Pakistan is a country whose economy depends a lot on its real estate. The estimated value of the realty sector of Pakistan is about $350 to $450 billion. For the past few years, Pakistan is struggling with its realty sector. In this article, we will discuss what are the major real estate problems and challenges in Pakistan that lead the realty sector towards such a deficit.
Problems and Challenges of Real Estate in Pakistan
1. Loss of Motive for Investors
Although some major facts hold Pakistan real estate business, one of them is the loss of investors. The government of Pakistan has imposed some strict policies against investors in the realty business. Non-filers of Pakistan are not allowed to purchase a property that exceeds 5 million until they register themselves in the FBR (federal board of revenue) as fillers. The strict banking policies on banking transactions of non-filers were the main reasons that discouraged investors to put down revenue in this sector.
2. Nonexecution of Developmental Budget
Although many reasons lead to a downfall in real estate, the major problems are due to financial, economical, and political provocations. The developmental budget was never executed completely on developmental projects. This pushed a lot of contractors in giving up their services, which generated poverty issues for people as well as devastating problems for real estate.
3. Strict Withholding Tax on Non-filers
As we have discussed earlier the problems of investors, and the strict policies of FBR presented later on this year for tax non-filers with the implementation of withholding tax. FBR policies to authenticate the source of income of non-filers have implemented a withholding tax of 37% of the total banking transactions, this issue demotivated a lot of investors and commercial real estate brokers in Pakistan to put their amount in the realty business, which proved as a deficit for the whole real estate of Pakistan.
4. Taxes Imposed on Non-filer Overseas Pakistani
As you know a majority of overseas Pakistanis have many of real estate investing difficulties. Overseas Pakistanis can not invest in other businesses, real estate was their only option that does not require their presence, but due to government policies for non-filers, those overseas Pakistani are afraid of investing their hard-earned cash in the realty business. Another reason that discouraged overseas Pakistani is their presence in the country to complete the procedure. These are some of the reasons that have limited overseas Pakistani to invest in real estate.
5. Fraud and Scams in Real Estate a Big Challenge
The majority of agents and dealers in the realty business are uneducated they do not have the required guidance to provide the people who want to invest in real estate. Most of these cases result in fraud or scams in the end. Overseas Pakistanis are not comfortable investing in real estate because of the increase in fraud ratio, no one certainly wants their investment to be exempted from uneducated dealers.
End Remarks
Although these major drawbacks in real estate is going throw a lot of thorns right now, due to high tourism demand and upcoming government policies we hope that the realty business will grow in the upcoming years with unexpected margins and Pakistan shall be able to grow its realty horizons.
