1 INTRODUCTION

1.1 What Is Real Estate Business

Real estate is is a common established business that is used to facilitate the societal
conditions of the country . it constitutes of land including air and ground focusing on the
infrastructure the buildings, vacant lands ,plots (residential or commercial) with its
natural resources such as crops, minerals or water and immovable property of
nature.Venturing interest in real property buildings ,the housing in general. The
profession of real estate business is about buying, selling, renting land, buildings, or
housing ,studying property listing or finding new interested prospects

Real estate is a term that encompasses land along with anything permanently conjucted to
the land, such as buildings, houses or specifically property that is fixed in location. Real
estate law is the body of regulations ,legal codes which pertain to such matters under a
particular jurisdiction and include things such as commercial and residential real property
transactions. Real estate is often with real property(sometimes called realty ), in contrast
With Land and anything fixed, unmobiled, or permanently attached to itsuch as assets,
buildings, fences, fixtures, improvements, roads, shrubs and trees structures,utilities
walls. Title to real estate normally includes title to air rights, mineral rights, and surface
rights which can be owned ,leased, sold, or transferred together or separately, also called
real property or realty.

Real" is derived from the Latin word for Royal. The translated term, Royal Estate refers
to an age-old system of land ownership and feudalism which developed independently
all over the world. The Royal family owned all the land within its kingdom, and with it
controlled its use and appeared at the right to tax users and occupants of the land. A
derivative system prevails among municipal organizations today in the form of renowned
domain which can sieze private property for public use. Also tax liens enjoy the
seniormost position among liens and claims against property giving the municipal
organization the ultimate right to seize property ahead of any other claimants

 According to the Barron’s Dictionary of Finance,

the term Real Estaterefers to the piece of land and all physical property related to
it,including houses, fences, landscaping and all rights related to the airabove and earth
below the property. Real estate deals not only withthe architectural design and
infrastructure of a building but also withits finance and potentiality. It is an area that is
highly influenced by thepopulation density, income generation and tastes of the people
andeconomic growth of a country under different period of time.
The Real Estate market forms the backbone of the urban economy being a fixed factor
market; hence an efficient Real Estate market is most important for a well functioning
urban environment. An efficient Real Estate market is one that encourages quick and
development and transaction of land, provides reasonable access and opportunities to all
income groups, environmentally sound and the system governing the land markets are
abided with other laws and regulations governing land, such as research planning and
development , taxation and provision of public infrastructure and services.

Real estate is one of the businesses that are demand today. These real estate companies
are establishing their own company name to provide homes that can be affordable for
those people who are looking for homes. The long history of Real Estate companies has
become one of the reasons why more people are looking forward to have this as their
future needs too. They consider this real estate business as one of the essential thing in
the present time for it is what people need. Security for home is what the companies are
providing to people for the increasing demand of the land and housing properties. It is
also maybe for the reason that the growing population also increases the probability to
lack the space as years are passing by and all of the land areas can already be occupied.

 According to the World Bank in most countries, real estate (including land) accounts
for between half and three-quarters of national wealth. In Pakistan about 250 ancillary
industries, such as cement, steel, brick, timber and building materials, are dependent
on the real estate industry. These combined make it the second largest employer next
only to agriculture sector as well

1.2 Over View Of Real Estate Industry In Pakistan

The development of the real estate markets in Pakistan has been constrained by a wide
range of factors. The land administration practices are from the colony settlement era;
laws and regulations governing real estate development and investment are traditionally
employed housing finance is mainly available to individuals in the higher income group;
only a small percentage of the loans disbursed by housing finance because of little scope
companies go to builders and institutional developers; and, access to real estate
professional services is not available to participants in real estate market because lack of
credibility .

The housing sector plays a crucial role in economic growth and stabilization by creating
employment opportunities in construction and materials and demand for financial
services. Utilizing the labour force efficiently The housing sector in Pakistan is still
towards maturity when compared with other developing and developed countries. There
is, however, tremendous potential for growth. The issues in the housing sector that
threaten the growth achieved are high land prices, high and rising real interest rates and
prices of construction materials along with basic necessities are not in range .
Although the ownership rate in Pakistan is high, (i.e., owned homes as a proportion of
total dwellings) the quality of a large segment of dwellings leaves much to be desired
limits the financial constraint serving as an asset and many of the externalities of housing
are thus not captured. The process of producing housing involves a large number of
actors. The government through its various institutions coordinates the functioning of
these actors by supporting or regulating these activities

real Estate in Pakistan is a growing sector of the economy of Pakistan. Pakistan spends
$5.2 billion on construction in a year. Moreover, many more billions are spent on buying
residential and commercial plots. According to the Pakistan Bureau of Statistics,
construction output accounts for 2% of GDP, with housing representing less than half that
total. With the rate of urbanization that Pakistan has been experiencing, there is a growing
need for urban planning.

Development of real estate business in Pakistan

1.2.1 Urbanization In Pakistan
Urbanization is the process of population growth in urban areas. There are many ways to
define an urban population. Through population density, population magnitude,
Governmental, political policies , or economic functions pakistan has long been a nation
defined by its geography. It is the country where majority of the population is based and
and where the largest industrialization is at great extant

Economic module suggests that Structural transformation usually takes place when
resources are reallocated from low productivity agriculture to high productivity industry
and services sectors. Cities and urban areas have high rate of tendency of these sectors
which benefit from migration of the surplus and underemployed labour. Rapid economic
growth is therefore associated with urbanization. The phase of urbanization is, in turn,
accelerated in result with migration.

It has been determined no country has grown to middle income status without
industrializing and urbanizing. None has grown to high income without vibrant cities.
Between 1980 and 1998, 86 percent of the growth in value added in developing countries
came from the manufacturing and services sector. Rapid productivity gains mainly
reflected improvements in the industry and services. Between 1985 and 2005, the urban
population in developing counties grew by more than 8.3 million a year. With falling
costs of Transport and communication and a greater potential for exploiting scale
economies, towns and cities have grown bigger and densitily populated

In the fifties and sixties, Pakistan adopted green revolution technologies in agricultural
sector and also opted for large-scale industrialization. As a result of these two factors,
there was massive rural-urban migration as tendency of living increases (majority of
these belonged to the lower-income group) desired to move in urban areas for having
basic necessities which are not far available in rural areas. Additionally, there are a lot of
variables like asset requirements , mechanical changes, rising desires, chances to work
abroad, that have been influenced by, urban life The other drivers for increased urban
areas are high birth rate and migration from rural areas. People are moving from the
countryside to urban areas in droves for better livelihoods and access to relatively better
services such as education and healthcare. The second reason for migration — one with
troubling consequences for stability and security The scale of migration was too large for
the State to manage and so instead of building houses, the state decided to adopt the site-
and-services concept. It often happens in those areas where land is barren not capable of
promoting agriculture growth modern technology plus mechanical ,civil engeneering
skills are then exploited to transform such land into housing socities which compel
people to migrate

A unique aspect of Pakistan’s real estate market is that the industry hits record highs and
lows within a time frame of a few years. Elsewhere in the world (barring the 2005 sub-
prime mortgage crisis), the real estate industry more or less follows a steady growth rate
(five to eight percent per annum is the average).
With the rate of urbanization that Pakistan has been experiencing, there is a growing need
for urban planning. Land use planners have to upgrade their skills considerably to
monitor and forecasts land use trends and infrastructure needs in a manner consistent
with the anticipated medium-term growth of the cities and their financial capabilities. It is
recommended that Research and development Capacity be built up, through the Real
Estate Federation (whose members should include professional real estate brokers) and a
Housing and Real Estate Institute.

