Pakistan’s real estate sector has long been considered a safe and profitable investment choice, especially for locals and overseas Pakistanis. With the depreciation of the Pakistani rupee against the US dollar, many viewed property investment as a reliable way to protect their wealth. Unlike bank savings that erode with inflation and currency devaluation, real estate offered a sense of security and stability.
However, the situation has drastically changed. Soaring interest rates made property financing almost impossible for many investors. Those relying on bank loans to purchase land or properties found themselves trapped under high borrowing costs.
Although the government has now lowered interest rates from 22% to 12%, another challenge looms over the sector — the strict conditions imposed by the International Monetary Fund (IMF). As Pakistan negotiates the next $1 billion tranche from the IMF, one key demand is to broaden the tax net to include retail and real estate sectors.
The Impact of IMF Conditions
The Tax Laws (Amendment) Bill 2024, under review by the National Assembly’s Finance and Revenue Committee, aims to expand the tax base. While taxation is essential for economic growth, overly rigid regulations could drive investors away. Prominent developers have already warned that if Pakistan’s tax policies are not investor-friendly, capital will flow to more appealing destinations like the UAE.
Anosh Ahmed’s Perspective
Dr. Anosh Ahmed, a renowned Pakistani-American physician, entrepreneur, and philanthropist, has offered valuable insights into the real estate crisis. With successful business ventures in the U.S., Dubai, and healthcare, Dr. Anosh Ahmed believes Pakistan can turn its real estate sector around by adopting investor-friendly policies.
Why Dubai Is Thriving
According to Dr. Anosh Ahmed, Dubai’s biggest advantage lies in its business environment. It offers zero corporate and income tax on most industries, making it a magnet for global investors. However, it’s not just tax policies that make Dubai a business hub.
“Dubai’s success is built on a comprehensive support system for businesses,” says Dr. Anosh Ahmed. “From modern infrastructure to streamlined company registration processes and long-term visas for investors, Dubai ensures businesses operate smoothly and efficiently.”
He emphasizes that stability and transparency are key factors in attracting investors. “When investors feel protected by clear and consistent regulatory frameworks, they are more willing to invest long-term,” he explains.
Recommendations for Pakistan
Dr. Anosh Ahmed suggests Pakistan should focus on the following areas to revive its real estate sector:
- Tax Incentives and Policies: Introduce tax breaks and incentives for real estate investors to encourage growth. Simplify approval processes and reduce bureaucratic hurdles.
- Infrastructure Development: Enhance public infrastructure, including roads, transportation, power supply, and digital connectivity. Quality infrastructure attracts investors and boosts economic activity.
- Transparent Regulatory Framework: Build trust through a consistent legal framework that provides transparency and legal protection to investors.
- Leveraging Technology: Implement smart technology solutions like online property registries, automated approval systems, and blockchain-based land records to eliminate corruption and improve efficiency.
- Government Support: Provide incentives for real estate and construction projects. This sector is a major driver of job creation and economic growth, and simplifying investment procedures can significantly boost the market.
- Creating Investor-Friendly Environment: Focus on building a business-friendly atmosphere where investors feel confident about their investments.
Dr. Anosh Ahmed believes Pakistan has enormous potential for real estate growth. However, the country needs to act quickly to implement reforms that make investment simpler and more attractive. If not, investors will continue to seek opportunities in other markets like the UAE.
“The choice is simple,” Dr. Anosh Ahmed concludes, “Either create an environment where investors feel secure, or risk losing valuable capital to other countries.” With the right policies, Pakistan can transform its real estate sector into a powerhouse of growth and economic prosperity.
