Point to Ponder
Top Gear of Economy
The vital role this essential sector plays in economy boost-up
Emerging trends and global outlook
By: Samiullah Sami
Editor-in-Chief Tourism Scenario
Chinese entrepreneurs evinced keen interest in investing in Pakistan’s real estate market and contributing its expertise in high-rise buildings and the technology sector.
Real estate has always been the economy’s strongest sector and is known to bounce back after every shock. Despite the dismal situation, there is an upfront optimism especially in the case of Pakistan. The real estate sector has a higher economic importance than other sectors such as the automotive industry or the healthcare sector. In fact, it makes a major contribution to a country’s GDP. So the vital role real estate plays in boosting an economy can hardly be ignored or overemphasised.
The affordability of real estate and rental prices and changes in those prices has a direct impact on the wealth of property owners and tenants and their consumer spending. Therefore, the development of rents and property prices is not only followed closely by private households that wish to change their housing situation or plan to invest but also increasingly by the central banks. So the real estate investments play a major role for private and institutional investors.
Indeed real estate is one of the reliable and important investment types for individuals and institutions. Interest in the price appraisal of real estate has increased with the rapid development of real estate sector and its legal infrastructure in recent years.
The appraisal of real estate is the main principle for all businesses. Land and property are factors of production and the value of the land is dependent on the demand and supply for the product that is produced.
However, real estate has always been the economy’s strongest sector and is known to bounce back after every shock. Whenever the bubble bursts, the market finds its equilibrium due to the presence of high demand and an overall shortage of housing units. Yet, even now, despite the dismal situation there is an upfront optimism especially in the case of Pakistan.
Conversely, Pakistan’s real estate market has been in a slump over the last few years – maybe since 2011 ‑ for various reasons. That situation worsened by political instability. However, it is encouraging to note that the ongoing development of CPEC is set on showing quite good and healthy signs for the real estate sector in Pakistan. It now seems set to attract a huge chunk of international real estate investors.
Moreover, the imminent economic growth is also attracting entrepreneurs from neighbouring China. Recently a delegation of Chinese entrepreneurs, consisting of professionals from multiple fields like high rise construction, tourism, IT, mechanical manufacturing etc. visited the Islamabad Chamber of Commerce & Industry. They found strong potential in the market due to its expanding consumer base complemented by a very strategic location. Furthermore, they evinced a keen interest in investing in Pakistan’s real estate market and contributing its expertise in high-rise buildings and the technology sector. Of course, that would provide a much-needed boost to the real estate sector, making it stronger and more diversified.
So, obviously, as confidence returns to the real estate business the industry faces a number of fundamental shifts that will shape up its future. The Real Estate 2020 captures important trends in the industry and the impact they will have on real estate managers and the investment community. Key areas include the urbanization that is taking place as people cluster around the great cities of the world, the new real estate subsectors that are emerging to satisfy the needs caused by shifting demographics, and also the technological implications that need to be considered as companies think and go globally.
The real estate sector in Pakistan is growing and is an important sector of the economy. The accelerating rate of urbanization in the country requires urban planning and, hence, an effective management of the real estate market.
So we all know that real estate is the most lucrative, risk-averse and popular investment opportunity in Pakistan amongst retail and large investors. Everyone wants to invest small or large savings in real estate instead of starting or expanding a business. What will be the implications of this behaviour on employment opportunities for a huge size of existing and upcoming young labour force is yet to be understood?
Real estate and construction, together, account for approximately two per cent of Pakistan’s total Gross Domestic Product (GDP). Not only does it generate a high level of direct employment, the sector also stimulates demand in more than 250 ancillary sectors, including cement, steel, paint, brick, building materials and consumer durables, to name a few. A unique aspect of Pakistan’s real estate market is that the industry hits record highs and lows within a span of a few years. In Pakistan, however, when bullish trends are witnessed in the market, monthly growth rates of more than 10 per cent are recorded, which are unprecedented.
Political instability in Pakistan is deemed to be the root cause of all major problems. Yet, undeniably, like every other sector in Pakistan, property dealing too is regarded as not a very clean business though fairly due to some black sheep in the business. Some real estate agents, with their misconduct, have earned a bad name for themselves as well as the entire market where buyers and sellers very much doubt their credibility. The increasing mistrust of people, however, has worked well both for themselves and the real estate sectors as some modern realtors have begun to understand the need of telling the truth and staying honest in their dealings. While the situation is getting better, there is still room for a lot more improvement.
In fact, Pakistan’s real estate sector is a robust industry in itself that maintains a consistent demand throughout the year. Despite problems in general and the real estate sector in particular, Pakistan’s property market has been performing
SUB HEADINGS
Real estate has always been the economy’s strongest sector and is known to bounce back after every shock. Despite the dismal situation, there is an upfront optimism especially in the case of Pakistan.
It is encouraging to note that the ongoing development of CPEC is set on showing quite good and healthy signs for the real estate sector in Pakistan. It now seems set to attract a huge chunk of international real estate investors.
The real estate sector in Pakistan is growing and is an important sector of the economy. The accelerating rate of urbanization in the country requires urban planning and, hence, an effective management of the real estate market.
