Real estate market in Pakistan along with its allied industries i.e., construction, housing, retail, rental, etc. is considered to have a pivotal role in overall economic development of the country. According to “Pakistan Economic Survey 2021-22”, the real estate market has contributed 9.6% shares in services and 5.6% shares in GDP[1] which is a huge contribution in the country’s economy. The statistics also highlights that the industry has seen a growth of 3.7% in the past year due to its positive economic contribution. This could be because real estate industry provides a reliable and sustainable source of income and is considered to be the best way for investing or saving money in any country. Despite having such economic potential, the industry fails to fully contribute in the country’s economic growth due to certain issues and challenges.
Effective real estate management system
Effective real estate management system is crucial to smoothly deal with real estate matters in a country. Most of the developed countries in the world have shifted on advanced I.T. based real estate management systems making it easy for them to deal with land transfers and payments ultimately posing a positive impact on economy. However, in Pakistan, there is still old “Patwar” system being used for dealing with most of the real estate matters which mostly rely on manual paper work posing several tangible and non-tangible risks on effective real estate management. Some of the risks include threat of fraudulent activities and improper money transactions while selling/purchasing of plots or other property. This ultimately impacts the economy at national level affecting the GDP.
The real estate matters are directly dealt by the board of revenue in the country responsible for monitoring and tax collection for each sale deed made for property. Because this tax collection is also done through old paper based adopted procedures, it affects the level of transparency for tax payments made against each property sold and there is a high chances of corruption activities to take place. This loop hole in the tax collection system poses potential threats to the overall economy of the country as there is no proper monitoring system to control and monitor the transactions made while property selling.
The real estate market index is a measure to analyse the performance of investment in real estate sector through showing the investment return in certain investment period. This index is used as a reference for decision making while investing in real estate market and to evaluate the result of investment done. Currently the Pakistan has no proper mean for sharing its property index with the national and international community shadowing its significance to more authentic investors. This also contributes in economic dilapidation of the country in terms of real estate as there are no proper means for attracting investors to invest in real estate sector of the country.
Formulation and implementation of real estate laws and policies is inevitable for running a secure and transparent real estate system in the country. For this purpose, many countries have developed separate authorities being real estate authorities for dealing with the real estate matters with strong legal backing, organization and policy framework. In Pakistan, no such authority exists in the country posing risk to real estate sector in terms of legal and policy backing. This has been impacting the record keeping efficiency of the country for real estate matters making the sector weak enough to be moulded in any form as per individual’s desires. This ultimately impacts the economical progression of the entire state because of the absence of policy framework even for real estate transactions. Thus, a real estate regulatory authority is inevitable for a secure and transparent real estate growth in the country.
Viewing the huge potential of real estate sector in the country’s economic growth, it is inevitable for the state actors to provide reliable and transparent resources ton deal with the real estate matters in the country. These could be in form of policy reforms or development of regulatory authorities i.e., Pakistan Real Estate Authority, etc. which can guarantee a sustainable growth of real estate sector. This will not only resolve the issues related to economy of Pakistan but will also help in dealing with other associated matters e.g., housing crisis, construction industry issues, etc.
Author:
Asad Ali Lodhi
PCATP Licensed Urban Planner
Associate Civil Engineer