The majority of people in Pakistan live in the countryside, with only one-third of the
country's estimated 188 million inhabitants currently are in cities Pakistan is urbanizing at
an annual rate of 3%- Pakistan is one of the fastest urbanizing countries in Asia and the
share of urban population has risen from 17% in 1951 to 37% in 2010 and to 39.7% in
2019 with annual rate of urban change at 2.77% urbanization in Pakistan is caused due to
both external/internal migration to the cities and natural increase. The research on
urbanization is challenging because a differences lies in defining of urban communities in
different contexts and unavailability of latest census data.. Urbanization in Pakistan
requires a tremendous focus on governance structure and policies, eliminating poverty,
providing education, housing, transportation, employment, public health and
supplementary amenities at an considerable level

Population growth and net migration are the major forces behind urban growth. About
one-fifth of the annual rise in urban population can be attributed to net migration. Large
cities with population of one million and above had a share in the total population of 50%
in 1998 which by now have risen to at least 66% or more. Urban areas contribute 80% of
GDP, which accounts for 60% of the employed labour force of the country. Urban
poverty rate is almost one half of that the rural poverty rate. Per capita income levels and
growth rates have also been relatively higher in the urban areas.

The villages and hamlets of the1980s have grown enormously into oversized and slums’,
irrespective of development works by provincial and local governments, in construction
of roads, cementing streets of villages, water supply system, rural health centre provision
of electricity and sui gas facilities Movement or shifting of people from rural to urban has
a direct link of accelatering of economy from rural to urban. Agriculture sector is the
major contributor in Pakistan’s economy

The rural-urban divide has been a major cause of concern and instead of building
linkages and synergies this divide has created an environment of adversity. Instead of
assuming a zero sum game the urban-rural impact can in fact lead to a positive sum game
resulting in a win-win situation for both t rural and urban population. Large metropolitan
areas can link Intermediate cities and town through better connectivity and these in turn
can serve as the pivots for the rural areas. The larger cities can draw workers from these
towns through commuting. Towns can draw sustenance from the agricultural activity of
the rural areas if a network of Farm to Market Roads is built connecting the two. Town
would become market centres for agricultural output, places of seasonal job opportunities
for farm labour and as providers of secondary education and health care services
 Urbanization in pakistan

Urbanization development of new cities

 2 HISTORICAL BACKGROUND

2.1 THE ORIGION OF REAL ESTATE

2.1.1 In International Perspective
The term "Real estate" is first recorded 1660s The history of selling real estate is
dependent upon the country where they conduct their trades. In the United States, real
estate brokers began presenting houses of around 1900, and they have continued to today
In countries like Australia, the practice of real estate sales has been present, but only
recently have real estate brokers and agents come together to form common associations
for home sales.

The first records for home sales in the United States begin around 1890 as an attempt to
form a real estate association failed, but it began a process. by 1908, the National
Association of Real Estate Exchanges was founded to bring brokers and agents together
at one platform to facilitate the selling of homes and plots . Despite the presence of the
association, until 1919, anyone could pretend themselves a ‘real estate broker’ without
any professional certification or licensing.The practice of selling homes in this era was at
a peak practice at best as brokers placed multiple placards in front of homes trying to
compete leaving homeowners to simply evaluate from numerous choices. Traditional real
estate sales practices emerged out of this era as true real estate agents asked permission to
gain listings to sell and earn a home-seller’s trust. Single competent agents gained
exclusive contracts in major cities such as Chicago, Baltimore, and this enabled these
agents to become the go-between for home-sellers and buyers who have potential by
incorporating the practices of walk through and open houses used to sell homes for over
100 years.

In the 1910s, the first open house occurred over several weeks as a way to open homes to
the public. The public could see new building ,architectural concepts as home technology
such as electric lighting space utilization and kitchen layouts and new techniques which
can modernize homes making them more desirable.

In 1925, the National Real Estate Journal presented the idea of presenting furnished,well
decorated ‘staged’ homes for review to give buyers a feeling of already being home.

In the 1930s and 1940s, real estate agents used one open house to create sales networks
of multiple homes to present to buyers. If one house was not desired, then agents could
have a coordinated set of network to improve chances of a sale.
In the 1940s and 1950s, the post-World War II world saw a boom in real estate sales as
soldiers also deamed for a secure place to call home and raise a family. Homes entered
and exited the market in rapid time

Finally in 1952, the use of model homes emerged in Dallas, Texas as a way to present a
finished home to thousands of people representing another built unit for purchase.

The new era of real estate was to figure out best ways to sell a home remains to get
people in the home. What has changed the emergence of the Internet as a way to list, find
and schedule appointments in efficient way New sites such allow new prospective home
buyers to see homes before they actually set foot in a home giving them a better feel for
areas of the home they want to focus on. The Internet has also facilitated the ability to
schedule showings, and buyers can see several homes in a day rather than one or two in a
day drawing out the buying process. Real estate agents were quick to adopt these
innovations in order to present the best aspects of the home and improve chances of the
sale and bring their listings together in one spot.

Real estate, as a whole, and housing, in particular, is the single largest asset welth class.
The resources in land are immense. According to the World Bank, in most countries, real
estate (including land) accounts for between half and three-quarters of national wealth. In
the UK, land and buildings were estimated to comprise a total of 57% of the national
wealth in 1997, while in the United States, real estate was estimated to represent almost
70% of all tangible capital in 1993, and the taxable value of real properties in the USA
were estimated at nearly US$6 trillion in 1991

2.1.2 In Pakistan Perspective

The start of the real estate sector as an industry in Pakistan was initiated from Karachi.
The real estate agencies in Karachi were in existence even before the independence of
Pakistan. These few agencies were located at Old Karachi near today’s Bandar Road.
There were barons who construct buildings and they hire and utilize labors on daily
wages. Rarely the selling of plot took place, initially, these deals were of few thousands
or few lacs in some rare cases.

