The realty sector in Pakistan has proven to be a significant contribution to the country’s socio-economic progress. Real estate investment is often long-term and involves significant cash. The profits are significant, but this type of investment carries a high level of risk.
The country’s general real estate market appears to have stayed more or less steady, based on recent property search trends. The information collected over the previous six months indicates that the property markets in Pakistan’s main cities have only experienced a slight decline or growth.
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KEY FACTORS AFFECTING THE REAL ESTATE MARKET OF PAKISTAN
INCREASING CONSUMER AFFORDABILITY
In recent years, the affordability of consumers has increased. Not only have real estate prices in the country increased in recent years but so has the consumer affordability graph. The increase in start-ups, various new employment opportunities, co-working areas, and outsourcing in Pakistan have all contributed to this rise in consumer affordability.
Consumer affordability, which has been steadily increasing, has resulted in increased demand for housing units and commercial properties, particularly in cities. However, that’s not the situation in rural areas, where affordability has remained relatively stable. Get the idea from Kingdom Valley.
DEMOGRAPHICS
The demographics of a country play an important role in the sale and purchase of real estate assets. It’s the same case in Pakistan, where the separation of inhabitants has a significant impact on in-demand residential properties and their market value.
As of now, there are two types of family systems that coexist in the country: the joint family system and the nuclear family system. The nuclear family system is one where the individuals separate from their family and start living on their own after getting married and having children. Individuals living with their extended families need bigger homes in comparison to nuclear families. Nuclear families can easily spend their lives in smaller homes or apartment units.
The extended or joint family arrangement, which is still present and favored by many Pakistanis, produces a significant demand for bigger houses. This is because youngsters do not normally move out at the age of 18 in Pakistan. Instead, these young adults stay with their families until they remarry. As a result, the average size of residential property in Pakistan is higher as compared to other nations.
INTEREST RATE
The capacity of an individual to be able to purchase a home is heavily influenced by interest rates. Even in Pakistan, the smallest shift in the interest rate has a significant impact on the current trends in the real estate sector. The majority of investors and homeowners in the country are dependent on real estate loans from banks and loan companies. This results in investors going for development projects that either offer monthly or quarterly installment payment plans
The stock market in the country changes frequently, owing to the country’s shifting financial and political situation, which prompts interest rates in the housing market and other industries to rise and fall. Increased borrowing rates tend to lower the consumer affordability graph. If the interest rates are low, demand for Pakistani real estate increases.
SCAMS
Another factor that is impacting the country’s real estate market is property scams. Property scams are very common in the real estate market and unless proper research is done, anyone can fall victim to them. What happens in a property scam is that fraudulent realtors will sell fake files for residential or commercial plots and then run away with the investment. To avoid such scams, it is best to only invest in projects with NOC approval.
INVESTMENTS BY OVERSEAS PAKISTANIS
Lastly, foreign investment also has an influence on the country’s real estate industry. Offshore Pakistanis’ investments have long been important in the country’s real estate market. The Naya Pakistan Housing Schemes, which are being developed in several cities across the country, and the growing technologically advanced housing developments in Gwadar, such as Golf City, are two examples of ongoing big initiatives that have enormous potential to encourage foreign investment.
Golf City is among the several housing schemes that are part of China’s Massive Belt and Road Initiatives, which are on track to transform Gwadar into the country’s biggest free port.
Author Bio
Muhammad Junaid is a CEO of VM Solutions, senior Analyst, and Search Engine Expert. Extensive experience being an IT Manager in NextGen Marketing – Park View City. Work for years with local and international enterprises. Also, represent well-known brands in the UAE.
