An overview of the Real Estate sector’s contribution to the Pakistani Economy.
An overview of the Real Estate sector’s contribution to the Pakistani Economy.
The biggest reason for Pakistan’s love for real estate is the perception of a secure and profitable investment. As indicated by Pakistan institute of development economics, the Real estate market has seen growth even though FDI has collapsed in the light of recent economic and political turmoil. The real estate sector contributed between 60% & 70% of the country’s wealth; estimated to be around USD 300-400 Billion as estimated by the world bank.
Surprisingly, real estate contributes indirectly to our economy by being the second largest employment creating industry; after agriculture. It also fuels demand for other complementing industries like cement, steel, paint, building, architecture, furnishing, urban planning and financing. One of the most challenging scenarios facing the real estate sector is trust deficit; the lack of belief customers have in developers. What’s fascinating is that when steps are taken to eradicate this trust deficit, regulations are brought in, the market slows down. Pakistan's real estate sector has been growing rapidly in recent years, driven by factors such as urbanization, population growth, and rising incomes. The sector has become an increasingly important driver of economic growth and job creation, attracting significant investment from both domestic and foreign investors.
According to the State Bank of Pakistan (SBP), the real estate sector contributed around 5.8% to the country's GDP in 2020, making it one of the key drivers of the economy. The housing sector, in particular, has seen significant growth, with an increase in demand for residential and commercial properties. The real estate economy is now worth 4x the total banking deposits in the country.
One major issue is the lack of transparency in property transactions, which can make it difficult for investors to navigate the market and make informed decisions. Additionally, there is a need for improved infrastructure and transportation, particularly in urban areas, to support the growth of the real estate sector. To address these challenges, the government of Pakistan has taken steps to improve the regulatory framework for the real estate sector. For example, the SBP has introduced measures to increase access to finance for real estate developers, and the government has implemented reforms to improve the transparency of property transactions.
In terms of job creation, the real estate sector is a significant contributor to employment in Pakistan, providing direct and indirect employment opportunities in construction, property management, and brokerage services. In addition, the sector contributes to the growth of related industries, such as finance, retail, and tourism.
Overall, the real estate sector in Pakistan has shown significant growth in recent years and is expected to continue to contribute to the country's economic development. To fully realize its potential, however, the sector will need to address the challenges it faces and implement reforms to improve the business environment.
In conclusion, the real estate sector in Pakistan is an important driver of economic growth and job creation, and has the potential to play a even bigger role in the country's development in the years to come. With the right policies and reforms, the sector can help to drive growth, create jobs, and improve the quality of life for the people of Pakistan.