The 1950s-1960s
The real estate market started to boom in the 1950s when the areas like Sindhi Muslim
Society, PECHS, Nursery, and Tariq Road were becoming populated gradually. In the late
years of the 1950s, DHA came into being, and in 1960, plots in DHA gained some boom,
but the prices were still very reasonable back then. The allotments of the plot took place
against some rupees and they got sold out against a few hundreds. After some time,
allotment took place against a few hundreds and new deals got finalized against few
thousands. with the passage of time, people got aware and returns of owning properties
in the city. People rapidly migrated towards cities from small villages and this trend of
Karachi real estate sector had been extensively spread throughout the country. It can be
stated that the origion of real estate market of Karachi’s district South is the nursery of
country’s real estate market. District South market, which started to progress in the mid
of 1960s, gradually becomes the backbone of Pakistan’s economy.
Now the real estate market has developed and have remarkable growth to an extent
where a single construction can spin the wheel of almost 50 industries.

Retrieving the data of initial phases of the real estate market in Pakistan is near to
impossible. However, we have the data from the beginning of 1970 taken from some of
the most senior real estate agents of the city. This data will help the newcomers of the real
estate market. this research will be beneficial for future work and will eventually
complement the professional trends of the industry.

The 1970s
The real estate market was normally and steadily progressing from 1970 to 1974. During
1973-1974, when ZA Bhutto introduced Amnesty Scheme, the market boosted. This
boom lasted till 1977. The disastrous flood in DHA and post-election riots in the city
crashed the real estate market of Karachi.

The 1980s – The Afghan War Era

The falling graph remained consistent till 1982. When Martial government gradually
established its feet and Pakistan become center of focus due to Aghan war. That war
brought a lot of financial and moral support for Pakistan from throughout the world. This
positivity resulted as the long-lasting boom of the market from 1982 to 1988, until the
death of Gen Zia ul Haq in a plane crash. The sudden death of then-President caused the
uncertainty in the political scenario of the country which resulted in the crash of the real
estate market from 1988 till 1992.

The 1990s
The market began to progress leisurely from 1992 to 1994, but the overall condition was
still below average in these years. Real estate market saw its next boom from 1994 till
1997. The real estate sector passed through a significant development in these four years.
In 1997, the disastrous rains, and power crisis caused the fall of the market. The market
suffered a recession in 1997 till September 2001.

The 2000s
The real estate market of Pakistan saw its major boom after the 9/11 incident. The upturn
of the market after the 9/11 incident broke all the records of its previous peaks. This
escalation of real estate market dragged the concept of house ownership far away from a
common Pakistani.The massive rise in prices disallowed massive genuine buyers and
discourage them not to purchase property in the early 2000s. The next recession toppled
the market in 2005. This recession long-lasted till June 2010. According to experts, the
major reason behind this recession was the sky-high prices of property. The market began
mending delicately from July 2010. This mending process got a boom in 2012 which
lasted until November 2015. Once again the reason of recession was overpricing.
Finance Bill 2001 Amendment

On 7th June 2016, the federal government approved the amendment in Finance Bill 2001,
this amendment had been made public through advertisements in various newspapers on
28th of June. This development created the howls amongst short-term investors and other
people associated with this domain. The reason behind the outcry was the indication
made by the government that the market rates of the property will be regularized
according to the DC-approved rates in near future. The indication came without any
mechanism and proper homework by the government. The attempt was made by federal
govt after almost 12 years, and by provincial governments after 6 years. A lot of effort
had been made to reduce the gap between market rate and DC rates. The negotiations
between government officials and different unions and associations of real estate agents
and other professionals of real estate industry resulted as the agreement on 80/20 ratio,
where 20% represents documented grey economy and rest of the 80% will be the
undocumented black economy.

Role of Short-term Investments

The short-term investment opportunities in Pakistan is flourishing since last 6 years. In

fact, the two major factors that include the 9/11 factor and uninterrupted democracy
factor since July 2010 until 28th of June 2016, has left the remarkable signs of fruitful
short-term investments in the economy of Pakistan. This peak of short-term investment
will be beneficial for few in future however many will suffer from it. This shiny market
of short-term investment has been created by the disasters made by the ‘economic
terrorists’. Many white-collar businessmen invested their un-tax, unregistered and
undocumented money from other businesses to this domain eyeing the lucrative returns.
Interestingly, in the six-year period of slackness of business and unproductive short-term
investments, the provincial and federal governments deliberately or maybe carelessly did
nothing to control the overpricing in the real estate market. The respective governments
could have controlled the prices by simply just increasing the DC rates each year
moderately. This move by the government could keep the residential property within a
reach of a common man at least. Since there was no action made by the government,
therefore, the large portion of documented white economy investments fell into the grey
economy. Now, the representatives of federation and chamber are seeing it as a threat
(earlier, they were worried that people are shifting their investments from production
industries to unproductive plots trading, and the money of investors are eventually stuck).
In such circumstances, nobody is willing for 20% documented economy at least at the
moment. The field plowed by the ‘economic terrorists’ wasn’t adding, in fact, it was
multiplying investments. Investments were giving returns each day, each hour, in fact,
each moment. Consequently, the market is suffering from inactivity since 28th of June.
However, it is yet to see how long this period of inactivity will take before it ends.
New changes

These 13 rounds of real estate market seem like quite balanced. Comparatively, by the
passage of time, the progress of the economy nationally as well as internationally and
geographical circumstances have been changed. The real estate trends have been
modified in Pakistan particularly in Karachi where the population has been increasing
drastically. The boom of the real estate industry, and the unregistered, undocumented and,
untaxed investments by white-collar people modified the dynamics of economy and
professional behaviors of masses associated with real estate market. However, it is yet to
see that whether the market will proceed with its 45-year-old trends or it will deviate its
path because of above mention activities. The trends reveal that regardless of any excuse.
the core reason behind the recession of the market had always been the overpricing. The
patterns of market trends remained the same for the 43 years out of its 69 years. The
period between the point of peak in the recession to the point of peak in the boom is
essentially consist of 4 to 5 years. The proportion of increment in prices in populated
areas is 4 to 5 percent however for unpopulated areas, that is around 9 to 10 percent.

When a recession starts, the prices in populated areas fell from 0.5 to 1 percent and prices
of unpopulated areas fell to almost 5% or 50% of the previously increased price.
However, apparently, it is difficult for the market to proceed with the same trends
anymore. Despite the fact that real estate trends of the country are similar to what they
were before but now other external factors have been changed. Therefore, we have to
wait and see how market forces will impact the real estate market..

