Pakistan has considerably evolved in terms of development and investments. Now people from low or middle income backgrounds are also growing and contributing towards the betterment of the society. Many industries such as architecture, steel, timber, interior design and construction are dependent on the real estate market. They contribute to the country’s GDP in their own way. The prices of property dropped drastically during the pandemic, however, as the pandemic has settled now, real estate business is booming again. In 2021, many new housing developments emerged and the old ones grew increasingly. Get to know about business ideas in Pakistan
Islamabad can rightly be called one of the best cities to invest in, in terms of real estate investment. We are looking at projects that are more advanced and provide a luxurious lifestyle to the residents and non-resident investors in Islamabad. You can also read real estate investment in Islamabad.
According to a report released in the first quarter of the year by the State Bank of Pakistan, “The combined share of housing and construction in the country’s GDP has been consistently higher than 9pc.” Before moving to the factors affecting real estate market read blog on things to consider before investing in real estate.
Below is the List of Factors Affecting Real Estate Market in Pakistan:
- Environmental Factors
- Demographic Factors
- Interest Rates and tax on Loans and Property
- The Economy
- Government Policies
- Employment Factors
- Trust in the Market
- External Investors
- Budget of the country
1. Environmental Factors:
The environment of the plot directly affects the property. Whether the location is safe or not. Whether the price will increase after some time or not. The area and the air quality also matters. Whether it is too dusty or pollution-free. Also, whether there is a proper sewerage line in that locality or not. These were some of the environmental factors that affect real estate.
2. Demographic Factors:
A country’s demography and location matters a lot. An average house in Pakistan is bigger compared to other developed countries. Our architecture and accommodation system is very well planned. People in Pakistan usually prefer joint families. If high-income people or low-income people are living in a certain area, then that will affect the market differently. If the people have high purchasing power, then the value of the market will be more in that area. Quality of local schools is frequently the single most important factor for buyers with children of school-going age. Proximity to local employment opportunities is a very high priority for most employment-age buyers. Proximity to social, shopping and recreational centers is valued most by younger buyers but plays an important role in pricing for all homebuyers. It is one of those factors affecting housing development, as the price of material and labour varies from place to place, also the availability of material and the kind of architecture you will do ,depending upon the seasons or location. Apart from real estate factors , If you want to invest in some big cities of Pakistan like Peshawar then checkout some of the best real Estate companies in Peshawar . You can invest in their projects and get good return on profits.
3. Interest Rates and tax on Loans and Property:
People usually avoid high taxes and interest rates on property. Nobody likes giving extra money, do they? Interest rates play a crucial role in the growth of the real estate market. If a high amount of tax is charged, people will most likely be reluctant to invest in it. It also depends upon the banks, if they are giving easy loans and payment plans for the people. Pakistan has a huge list of banks that provide home loans. If the stock market is going well, people will more likely be able to invest in the real estate market. Read blog on property taxes in Pakistan.
The new administration has established new taxation policies for immovable assets in the form of Budget 2019-20 to stimulate property investment and eliminate inconsistencies that are hampering the market’s expansion. Here are a few of the most important aspects of it.
- On immovable property, the withholding tax (WHT) rate has been lowered from 2% to 1%.
- Withholding tax (WHT) is collected on all real estate purchases, regardless of their market worth.
- Withholding tax (WHT) is collected when a property is sold after a holding period of up to five years.
- Non-filers would no longer be restricted from purchasing homes worth more than PKR 5 million.
4. The Economy:
The economy of the country plays a crucial role in its development of the country and also its real estate market. With a booming economy, the rate will also get high and increase in demand. If the people have a high purchasing power, they will purchase more in property and invest in real estate. Real Estate Investment Trust is a very hard task to do. The real estate market and economic conditions have a major reciprocal link. A downturn in the economy, on the other hand, may not affect everyone in the same manner. In truth, there are possibilities to invest in a desirable property by strategically planning and being mindful of elements such as building prices, inventory mixtures, and seasonal trends. While a suffering economy is not a pleasant sight for most, it does mean that there are bargains for investors and first-time buyers in locations where property prices are likely to fall significantly. Apart from real estate factors , If you want to buy a house then checkout some of the best areas for buying houses in Karachi and then proceed further.
5. Government Policies:
The policies and rules and regulations of the government matter a lot. The lawmakers and public office holders play a pivotal role in the real estate market. Like we discussed in the tax section, the government also offers certain policies and tax reductions for the people. Profitable Property Investment in Pakistan is a topic of discussion but always remember to get proper knowledge before investing in any property.
6. Employment Factors:
Employment factors have always played a great role in the real estate market of any country. It even decides who will invest and who will not. If the employment rate is high people can invest more in real estate business.
7. Trust in the Market:
Trusting anyone in matters of money can be doubtful. This also holds true for real estate. Trusting anyone before investing is a tough task. There are multiple cases of frauds, low quality projects and bad customer service. People will invest in stocks but avoid real estate. Therefore, it is very important for real estate investors to invest in the high image of their brands. Also check blog on best construction companies in Pakistan.
8. External Investors:
Certainly, the fraction of external investors directs the real estate business. The real estate business would flourish if the government is investor-friendly and invites foreign investment.
But what is the nature of the investor-real estate market relationship?
The solution is straightforward.
People who invest in your country bring a variety of resources with them, including cash, human capital, machinery, technology, and other items. They’ll need room now to manage all of these things effectively and efficiently. When it comes to real estate investing, this is the time to act. Apart from factors, If you want to buy a house in some top areas of Pakistan like Lahore then checkout some of the top areas for buying houses in Lahore and then plan to invest.
9. Budget of the country:
The cost of a property is, in fact, determined by the budget. If the government raises the cost of bricks or cement, the cost of housing will rise as well. However, if the government relaxes regulations for these businesses, building costs will be lower, boosting investor confidence and bringing money into the country. If the investor is happy, he will keep on investing more into real estate societies. Commercial investment seems to be more profitable than residential investment , Checkout some of the commercial areas to Invest in Peshawar where you can invest and get good ROI.
Real estate market values are very dynamic, and most of it is determined by external sources. Whether you intend to buy a new house or use the equity in your current one for other purposes, it’s vital to look at both broader market circumstances and your unique property to see how the value of your home will change over time. Whether you want to buy a house or invest in real estate Pakistan, all these factors play a huge role in the real estate market. Also read investment opportunities in Pakistan.
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- Real estate projects in Peshawar
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