Influence of CPEC on Real Estate Sector and Development of Pakistan

Mudassir Altaf 03244459192 info@chohanestate.com 16-02-2019

Reading time: 4 minutes

Many of our clients at Chohan Estate inquire about how the real estate sector in Pakistan will get affected by Gwadar. So we thought to enlighten you about CPEC, Gwadar and how these both will boost Pakistan’s economy.

Real estate is all about planning and investing in a piece of a land after predicting its future. People usually set short-term or long-term goals to gain profits from their investment. When we talk about real estate in Pakistan, only one word pops up and that is Gwadar. Gwadar has become synonymous with the most lucrative investments in Pakistan. And rightfully so.  Gwadar is forecast to be the future commercial, industrial and residential hub of Pakistan. A major reason for this is CPEC (China Pakistan Economic Corridor)

The team of real estate experts at Chohan Estate have all the authentic updates about Gwadar and CPEC development. Because we don’t want our clients to become a victim of hoax and make a wrong investment.

What exactly is CPEC?

Pakistan China  Economic Corridor, also widely known as CPEC is link between two countries China & Pakistan forming an alliance for the future business dominance. CPEC is a 3,218 kilometer long route, to be built over next a few years, consisting of Gwadar deep sea port, highways, railways and pipelines. CPEC is part of the Chinese one belt one road initiative which links more than 70 countries with China.  This communications network will connect Pakistan’s Gawadar port with China’s Kashgar in western province Xinjiang. CPEC will open doors to immense economic opportunities not only to Pakistan but will physically connect China to its markets in Asia, Europe and beyond. Almost 80% of the China’s oil is currently transported from Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months), with Gwadar becoming operational, the distance would reduce to less than 5,000 km.

Why is Gwadar the most crucial aspect of CPEC?

The need for CPEC comes at a time when China has already captured world’s production market but due to its geographical location, it faces hardships when sending out shipments. Currently, all the ships and cargos that have to reach China, pass from a very long water-route. But once Gwadar port will be functional, Chinese fuel imports and exchanging freight will be stacked on trucks and carried to and from Xinjiang through the Karakoram Highway. Once CPEC will be operational, it will have a dominant impact on the entire region. The project’s impact on Pakistan’s economy will also be huge and so will be on the real estate sector.

Two major factors in regards to CPEC which are going to affect real estate sector and our economy are:

Economic Boost in Pakistan

The result or effects of CPEC on our country’s economy will be enormous. Because of CPEC, a need to create different industries in Gwadar will arise. To fulfill this, there would be an influx of tremendous job opportunities. According to studies carried out in Harvard International Development Research Department, in the next 10 years annual development rate of Pakistan would rise to 5.07%. It will be the second most elevated development in Asia right after India. Hence boosting our economy. With an economic boost, the demand of accommodation would most definitely rise and the demand for land would be huge.

With more individuals being able to buy property, the real estate sector would flourish. But the real boom or true impact would be witnessed after 2020 when the road belt would be completed and functional. A bigger economy in turn means a lot more pressure on the real estate sector of Pakistan. Our housing sector is already running short and with more people having the power to purchase property, the real estate sector will flourish. To summarize, we will definitely start seeing the effects of CPEC after year 2020 and the charge will be led by residential and commercial properties followed by industrial and agricultural land.

Chinese Immigration in Pakistan

The mere fact that CPEC is a joint venture between Pakistan and China means that many engineers from both the countries would be deployed in Gwadar and along the lengthy belt. Which is a great news for the real estate sector, because accommodating them would conceive the need and requirement for the establishments of small cities and towns along the belt.

The land would be required in plentiful to build safe housing societies with all the amenities. Gwadar being the ultimate port would develop into a major city just like Karachi. Initially, there might be a dearth of good educational institutes etc., so many Chinese expats would settle their families in cities such as Karachi and Lahore. Consequently, these major cities will witness an enormous real estate boom.

It is a matter of common knowledge that Chinese influx has already effected the rental returns in major cities and in time this influx is going to grow. Even if we consider that Chinese investors will not be allowed to buy properties directly, the impact will still be huge especially in major cities such as Lahore, Karachi, and Islamabad and most importantly in Gawadar.

The very first market Chinese businesses need to capture after CPEC is our local market and the first targets will be our metropolitan cities.  Lahore being in the center of Punjab and the second biggest city offers a lucrative investment opportunity. In short where they will invest they will need property to launch an industry and to reside. Higher rental returns will mean a higher property price and local investors are already preparing themselves for the future. One of the major reasons we are seeing a spike in apartment buildings all over Lahore is part of this chain.

Conclusion:

These are that factors that are keeping the interest of the people in real estate in Pakistan. And the real estate consultants at Chohan Estate suggest you to invest in Gwadar now, because very soon a major price hike will be witnessed. So make hay while the sun shines!