Some people are convinced on the basis of the previous 69-year track record that there is
a fair chance of another recession period of four years. These people believe that even if
the government takes U-turn and reverse its decision, the market is not going back on the
track anytime sooner. Some people believe that this trading of plots has turned out to be
a stock-like market. Therefore, the recession period would not be long and the market
will be stable after a slight correction. The third type of people believes that if the
government reversed its decision the market will boom endlessly. Each opinion has its
own importance but apparently, if we observe history, database research, and the
government’s policy to discourage and prevent investment in this domain reflects that the
market will follow its 69-year old pattern once again. In fact, if the government continues
its policy of white documenting the economy, the recession will become longer and it
may turn out to be worst.
 3 LAWS PERTAINING TO REAL ESTATE
BUSINESS

Every country around the world has its own laws that govern property buying and selling
process and being a part of Pakistan real estate industry, you need to know about the laws
that are related to this important industry. Real estate activities across the country that
include ownership of property, change of titles, selling, buying, leasing etc. are governed
by different laws. Whether you are new to this industry or are not yet aware with all the
laws that govern country’s real estate sector, your premier online property portal has
penned down a list of Pakistan real estate laws to help you make smooth property sales or
purchases and to avoid all kinds of frauds. The principal laws those are obligatory while
buying and selling property in Pakistan include,

The development of clear and verifiable property rights is the supportive part of the
development of efficient urban land markets. Among the wide and complex variety of
property rights existing in advanced industrial economies, real estate property rights are
the most ancient form of rights. Property rights play a crucial role in sound, efficient and
modern urban planning, by lowering the need for costly state interventions.

3.1 The Registration Act 1908

This act extends to the entire Pakistan except a few districts of the country that are
excluded by the provincial governments from their operation. The act has a total of
fifteen sections and includes all the details as regards establishment of the registration.
The Registration Act 1908 thoroughly explains where properties can be registered and
guides people on all the matters that are related to real estate registration in the country
without leaving behind any kind of ambiguity. The purpose of this Act is the conservation
of evidence, assurances, title, and publication of documents and prevention of fraud. It
details the formalities for registering an instrument

3.1.1 Security of ownership and tenure rights

The security of ownership also stimulates land development. Land registration provides
landownership security and develops land sales and rental markets. With security of land
tenure guaranteed, the landowner can lease out part or all of his/her land and move out of
agriculture in search of better opportunities, either in terms of jobs or self-employment.

3.1.2 More efficient land transfers

The cost of delays for permits is a serious constraint in most developing countries, and an
efficient registration system makes transfers easier, less expensive and more secure. Not
only does this reduce land transaction costs but it also speeds up the process of land
acquisition for investors and removes landownership uncertainty, thereby, providing a
considerable investment incentive., enhancing the overall allocation of land resources.
3.1.3 Security of credit
The land title can be used as collateral for loans. This security has a positive impact on
the productivity of the land since it enables the release of major financial resources for
investment in the land.

3.1.4 Improved land use and management

This can directly provide better information on land ownership and rights for physical
planning as well as facilitate the development of other planning tools such as information
banks covering land use, land values, population, etc It can also provide a tool to restrict
certain land uses with a negative environmental impact

3.2 The Stamp Act 1899

According to the Stamp Act 1899, the buyers as well as the sellers are required to pay
certain amounts to government in lieu of stamp papers that are used for making all the
legal agreements or contracts as regards real estate sector across Pakistan. By making use
of the Stamp Act 1899, the buyers and sellers can therefore legally validate their buying
and selling of properties and stay safe from all unfortunate or fraudulent activities. One
should also keep in mind that the cost of stamp papers fluctuates in accordance with
economic situation of country.

3.2.1 Property tax

Property tax is a levy charged by the municipal authorities for the upkeep of basic civic
services in the city. In Pakistan, it is the owners of property who are liable for the
payment of municipal taxes whereas, in countries like the United Kingdom, the occupier
is liable in15 Generally, the property tax is levied on the basis of reasonable rent at which
the property might be let from year to year. The reasonable rent can be actual rent if it is
found to be fair and reasonable.. There is lot of discretion with the assessing officer as a
result of the Rent Control Act, the income of the municipal corporations has become
static.

3.3 The Land Revenue Act 1967

This act lays out the structure and hierarchy of land and revenue department in Pakistan.
It offers comprehensive guidance regarding collection of land revenue in the country such
as the marking of boundaries, arbitrations, and surveys. These elements are instructed by
Land Revenue Act 1967.

3.4 Transfer of Property Act 1882

There is no doubt about the fact that property buying and selling has never been a
flawless procedure across Pakistan. It has never been considered a safe and risk free
procedure, the reason being the primitive land record system, which carries along a lot of
loopholes and pitfalls. This is the reason why buyers are required to carefully get the
property title of the seller checked before making a payment transaction and signing a
contract. The Transfer of Property Act 1882 clarifies about persons who are entitled to
transfer the property.
It also explains the methods of transferring property and the types of properties that can
be transferred. Before you finally decide buying or selling property in Pakistan, you
should always keep these laws in mind in order to ensure smooth and seamless real estate
transactions.

3.5 Types of Real Estate in Pakistan

3.5.1 Sale of Real Estate in Pakistan

Sale of real estate in Pakistan normally takes place through a title document known as a
Sale Deed, except in certain cases e.g. purchase of real estate in Defence Housing
Authority (DHA) or in a housing society where sale deed is not executed for transfer of
title in real estate and an allotment letter/transfer letter from the authority or the society,
as the case may be, is deemed to be the title document. Some people, before execution of
the sale deed, may opt to execute an agreement to sell. However, such agreement to sell
does not transfer title to a property in favour of the vendee. It, nevertheless, does create a
right in favour of the vendee, in case the vendor refuses to honour the terms and
conditions of the agreement, to seek specific enforcement of the agreement to sell. Title
in an immovable property is only deemed to transfer once such Sale Deed or title
document has been executed. A sale deed must be affixed with requisite stamp duty and it
must be registered with the relevant sub-registrar. After registration of the Sale Deed with
the sub-registrar it must be ensured that a mutation of such sale is entered in the register
of mutations kept and maintained by the patwari.

3.5.2 Purchase of Real Estate in Pakistan

Before purchasing real estate in Pakistan, a complete and thorough search in respect of
title of the seller to the real estate must be carried out. A general practice is to investigate
title of the current vendor and any previous owner(s) for the last 20 years. Original title
document in favour of the vendor must be obtained alongwith other relevant documents
including mutation in favour of the vendor, a fresh copy of fard, aks shajra and
NOC/NEC as the case may be. If the vendor is selling the property in the capacity of an
attorney of the owner then it must be ensured that the power of attorney is affixed with
appropriate stamp duty and it has been duly registered with the relevant sub-registrar. If
possible, contact should be made with the owner(s) of the property and authenticity of the
power of attorney confirmed A holder of a forged and fabricated power of attorney may
not be able to transfer a valid title in an immovable property to a third party.
Real estate investments can have a good or bad reputation. A good property can earn you
a fortune, while a bad one may get stuck for years without any positive gain, or you may
have to bear some loss to get rid of it. This all depends on actual homework market
research, future projections, and sometimes external factors like unfavorable decisions or
uncertanities by the Government or delays in mega development projects. The best and
secure way to sell, purchase and transfer of property is firstly to consult with lawyer for
verification and checking the legal status of the property and then to enter into full
written agreement by setting out all the terms and conditions. Non-resident Pakistanis,
overseas Pakistanis and foreigners can have the oppertunity to also purchase immovable
property in Pakistan.

