Real Estate Challenges Faced By Pakistan in 2022
Pakistan is a developing country with lots of potential in the real estate sector, but at the same time, there are several challenges that the real industry has to face.
Scams, improper documentation, and lack of digitalisation permit the real estate industry to face severe challenges. Different factors affect the real estate industry.
This blog will discuss the factors that challenge the real estate industry.
Competitive Market
In the past few years, the real estate market has become very competitive; many real estate developers and builders have emerged and shown a keen interest in the industry, consequently giving rise to operational and sales costs.
As operational and sales costs have increased, people find it challenging to find an affordable entity. However, the increased competition in the real estate industry has some positive impacts, like improving the quality of construction and development. At the same time, it harms the buyers and investors as they find the prices to be very high.
Elevated Inflation Rate
Although inflation has been a constant issue for our country, in the past five years, inflation has surpassed all the previous records posing its impacts on all major industries, including real estate.
Although inflation has been a constant issue for our country, in the past five years, inflation has surpassed all the previous records posing its impacts on all major industries, including real estate.
Interest Rate
The interest rate is always very critical as most businesses and even the real estate industry are highly dependent upon it.
Although the interest rate has decreased from 11.10% in 2021 to 9.75% in 2022, it lies in the upper limit. It's tough to meet the loan requirements when the interest rate is high, consequently causing a decline in the real estate industry as most developers and contractors are highly dependent upon it.
Non-Flexible FBR Rules and Regulations
The strict and non-flexible FBR rules are one of the biggest challenges for the real estate industry in Pakistan. From one angle, it sounds positive to avoid tax robbery, but at the same time, these sets of rules are limiting the growth of the Real Estate Industry. This growth is directly linked with the country's growth; hence the rules must be flexible enough to allow free growth of the real estate industry.
Economic Situation of the Country
The country's economic state is one of the most critical factors that can alter the course of the real estate industry. A better and stable economic condition will attract investors and foreigners to invest in real estate, as a stable economic condition ceases the chances of loss.
On the other hand, if the country's economic situation is unstable, the investor won't be putting their money at stake, and considering the risk factor, the investor will even try to pull back the money that had already been invested. This will negatively affect the real estate industry resulting in the decline of the industry.
Lack of Digitalisation
There is a gap between real estate and technology in Pakistan; the patwari system and handbook registration system is still being carried out, which is an old school concept and has much room for errors and scams.
All the documentation systems must be digitised to ensure a foolproof documentation system, making it very transparent and reliable.
The Influence of Mafia's
In Pakistan, the influence of land mafias in real estate is an issue that can't be ignored. A person buys a property and it is illegally obtained by the land mafias with the fear and power they depict. Even if a case is filed against them, they have such an influence that they can even mislead the courts and judges. Therefore in a place or area where land mafias are powerful, people avoid investing, consequently posing a downfall in the real estate industry.
If we go through the past statistics, land mafias are so powerful that they can even take the lives of people hindered in their way. Henceforth, most people avoid clashing with them and choose not to invest instead.
In Pakistan, the influence of land mafias in real estate is an issue that can't be ignored. A person buys a property and it is illegally obtained by the land mafias with the fear and power they depict. Even if a case is filed against them, they have such an influence that they can even mislead the courts and judges. Therefore in a place or area where land mafias are powerful, people avoid investing, consequently posing a downfall in the real estate industry.
Lack of Awareness
The lack of awareness among a noticeable part of the nation makes it easy for scammers to drag people into their web. People are usually unaware of the consequences and invest without proper research resulting in some severe loss posing a bad image of the real estate industry.
The solution to the Rising Challenges of Real Estate
The government will have to take some extraordinary measures to guard the country's real estate industry. The government's topmost priority should be to control the inflation rate as it has adverse effects on the real estate industry.
FBR strict laws and regulations must be revised to set free people in buying and selling; vast amounts of taxes imposed on while buying and selling should also be revised to control the prices of the real estate market.
Government must realise the influence of land mafias in real estate, heavy fines and punishments must be imposed on the people responsible for hijacking lands and properties of other people.
Lack of digitalisation is also the root cause of many problems and challenges associated with the real estate industry; the improper and handwritten documents and registrations along with the patwari system should no more be the part of real estate, every document and registration should be digitalised to eliminate the ambiguities and scams involved in the industry.
Conclusion
In short, every problem and challenge mentioned above has a particular solution. Considering the importance of the real estate industry, the government must take steps to make the real estate industry robust, affordable and accessible.
