, investors have pulled out money from several banks in Pakistan after the introduction of 0.3 to 0.6 per cent withholding tax on filers and non-filers on tax returns.

These components, along with the rise of safe property investment bets in various parts of the country and abroad, encourage Pakistanis and non-resident Pakistanis (NRPs) to invest in valuable long-term investments compared to short-term purchases.

Showcasing the change in the industry, this year's International Real Estate and Investment Show brings the third Pakistan Property Exhibition in Abu Dhabi. The specialised event, held with the support of the Pakistan Embassy, Pakistan Business Council and Pakistan Association Dubai, showcases the country's leading developers and realty agents under one roof to showcase the best options for investment, provide spot sales and learn about the leading insights into the market. Visitors can expect to see properties from cities including Islamabad, Lahore, Karachi, Gwadar, Gujranwala and many more.

"Studies have continuously shown new global trends that the real estate market in Pakistan is tapping into. Apart from new demographic movements, Pakistan has also witnessed a heavy intercity migration over the last five years due to security and economic benefits that specific cities offer," said Antoine Georges, managing director of Dome Exhibitions. "The International Real Estate Exhibition Show enables Pakistanis to secure homes and investment properties in their country by bringing the opportunities to them through the Pakistan Property Exhibition. The pavilion aims to attract more than 10,000 Pakistani investors from the UAE."

To be held at the Abu Dhabi National Exhibition Centre from November 2-4, the exhibition enables Pakistan's realty giants such as DHA, Model Housing Lahore, New Lahore City and Bahria Town to showcase the latest properties available for aspiring buyers.

Real estate and investment companies will also have the chance to market their products to Pakistani investors through well-tailored marketing strategies made available by marketers such as Athar Marketing, Star Marketing, Midas Group and Q&A Marketing and more.

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