3.6 Lease/Renting out of Real Estate in Pakistan

3.6.1 Landlord's Point of View

Landlord must ensure that lease of an immovable property is executed in writing. Lease
of immovable property for a period of less than a year does not require compulsory
registration. However, lease of immovable property for a period of more than a year must
be registered. If the tenant refuses to pay rent, or for any other reason as stated in the
lease agreement and allowed under the law, the landlord may terminate the lease. If the
tenant refuses to vacate the premises the landlord may file an ejectment petition before
the relevant rent controller.

3.6.2 Tenant's Point of View

Tenant must ensure that he makes payment of the rent either through a crossed cheque, or
where payment is made through some other mode, then a receipt must be obtained from
the landlord. In case the landlord unlawfully or unjustifiably attempts to evict the tenant,
the tenant may file a petition before rent controller in addition to availing other legal
remedies as advised by his counsel.

3.6.3 Gift of Real Estate in Pakistan

Gift of real estate in Pakistan must be made in writing. There is, however, a qualification
to this general rule in case of a Muhammaden. Although allowed under law, it is not
recommended to make oral gifts of immovable property because it may become difficult
to prove an oral gift. Where a gift deed is executed, it must be affixed with appropriate
stamp duty and it must be registered
3.6.4 Declaration of gift;
Acceptance of the gift by the donnee during the lifetime of the donor Transfer of
possession of the subject matter of the gift by the donor to the donnee Once all of the
above-mentioned conditions are satisfied, then the fact of a gift is deemed to be
established.

3.7 Mortgage of Real Estate in Pakistan

3.7.1 Legal Mortgage

A legal mortgage in respect of an immobile property may be created after execution of a
mortgage deed. A mortgage deed must be affixed with appropriate stamp duty and it must
be registered with the relevant sub-registrar.

3.7.2 Equitable Mortgage

An equitable mortgage in respect of an immovable property may be created simply by
deposit of original title documents e.g. sale deed, allotment letter, etc., with the
mortgagor. It is not required to be registered, however, a general practice is to get a lien
marked in respect of such mortgage.

3.8 Real Estate Taxation in Pakistan

3.8.1 Taxation of Gains from Real Estate in Pakistan

The Constitution excludes legislation on taxation of capital gains from the purview of the
federal government. The income tax law has also been harmonized with these
constitutional provisions by excluding the immovable property from the definition of
capital asset, whose gain is liable to tax. Despite this, profits on some transactions
concerning immovable property is taxable under the income tax law e.g. disposal of
property acquired as a stock in trade or with commercial intent to make profit.

3.8.2 Capital Value Tax on Real Estate Related Transactions in

Pakistan
A Capital value tax at the rate of 2 percent of recorded value has been levied vide Finance
Act, 2006. This is applicable in urban areas for residential property exceeding an area of
one kanal and in case of commercial properties without any threshold of land area or size
of the property. However, where the value of such property is not recorded, the CVT is
payable at Rs. 50 per square yard of land area. All transfers falling under the scope of
purchase, gift, exchange, surrender, power of attorney and relinquishing the rights have
been subjected to the capital value tax. However, transactions between spouses, parents,
grand parents, brothers and sisters through gift and inheritance have been excluded from
its purview.

3.8.3 Establishment of Real Estate Investment Trust in Pakistan

The concept of Real Estate Investment Trust has recently been introduced in Pakistan as
an incentive for real estate investment in Pakistan. Any income of such trust is exempted
from tax, subject to the condition that not less than 90 percent of its profit of the year is
distributed amongst the unit holders.
 4 PRESENT CHALLENGES TO REAL
ESTATE BUSINESS
Varied factors are associated with and changing the current state and pattern of
development of real estate growth. Physical aspects like variation in size of the
apartments, size of plots, price and rent of residences in different location and socio-
economic condition of the dwellers, land tenure ship pattern, car ownership pattern, level
of satisfaction of apartment owners with services provided by real estate developers,

4.1 Five common issues impacting real estate

4.1.1 Rising rates and the economy
Rising rates can actually be good – and bad – for the economy. the profile of interested
people feel bad when they saw increase costs. They’feel quite good when they monitor
business activity and keep inflation in check and balance . it has been perceived in today
environment “It may be painful in the short run but quite beneficial in strategic run . it
may have a slower number of new home purchases or resales, or higher mortgage rates
but inflation won’t get out of control.”

4.1.2 Politics and political uncertainty

research explained to attendees that the mid-term elections could change the balance of
power and with it, policy. “The 2018 elections are going to be telling because they’re
going to determine whether or not the policies of the current administration are going to
be maintained and many no longer benefit

4.1.3 Housing affordability

The group pointed to wage statistic, gentrification and a low supply of affordable homes
and apartments, plus two decades of housing underproduction that has dramatically
impacted the residential housing market. “The local control of housing decisions is
problematic,” audience have told . “Decision makers ... are dependent to voters and not to
the economics of the housing market and as a result, they don’t respond to what is
necessary from the perspective of housing that would be affordable and demanded by
families, etc."

Audiences were told that the solution is quite simple. “It’s a supply and demand
problem,”. "by substituting new technologies can increase the supply of housing, can
lower the pricing
4.1.4 Generational change and demographics
The organization advised that for the first time in more than 50 years, there are four
groups influencing both commercial and residential real estate: Millennials, Baby
Boomers, Gen X and Gen Y. On the rising tide of Millennial homeownership, Nahas said
“We have more people today under 40 influencing real estate. That affect has not been
fully felt yet. It’s going to take some time

4.1.5 E-commerce and logistics

Technology is continuing to disrupt, and how we are buying things change. The group
determine it may be a concern of retail sector volatility, including the rise of e-commerce
and logistics that have tendency to support warehousing and delivery of goods.

4.2 Issues to look out for in the future

4.2.1 Infrastructure
American Society of Civil Engineers, stating that there is a “lack of serious effort” by
the country to address its failing infrastructure. As old ways are obsolete new residential
housing developments require new infrastructure, such as water, power and sewer
services. The group also stressed that an absence of developed public transit hampers
development, creates congestion and ultimately increases costs.

