Government is the ruling body of many countries around the world. After the end of a government’s term, a new government takes up the charge and forms new policies regarding all the sectors. Similarly, it develops reforms for the real estate sector as well. Real estate is an integral part of most economies. The Pakistani real estate market accounts for between $1-$1.5 trillion. The expectation is that Pakistani real estate market will bloom and grow exponentially. Let’s take a detailed look into the government policies and how they affect the real estate sector.
Government’s Focus on the Tourism Sector
The current Pakistani government is very invested in promoting its tourism sector. It is a significant factor affecting the Pakistani real estate market. Growing tourist attractions have helped the nation’s locals earn substantially. These attractions include sites such as Minar-e- Pakistan, Quaid’s Mazar as well as burgeoning housing societies that double as tourist attractions.
This ultimately contributes to the country’s GDP. The activity in the Pakistani real estate market is rising because of rental fees from the tourists, the prices of real estate assets in those areas rose significantly. The people want to invest more to secure long-term earnings. On the contrary, the real estate sector fears negligence. They think the government will spend more on tourism and allocate a low budget for the real estate sector.
Government Intervention in Housing Market Economics
Pakistan’s government is trying to put an effort to make provide people with fair housings. The name of the project initiated is Naya Pakistan Housing Program. This project is working on 7 cities, Sukkur, Gilgit, Islamabad, Muzaffarabad, Quetta, Swat, and Faisalabad. The aim is to provide low-cost 5 million houses to underprivileged classes in the next five years.
A non-filer is a person who doesn’t pay the tax to the government by the required date. The government of Pakistan considers them to be tax evaders and promises to take action against them. So, the government has imposed a ban on non-filers which stops them from purchasing a property. The non-filers have to get themselves registered to do so. The complex registration process has kept people from it. And real estate transactions have fallen because people don’t want to be in trouble. This is a great initiative by the government to regulate the Pakistani real estate market.
One of the examples of government policies that affect real estate is the rental laws. The rental laws of Pakistan allow the tenant and homeowner to set the rent fee among them. After that, they sign a rental agreement. The rent increases each year by 10%, or after every three years, it increases by 25%. It gives the homeowners the liberty to charge the rents according to their market. Not according to the government’s wish. Secondly, the increases are motivating as they are not investing in it but are getting income out of the house.
Pakistan has no standard wage rate. The provinces have the liberty to do that. It has been ranging from Rs. 15000– Rs. 17500 since 2017. So, the real estate companies in the Pakistani real estate market don’t fear the rise in cost because of their labor force. The real estate firms in Pakistan don’t experience labor deficiency because of government reforms.
Laws for Overseas Pakistanis
Since pm Imran Khan came to office, he has been quite vocal about encouraging overseas Pakistanis to invest back in their home country. It has helped him gain support from them. The government has established an Overseas Pakistani Foundation (OPF), which aims to provide social and economic welfare to overseas Pakistanis. This has had a fruitful impact on our economy especially with regards to the Pakistani real estate market. Along with this, it is trying to guide their investment back home. The recent report of Tribune has shown how overseas Pakistanis have increased the remittances to Pakistan. And most of that money is spent on real estate and housing.
Land Development Laws
These laws require people who want to develop lands into the housing societies to obtain NOC from the cities’ development authorities. For example, the Lahore Smart City has its NOC approved by LDA. Recently the Punjab government decided to fix a time for approvals of NOC. It means that people now will not have to wait for a long, long time. They can start the land development and conversion right off in the Pakistani real estate market.
The Prime Minister announced the allocation of an Rs.30 billion subsidy to Naya Pakistan. It encouraged individuals to invest in the construction of the program for Naya Pakistan. Plus, people taking loans to invest in the Pakistani real estate market will be given relaxations on the interest rates. The increasing investment shows how important is the role of government in housing and real estate development. There will be no inquiry about their sources of income. The government ordered the central and private banks to put their part in the industry’s growth.
In conclusion, Pakistan is primarily an agricultural country and is gradually trying to uplift its real estate sector. But it can’t direct the maximum of its resources in the Pakistani real estate market. If it does so, the country will experience economic growth for a while. It will lead to high inflation and overheat the economy.