The Precarious Real Estate Market
Is Pakistan’s real estate bubble ready to burst?
Was this email forwarded to you? Subscribe here.
Real estate is seen by all as a safe investment in Pakistan. The market relies on newer locations and the expansion of old ones to gain higher returns on investment, with little focus on the growth of the construction industry. Although, the sector provides employment, boosts economic activity, and promotes foreign investment, is it the stable growth that Pakistan needs?
Over the past few years, Pakistan’s real estate market has boomed. However, it poses more threats to the economy than superficial benefits. For instance, one of the main threats to the economy includes, the parking of money. The smooth circulation of money is a sign of a healthy economy. While real estate blocks circulation in hopes of higher returns in the future. In this case, people may expect up to 18% compound return in the past two years, according to Zameen.com. At the same time, the demand for housing remains dwindling due to rising prices. The situation resembles the 2008 housing crisis, with little precaution from the government.
On the other hand, money that can be used for more productive and lucrative industries stays stagnant. This raises the opportunity cost of real estate to great heights. The real estate and construction market’s golden days have provided a playing ground for all economic agents, including the government. Many have criticized taxation on the real estate industry, claiming its importance in the economy and apparent discouragement due to taxation.
In conclusion, the government needs to make other kinds of investments as accessible as real estate. However, Pakistan ranking 108th in the Doing Business report 2020, makes the road ahead arduous.
GRAPHICS OF THE DAY
Real Estate Investment Trust (REIT) grew by 35% during 2022 compared to 2021
Labour force employed in the construction sector of Pakistan
INSTAGRAM POST
SECP company registration October 2022 — www.instagram.com
⚫ No. of new companies incorporated by SECP in October 2022 was 2,361 taking the total no. of registered companies to 180,996
⚫ Real estate and construction sector took the lead with the incorporation of 432 companies followed by IT 355 and Trading with 279
⚫ No. of new companies registered increased by 17% compared to the same period last year (October 2021)
View more
What Else We’re Reading
Govt initiates study for long-term development plan (Dawn)
Business community hails gas rationing for domestic consumers (Business Recorder)
Advertise With Us — macropakistani.com
Improve brand awareness for your startup/business or amplify the reach of your ongoing marketing campaigns by promoting them on Macro Pakistani. We have previously done successful paid collaborations with:
Send an email to hello@macropakistani.com
Learn more:
About Us: Macro Pakistani is a data-driven research platform that aims to provide a basic understanding of Pakistan’s economy. If you have an interest in contemporary news but are currently overburdened with sensationalism and specialized vocabulary, we are the platform for you.
How are we doing? Please send us any questions, comments or suggestions by replying to this email.