4.2.2 Disruptive technology

it has been considered a current issue but has debated and determined that technology is
quickly and rapidly changing that it’s an evolution. The organization’s report notes that
the impact on residential areas include an increased demand for connectivity, smart
homes, and can cause older structures to be less desirable. the technology wild card is
block chain, which he said has potential to disrupt real estate in a significant way, in
different areas from transactions to titles.

4.2.3 Natural disasters and climate change

Despite all the data and press coverage, natural disasters are unpredictable and this plays
havoc on homeowners and developer and increases risk to homes, both single-family and
multifamily, the organization said.
4.2.4 Immigration
Immigration affects the skilled and unskilled labor pool, Additionally, immigration
impacts both residential and commercial real estate and affects both urban and suburban
areas,. Residentially, changes in immigration policy mean fewer new households, reduced
rental/owner demand, reduced broker transactions, the organization said in its report.

4.2.5 Energy and water

“Owners and developers and investors must consider what the state of energy and water
is when building,” Nahas said. Residential real estate is impacted as the cost to extend
utilities at the edge of urban areas increases,

4.2.6 Rise in land price

The major hurdle of providing affordable housing to all is the high value of land in city.
Land value in the city has drastically increased in last the decade with emerging
technology and better transportation showing about a four-fold increase in the average
land value in last ten years. In some of the critical areas of the city.The high land value
results in the high cost of housing units, for both purchase and rent. With the increase of
population the housing demand is also getting an upsurge, thus further increasing the
value of housing units. Consequently, the settlement area of the city is expanding and
people are getting more inclined at the outposts a result, the surrounding areas of the city
are also experiencing a rise in the land price.

4.2.7 Increasing cost of construction material

The housing problem of the city is further aggravated due to the price hike of
construction materials. The price of construction materials is consistently increasing,
thereby increasing the construction cost and apartment price.
Unplanned development of the city Unplanned development of the city creates challenges
for real estate developers to determine a suitable location for residential development.
Haphazard development of commercial land use in residential areas, deterioration of
transport facility and road network creates a continuous challenging situation for real
estate developers while providing housing facilities in those areas.
 5 HOUSING INFRASTRUCTURE
Infrastructure is the fundamental requirement in the functioning of any country. In
today’s modern era, electricity is needed to power homes and industry. Structured roads
a proper transportation system to transport goods from one place to the other and then
ports and airports to export industrial products to foreign trade partners. Similarly, a
modern nation requires effective water and sanitation to improve and sustain the health
and cleanliness of its people. In all situations, infrastructure is such a necessity that it
affects the lives of every single individual to a great extent on this planet without it life
cannot sustain. The improvement and expansion of infrastructure is a pre-requisite for
sustaining and accelerating economic stability , growth and social development in a
country. Improving quality and service coverage in power, water supply and sewerage
treatment, transport and logistics is crucial for Pakistan’s economy and to improve the
quality of life. To improve and expand infrastructure, Pakistan’s needs are massive to
strengthen the infrastructure requirements which are crucial for real estate. The
urbanisation and economic development are mutually interdependent.

 The housing sector plays a crucial role in economic growth and stabilization through
the creation of new jobs in construction and materials and demand for financial
services. The housing and construction industry has the potential of utilizing a large
number of skilled and unskilled workforce, significantly eliminating unemployment
and, thereby, reducing poverty in the country. attribute of housing, coupled with its
size and its multiplier effect on the economy, gives it the role of a leading indicator of
the imminent state of health of the economy at large

 Housing construction activity and productivity has been rising in Pakistan in recent
years from very low levels At 1% of the GDP, however, there’s tremendous potential
for growth, given a relatively stable and growing economy, a rapidly increasing
population, unmet housing demand, and a growing awareness of housing finance
options.

5.1 HOUSING BACKGROUND

The housing crisis in Pakistan began after a hard-won freedom, and the ensuing flow of
refugees into the territories that became Pakistan. The government of Pakistan adopted
the welfare-state model as its development policy at the time of independence. According
to this model, the State undertook the responsibility to provide housing and shelter to its
citizens. Projects were launched in many cities of the country to provide basic housing
(one or two rooms, toilet and kitchen) for low-income groups and government
employees. The largest housing initiatives were in Karachi where, through the Greater
Karachi Resettlement Plan of 1958, the government aimed at providing 500,000 housing
units in 15-20 years.
The State developed the physical infrastructure, while people bought the plots of land and
built their houses themselves. The government introduced various schemes on this
concept in all the major cities of Pakistan. A certain percentage of the plots were of a
small size and ostensibly meant for poor families. Pakistan also adopted green revolution
technologies in the agricultural sector and also opted for large-scale industrialization. As
a result of these two factors, there was an immense rural-urban migration.

The urban growth rate increased to 4.8 percent during 1951-1961 and 4.8 percent during
1961-1971. As a result, 10.58 million people were added to the urban areas of Pakistan in
a period of 20 years. In Karachi, more than 38 per cent of the increase in the population
in the period 1981-1998 was estimated to have been because of the migration. Lahore and
Peshawar had similar situations. The proportion of migrants from other provinces is
significant in Sindh while, in Punjab and NWFP, shifting to urban areas takes place
mostly from within the province.

5.2 HOUSING INDICATORS

The state of housing in a country or city is identified by various indicators. The most
important indicator is the demand-supply gap. Demand is the number of housing units
required as a result of an increase in population where this increase can be due to
migration as well as natural population growth. Supply is the number of housing units
that are provided through State-approved processes and policies . The demand-supply gap
is the difference between the two. If the gap is large, housing conditions are bound to be
poor. Backlog is another indicator and means that the required number of housing units
has not been built. Other indicators are rooms per house (the less the number of rooms,
the worse the housing conditions) and the number of persons per room (the larger the
number of dwellers, the poorer the housing conditions). Other indicators include the
availability of water, sanitation, electricity, and the quality of construction, especially
roofs.

