The current situation of the real estate sector in Pakistan is chaotic and 2018-19 have been the worst for the better part. Pakistan’s market reliability and stability are questionable as the market dips at the slightest unrest.
And the condition worsened with new policies introduced by every new government without fully understanding the condition and taking into account unstable market conditions. The market was expected to catch a breath with newly formed PTI govt but the opposite happened due to govt’s several modifications to how property buying and selling is going to take place.
But, PTI govt is expected to usher in several new developments that will affect real estate values upon their completion.
World Bank’s country director for Pakistan, Mr. Patchamuthu Illangovan, visited ISE REIT for a briefing on the potential of the real estate economy for infusing growth in the country’s economy.
The Country President was received by Mr. Zahid Latif Khan, chairman of ISE REIT, and other directors.
Mr. Aftab Ahmad Chaudhry, director ISE REIT made `a detailed presentation on the potential of the country’s real estate sector. He informed the visiting dignitary that Pakistan’s commercial real estate alone has an estimated valuation of US$ 1 trillion, while the residential, industrial, agricultural and tourism-oriented real estate also have separate valuation estimates. He said this potential can only be exploited by introducing supportive taxation and regulatory frameworks for the real estate and the construction industries of Pakistan.
There is a new framework Under-development for Real Estate Investment Trust (REIT) sector by SECP.
Mr. Aftab highlighted that the present government has already initiated a wide-ranging reform process for taking advantage of the real estate economy and making the sector as a leading contributor to the country’s overall development.
In this respect, Mr. Aftab highlighted that the infrastructure development initiatives under the two economic corridors of CPEC and CAREC have the potential of transforming Pakistan into a transnational logistical and industrial hub for the Central, South and Southwestern Asian countries. He said that with the start of work on the development of the 9 Special Economic Zones (SEZ) envisaged under the CPEC, the country would witness an immense uptick in the construction industry.
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He also informed the World Bank’s country chief about five most important initiatives having been put in place by the government in an attempt to boost the real estate economy. He enumerated these initiatives as under:
1. The decision by the cabinet to grant the status of ‘industry’ to the construction sector. He, however, stated that the entire real estate value chain should be considered as part of the industry.
2. Approval of the cabinet for the legislation on the establishment of the Real Estate Regulatory Authority (RERA) in Pakistan. While welcoming this move, he said that without the establishment of provincial authorities on the subject and making them work with the federal RERA, the purposes of regulatory harmonization for the real estate sector may not be achieved.
Availability of concessionary credit for the industry @5-6% just like the other concessionary schemes of SBP for the export and SME sector.
3. Release of the draft of Special Taxation Procedures/Rules to rationalize/incentivize the construction sector. He highlighted that this initiative alone would have far-reaching benefits to jump-start the real estate economy in the country.
4. The proposed establishment of a separate CPEC Authority. He, however, emphasized that along with CPEC, CAREC also has tremendous developmental potential, and the proposed authority should be named as ‘Economic Corridors Development Authority (ECDA)’ so as to bring convergence on the work of both the economic corridors.
5. There is a new framework Under-development for Real Estate Investment Trust (REIT) sector by SECP. He said that the current leadership of the Commission is speedily working to bring ease of doing business related improvements in this regard, and the newer framework may enable our country to witness the emergence of a vibrant REIT sector on the listing board of PSX.
He informed the visiting dignitary that in addition to the above supportive initiatives, the government must also take the following two very needed steps:
1. Availability of concessionary credit for the industry @5-6% just like the other concessionary schemes of SBP for the export and SME sector.
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2. Digitization and cadastral mapping of urban and all other landmasses of the country. He stated that while the digitization of the rural land record of Punjab and Sindh, has already taken place with the support from the World Bank, there is an immediate need to start the gigantic work of digitization of the urban and all other land banks of the country.
The country President, World Bank, Mr. Illango thanked ISE REIT for inviting him and expressed his hope to see positive results from the government’s newer initiatives, which have the potential to promote economic growth opportunities for many other manufacturers and service providers of the real estate value chain.
At the end, the visiting dignitary was presented with a Crest of ISE REIT by the Chairman Mr. Zahid Latif Khan.