Real Estate in Pakistan
Real Estate in Pakistan is an important and growing sector of the economy of the Country. The importance of Real Estate Sector is evident from the fact that more than 400 sectors like cement, steel, construction material, furniture, trade & commerce etc. are associated with this sector. Construction sector has grown by 9% which indicates its strength but this robust sector needs help of the real-estate sector.
Real estate is considered as the most favored investment tool in Pakistan. People highly prefer to invest majority of savings in real estate. According to the Pakistan Bureau of Statistics, construction output accounts for 2% of GDP, with housing representing less than half that total. With the rate of urbanization that Pakistan has been experiencing, there is a growing need for urban planning.
Role of Real Estate Agents
According to FPCCI (The Federation of Pakistan Chambers of Commerce and Industry), real estate agents are playing an important role in the economic development of the country.
Real Estate and Government :
The performance of Real Estate sector was improving at a very high speed in the past but the last Government imposed exorbitant taxes on this sector, causing the performance of this sector deteriorate adversely. Moreover, despite repeated demands of the Real Estate Agents of Pakistan, neither Real Estate Sector was given the status of industry nor long standing demands of facilities were provided to this sector by the previous Government. This played havoc not only to the Real Estate Sector but also to the Real Estate Agents in Pakistan. However, it is expected that the new Government will bring new reforms and understand the needs
of this sector. Mr. Asad Umer, the would-be Finance Minister of the new Government, has announced creation of 100 Lac jobs & construction of 50 Lac houses, which shows the priorities of the new Government. This announcement has created a hope that the new Government will work for the betterment of Real Estate Sector & the Realtors.It is also hoped that the new Government will provide sufficient facilities to the Real Estate Sector and declare it as an industry. It will increase the revenue to a great extent and help the new Government to counter economic turmoil/crisis. Overseas Pakistanis always play a vital role in Real Estate Sector as the trust develops with the new Government. It is highly expected that overseas Pakistanis will invest their money in Pakistan and it will be a key factor in emergence of Real Estate Sector. This investment will enhance the activities of the Real Estate Sector. It will not only be beneficial for the investors but also result in increase in revenues of the Country. The new Government should take some initial positive steps to gain the trust of foreign investors so that they can invest in Pakistan without any fear.
Following steps need immediate attention of the new Government in this regard:-
- Registration of the Real Estate Agents/Firms:-
At present, there is no registration of the Real Estate Agents/Firms with the Government. No licenses are issued in this regard by the Government. A stock broker, who deals in the transaction of shares & stock, can’t start or run business unless he/she is registered with Pakistan Stock Exchange despite the
fact that the money value of the transaction may be very nominal. On the other hand, a Real Estate Agent, can start or run business anywhere without any registration or license from the Government despite the fact that the value of the transaction may involve billions of rupees. Registration of the Real Estate Agents/Firms may result in generation of revenues in billions.
- Establishment of Training Centers:
Real Estate Sector, despite its gigantic importance, is neglected by all Governments. No training is available in this sector in Pakistan. If the new Government establishes training centers in this sector, it will not only result in creation of jobs, strengthening of Real Estate Sector and generation of revenues.
- Exorbitant Taxation:
Previous Government is considered pro-business sector. But, it adopted such policies which resulted in exorbitant taxes in all sectors of the economy including Banking & Real Estate Sector. These policies have deteriorated the performance of each sector, causing the exports to decline and imports to rise abnormally due to which balance of payment of the Country is affected drastically.
- Condition of Being A Tax Filer to Purchase Property With Worth More Than Rs.5,000,000/-:-
The above captioned condition has played a havoc to Real Estate Sector and destroyed its business completely, forcing most of the Real Estate Agents to close their businesses. In Pakistan, the number of the tax filers is very limited. Only 10 to 16% tax filers are registered with FBR. The above mentioned condition has a devastating affect on the business activities of the Real Estate Sector. The new Government should review this condition and amend it suitably.
- Frauds in Real Estate Sector.
In Pakistan, fraudulent activities are increasing day by day in Real Estate Sector due to non-availability of Governmental controls. Each day, a new scam in real estate sector emerges taking away the savings of the public. NAB & other Government Institutions intervene only when the lifetime saving of the masses is swindled by the non-certified corrupt individuals & enterprises of Real Estate Sector. Such individuals & enterprises escape due to the tedious & complicated proceedings of the Judicial System of the Country. The Government should take suitable steps in this regard.
Writer: Rashid Bashir
Designation: Managing Director Chohan Estate