5.3 HOUSING CONDITIONS

An increase in average household size indicates more people per housing unit in 1998 as
compared with 1981. As seen in Table 8.3, this increase is more pronounced in the urban
areas (from 6.1 to 7.0). This indicates increasing congestion in a household that is a result
of higher population growth, especially in urban areas. Despite an increase in persons per
housing unit, rooms per housing unit has increased slightly during 1981-1998 from 3.2 to
2.9 and 3.6 to 3.2, respectively, that caused a decline in persons per rooms. It therefore
means that congestion has reduced. The most dramatic change has taken place in
electricity supply. Nearly 28 percent housing units have inside water and 70 percent are
covered by electricity in 1998, as compared with 13 percent and 30 percent, respectively,
in 1981. However, piped water in rural areas is available to only 13 percent households
and 69 percent households in the rural areas have no latrines. Even in urban areas, only
51 percent households have latrines and 60 percent have piped water in their homes.
These figures paint a dismal picture on the quality of housing conditions in Pakistan
5.4 HOUSING CONSTRUCTION

Internationally, the construction industry is considered as one of the major industries

contributing to the Gross Domestic Product (GDP) in developed countries. The
construction sector is directly linked with employment. There are both formal and
informal building firms, who undertake works. In the period 1985-90, this sector
contributed more than 5.55% in GDP. It is estimated that about 1.77 million man/ year in
1994/95 (according to Fourth Five year plan) were engaged in this sector . It is also a
source of employment for millions of people the world over. The total worldwide
spending on construction in a year is about $3.2 trillion, with Pakistan's contribution
being $5.2 billion. Construction activity has been increasing in recent years, mostly in the
upper end of the market. Even though the general macro-economic conditions appear
quite conducive to the general development of the housing sector; housing finance has
not emerged as a dominant option yet, and this has reduced the construction industry’s
growth International Developers and large state and private developers remain significant
bidders for housing projects, but the smaller builders are ignored, owing to increased
construction costs and the difficulty in accessing sufficent finance.. The cost of
construction has also been rising regularly, despite governmental efforts to bring down
the prices of essential inputs.

A positive step taken by the government has been the formulation of the National
Housing Policy and the measures taken to implement it. The objective of the policy is to
create affordability of owning a housing unit, especially for the middle- and low-income
groups in both urban and rural parts of the country.

5.5 CORPORATIVE HOUSING SYSTEM IN PAKISTAN

When Pakistan was created in August 1947, housing was a major problem for millions of
people. Independence had created a large influx of migration into the new state. As the
state was unable to provide adequate housing for its population, squatter settlements soon
appeared and were largely tolerated by government. Industrialization and urbanization
accentuated the situation. Refugees and rural migration contributed to the growing
number of urban poor. Housing co-operatives in Pakistan are developed under the
township model where large pieces of land are provided by the state to the housing co-
operatives or the Union. The housing co-operatives or the Union carve out plots, develop
the land and lease the land to the members. Commodities development such as water and
roads are undertaken by the Province/City Development Authority or by the Union for
which the housing co-operatives have paid a fee. Commercial buildings are also
constructed. The size of housing cooperatives varies according to the land available.

Housing co-operatives members are tenant owners. When the land development is
completed, the allotment is handed over to the individual member upon payment. The
individual member builds the house themselves following the co-operative laws and
relevant regulations. Members continue to pay nominal renting fees to the Union.
 Housing co-operatives had had a modest start. In the province of Sindh there were 46
housing co-operatives located in Karachi (22), Hyderabad (23) and Sukkur (1). In
1949, the Karachi Co-operative Housing Societies Union was founded as a central co-
operative organisation by 24 primary housing co-operatives. Co-operators took the
responsibility of developing much needed housing

 In the province of Punjab, housing was the responsibility of the government through
Urban and Housing Development and several trust organisations (LIT, RIT, etc.) until
the 1970s at which time, commercial and co-operative developers started to do
business.

 Even though co-operatives were introduced in the province of Baluchistan in 1950,

no substantive development of co-operatives was made until 1955 when a small
amount of financial assistance was provided with the Aid Program.

 Housing co-operatives have also developed in the North West Frontier Province as
indicated in the statistics section below. In the Capital Territory of Islamabad, there
are different types of cooperatives but unfortunately there is no indication of the
number of housing co-operatives.

5.5.1 Famous Corporative Societies Functioning For Betterment Of Real

Estate Business In Pakistan

DHA (Defense Housing Authority)

DHA society is basically for Army officers and it is built by Pakistan Army. The houses
are well developed, modern and high standard. For the people who want modern and
expensive living, DHA scheme is the best option. It has major projects in Karachi, Lahore
and Islamabad. It has lots of parks and markets.

Askari Housing Scheme

Security, proper planning and excellent setup, all comes in one. It was first society built
for retired Army officers, but due to its best security system, it is regarded as one of the
best societies of Pakistan, as security is main issue now days. It has its projects at Lahore
and Rawalpindi

Bahria Town
It is the most successful housing project in Pakistan with it centers at Karachi, Lahore,
Islamabad and ongoing projects at Hyderabad, Faisalabad, Sukkhur, Nawab shah and
Peshawar. The success lies in the fact, that it is a perfect blend of traditional and latest
amenities. Malik Riaz has given a luxurious lifestyle with a peaceful environment, which
is none other than Bahria town.
WAPDA Employees Cooperative Housing Society
It has its centers in Lahore, Multan and Gujranwala. It is a well-developed society with
lots of facilities in it.
1 THE FUTURE OF THE REAL ESTATE
INDUSTRY

Real estate business has been a unique source of safe investments all over the world
where supply and demand are synchronizing in a homogeneous formula leading for
successive actions of business development. In Egypt, visualizing the increasing number
of population with escalating growth rates and urbanization rapid development all had
created a kind of massive demand on real estate products with particular emphasis on
housing opportunities over the past four decades. This phenomena still elaborates on the
crucial importance and vitality of the real estate business, and is expected to sustain such
a kind of business for the coming eras. Yet, establishing and running a successful real
estate business is dependent upon realistic and careful market research,tools and
processes, where hedging a consolidated position in the market would be needed. The
conclusive data aims at highlighting and synthesizing the primary market forces that
would be of value towards establishing and running a sustainable real estate business, and
further to improve the product mix over time and region

Real estate brokerage is a highly competitive business, and service and cooperation are
essential parts of doing business, but there are risks involved with costly
consequences. The real estate industry is facing disruption, and not just on one front. New
real estate brokerages are offering an alternative to the way agents do business, tech
startups are providing more information and ease of access to consumers and
professionals, and companies are helping consumers bypass the need for a real estate
agent altogether

6.1 INCREASED COMPETITION

According to the Macquarie Residential Real Estate Benchmarking Report, increased
competition has led to a steady fall in real estate commissions across asia. New market
entrants who are leveraging technology and offering tiered pricing models are putting
pressure on traditional agencies. One such example is the emergence of fixed fee real
estate agencies in recent years. By increasing their efficiencies and reducing their
overheads, they’re able to cut costs and offer lower fees.
To combat this, traditional agencies must introduce new technology to automate tedious
tasks and offer a superior customer experience as a point of difference i.e. property
management software. Additionally, agencies must look towards diversifying their
revenue streams to boost profitability in the long-run.
6.2 DATA AND SERVICE
Data continues to take on a more important role for consumers, who are looking for
transparency in the market and for hard numbers to help ensure their decision to buy or
sell a home is the right one Since then, transparency and the availability of information
has become vital and useful to the homebuying process, evidenced by the rise of popular
real estate information sites like Zillow and Trulia, which offer consumers free access to
information about houses on the market, potential home values and recent sales both
serving homegenous and hetrogenous characterstics of potentional buyers. today a major
role of real estate agents has been to provide all necessary and relevant information that
wasn’t available to individual buyers and sellers, such as median sale price, the number
of homes for sale and details about individual properties
top Executives, preparing for the future of real estate has been focused on remaining in
step with the newest technological advances, including maintaining website that's
dynamic for home users including interactive maps, easy-to-access analytics and user-
friendly listing details and keeping up with blockchain technology and avilable options

6.3 MILLENNIAL WILL KEEP BUYING HOMES

DESPITE RISING RATES.
"The housing market in 2019 will be characterized by continued rising mortgage rates
and surging millennial demand. Rising rates, by making housing less affordable, will
likely deter certain potential homebuyers from the market. On the other hand, the largest
cohort of millennial will be turning 29 next year, entering peak household formation and
home-buying age, and contributing to the increase in first-time buyer demand
Millennial will continue to make up the largest segment of buyers next year, accounting
for 45% of mortgages, compared to 17% of Boomers, and 37% of generals. While first-
time buyers will struggle next year, older Millennial move-up buyers will have more
options in the mid-to upper-tier price point and will make up the majority of Millennial
who close in 2019. Looking forward, 2020 is expected to be the Millennial are also likely
to make up the largest share of home buyers for the next decade as their housing needs

6.4 TRANSACTIONS
It’s not just the way people pay for a house that may change – it's the basics of the
transaction itself. Agents will need to step up their knowledge in these areas and be able
to walk buyers and sellers through each process. Consumers will also need to understand
new buying and selling options offered by iBuyers – companies such as Opendoor,
OfferPad and Zillow Instant Offers that are able to purchase properties with cash on a
large scale and flip them for a profit. That means homeowners will likely receive an offer
for less than they could get if they listed their property with an agent, made
improvements to the home and marketed the home to the public.

PROSPECTS IN PAKISTAN
Real estate investments are the most important form of investments for long-term returns.
Residents all over the country are now gradually transitioning from living as tenants to
real-time homeowners. With globalization and urbanization at its peak, residents are
quick to seize out on to profitable opportunities for a fulfilling future and life style. For
the past few years, the property investment markets haven’t been performing for quite a
few reasons. However, after the introduction of RERA (Real estate regulatory authority)
and GST, the demand for affordable homes has rapidly increased. Realtors have now
devised strategic plans to cater residential expectations and to introduce with affordable
housing options to push unsold inventory. This, therefore, establishes long-lasting
relationships with key clients for future business prospects

Pakistan is quite a part of the nearly global boom of the Real Estate market. The prices
have been rising steadily for quite some time now. The property in prime locations of
cities like Karachi, Lahore, and Islamabad is in high demand among both realtors and
consumers. The prices of such properties are already reaching into the above million US
dollars range. The prices have gone up so rapidly that they are nearly five times of what
they used to be around a few years ago. There are numerous housing societies that are
being constructed on the outskirts of many major cities. Most of them are being targeted
at the upper end of the market with prices in hundred-thousand ranges. Owners are not
selling these properties and when the selling spree begins the prices are going to drop.
Even residential consumers who own the property are simply not selling it anymore and
are waiting for the prices to go even higher to have profitable return in order to opt new
investing opportunities in real estate.

Considering the state of the market many people are considering this the best time to
invest in Pakistan Real Estate. There are many realtors and firms that are busy buying
projects that are going to take years to complete. This will be a rapid reversal of the
current trend and bring an end to the Real Estate boom going on in Pakistan today.
Another point is that in their interest to invest in Real Estate many people are resorting to
home loans but a steady increase in the interest rate is causing a good proportion of them
to default on their loan. government have made homebuyers and developers anxious. The
government’s economic and employment policies will serve as the key drivers to growth
in the real estate sector . The last two years were not the best for the Pakistan realty
market, and the slowdown impacted all asset classes, except in a few pockets. Revival is
no doubt the need of the hour. There is a sense of hope among developers for a positive
post-poll scenario. So far, none of the campaigns have outlined a comprehensive proposal
for recovery of the real estate market — specifically in terms of providing more housing
and managing interest rates the property market is a key election financier facilitator ,
and considerable amounts of unaccounted money are being pumped out from the real
estate sector to fund the elections. Before the polls, developers are expected to provide
liquidity to politicians so as to finance their campaigns.
Many developers who are funding possible candidates are delaying their projects due to
the lack of liquidity.. Reduced housing absorption has adversely impacted developers’
liquidity and in turn, their funding ability. Political commentators note that certain
properties are sold below market rates in order to generate cash for the election
campaigns. Given this situation, many developers cut down on new launches and focus
solely on selling the existing inventory Many assume that property prices will shoot up
post elections, but this expectation in unfounded as there are too many factors at play,
regardless of which party wins. Election results do not make or break a market, but they
do affect market sentiments to a significant degree.. A decisive win for any of the
alliances will uplift homebuyer sentiment and the property market will see a return of
buyer demand due to the reinstatement of confidence., if the road to recovery is
unhindered, property buyers may very well re-enter the market in good numbers.

Initiatives have a tendency to boost pricing of residential property in the immediate

vicinity. The manifesto of one of the parties in the electoral fray mentions several
initiatives in the infrastructure space, with an intended spend and spending $1 trillion on
upgrading infrastructure over the next decade. It also commits to significant expansion of
and improvement in the Pakistan Railway network, including covering a million plus
cities by high-speed rail. The manifesto also mentions upgrading the infrastructure of the
port sector, developing inland waterways to strengthen infrastructure and encouraging
public private partnership for the creation of world-class airports. The key factors
currently at play on the real estate are unsold inventory, absorption and interest rates. It is
unlikely that these factors will change immediately post polls, regardless of which party
wins. Over the longer term, what will matter most to the real estate sector are a hard
retook at foreign direct investment (FDI) in housing, real estate investment trust (REIT)
legislations and the effective implementation of real estate (Regulation and Development)
Bill. The state Bank will pay a key role in the post-election scenario, be it in bringing
down interest rates for home purchase, or allowing flexibility to reintroduce subvention
schemes, or restructuring debt for debt-ridden developers. The state bank role in deciding
whether to ease lending rates in order to make it easier for more people to qualify for a
loan — and magnitude of down payment needed to buy a home — will also impact the
real estate market better vision on infrastructure will help make the market more
opportunistic New

Undoubtedly, a new stable government will boost businesses and ignite investor
confidence. However, the real impact of any changes will not reflect in the economy for
at least another one year, and the effectiveness of any new initiative is something only the
future can tell. A combination of bottomed-out property prices, low interest rates and a
return of buyer confidence can create the perfect environment for recovery — and even a
bull run. If the incoming government is able to keep interest rates low and employment
generation high, it will provide the platform for a far more stable and investment-friendly
real estate market.
.