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Why investors are ditching Pakistan Real Estate

Why investors are ditching Pakistan Real Estate

In the last decade Pakistan real estate sector performed exceptionally well as property prices doubled approximately after every five years. This abnormal growth was due to the huge capital inflow in real estate. But now prices are cooling down across the country as things have changed. The year 2019 is a bad omen for reality sector as it is hard to find investors in the market. Here’s why investors are ditching Pakistan Real Estate.

Real Estate Scams

According to NAB there are thousands of illegal housing schemes in Pakistan. People have lost their life savings due to widespread real estate scams. Even frauds have been reported in well known housing schemes. Gwadar real estate frauds are the talk of every town as developers sold out the societies without having land. Due to these frauds investors are now very cautious. Even many have diverted their investments to other sectors.

High Interest Rates

The increase or decrease in interest rate has huge impact on real estate. Low interest rate increases the investment in reality sector whereas high interest rate decreases the capital inflow. Pakistani interest rate now stands at 10.25%. The high interest rate has declined the property investments. This is because people are getting more profits on fixed deposits from banks. The capital flight from real estate to banks is the major cause of property price decline.

New Property Laws

Pakistani Government has introduced many property laws in the last budget. According to the new property laws, firstly non-filers can’t buy property worth more than 5 Million PKR. Secondly foreign Pakistanis have to send money within 60 days before the property transfer. Thirdly registration authorities will be fined if they process the files of non-filers. These laws have diverted the investments away from real estate.

Property Valuation Rate Increase

On 1st February 2019 FBR raised the property valuation rates in 20 cities across Pakistan. The rate increase has made the real estate transactions expensive due to which volume has decreased. The day trading has almost ceased. Property valuation rate rise has slowed the market. Now only genuine buyers are purchasing properties whereas investors are moving to other sectors.

Black Money Crackdown

Real estate sector is generally considered as the safe heaven to park the illegal money. But things are changing now as buyers have to provide the source of income. Pakistani reality sector that once thrived on black money is now in decline. People can’t hoard properties beyond their incomes because NAB is acquiring about the income source. Due to the ruthless accountability, investors with black money are afraid of losing money.

Pakistan Real Estate Market Watch

Pakistan Property Market is almost dead as there are very few buyers in the market with white money. Without black money investments, Dubai property prices have declined by 75%. Same is happening in Pakistan as market is adjusting to the new purchasing power of buyers with white-money. Due to low transactions many property dealers have closed their offices. Realtors claim that if property laws are not changed, real estate prices will fall by 40% in 2019.

FBR Increase Property Valuation Rates in 20 Cities


  1. muhamamd azeem uddin

    on   said 

    Dear Malik sahab,

    we are seeing their is LOT OF LAWS regarding property , and it is beyond to understand which one is right one.
    kindly read the artilce and comments please.:

    if i talk about practical real esate prices then at this moment their is no downward trend at all.

  2. Shaheen ali

    on   said 

    Benami Act enforced by government. How it will impact Pakistan Real Estate Market?

    As published in the Nation;
    Please find the link.
    Govt to confiscate Benami assets, bank accounts

    Or here is the complete article:

    The Federal Board of Revenue (FBR) yesterday notified rules of Benami Transaction (Prohibition) Act 2017 that will enable the government to confiscate all assets and bank accounts kept in name of others in a bid to evade taxes.

    The last PML-N government had approved the Benami Act in January 2017 and it took two years to make it operational. This is a major step to plug loopholes to avoid payment of taxes in Pakistan. The enforcement of Benami Act will enable the government to confiscate all assets and bank accounts kept in name of others in a bid to evade taxes.

    Under the rules, the government has announced reward for whistleblowers. The amount of reward for detecting and confiscation of Benami property worth Rs2 million or less would be five percent of the price of Benami property. Similarly, the amount of reward would be Rs100,000 plus four percent of the price of Benami property after detection and confiscation of property worth more than Rs2 million or less than Rs5 million. Furthermore, on detecting and confiscation of Benami property worth over Rs5 million, the reward amount would be Rs220,000 plus three percent of the price of the Benami property in excess of Rs5 million.

    According to rules, the FBR may by an order assign any commissioner/deputy commissioner/assistant commissioner Inland Revenue to exercise the powers and perform the functions of approving authority under the provisions of the act and these rules. Secretary Revenue Division will forward a panel of suitable officers to the federal government who are qualified for the chairperson and members of the adjudicating authority.

    According to rules, when an order of confiscation of property will be made, the Adjudicating Authority will send a copy of the order to the approving authority. The approving authority will forthwith direct the administrator to proceed to take any or all steps. The approving authority will also issue notice to the concerned authority of the federal government or a provincial government or a local body or an authority or any person or officer who is responsible for recording the registration of any property or maintaining its record of ownership, as the case may be, having jurisdiction for the purposes of registration of such immovable property, intimating that the property has been confiscated under the act.

    The approving authority will arrange a copy of the notice at some conspicuous part of the immovable property for the benefit of general public mentioning clearly therein English and in vernacular language that the property has been confiscated under the act and vests absolutely in the federal government.

    The authority will direct the administrator to proceed to take any or all steps mentioned in this sub-rule. He will forthwith issue a notice to the authority or person having the custody of such movable property informing that the properties have been confiscated under the act. He will sell the property, if the property is liable to speedy and natural decay or the expenses for maintenance are likely to exceed its value with the written approval of concerned adjudicating authority and deposit the sale proceeds in the nearest government treasury or branch of State Bank of Pakistan or federal treasury or any branch of National Bank of Pakistan.

    Under the rules, the administrator shall at the time of receiving the confiscated property ensure the proper identification of such property with the reference to its particular mention in the order made under sub section 1 of section 22. The administrator may, with permission of approving authority establish one or more warehouses for safe keeping of attached and confiscated movable properties.

    An appeal to the Federal Appellate Tribunal under sub section 1 of section 44 shall be filed in the form as specified in the part 3 of the first schedule to these rules. The form under sub rule (1) shall set forth concisely and under district head the ground of objections to the other appealed against and such grounds shall be numbered consecutively and shall specify the address of service at which notice or other proposes of Federal Appellate Tribunal may be served on the appellant and the date on which the order appealed against was served on the appellant.

    • Shaheen Ali
      There are two important things to consider;

      “The Federal Board of Revenue (FBR) has notified the rules of Benami Transaction (Prohibition) Act 2017 that will enable the government to confiscate all assets and bank accounts kept in name of others in a bid to evade taxes”.

      Whistle blowers to get 5% of property value in reward on Benami property worth Rs 2 Million or less, Rs 0.1 Million plus 4% on property valuing between Rs 2-5 Million; and Rs 0.22 Million plus 3% on assets worth over Rs 5 Million”.

      In simple word all properties and accounts held on other name will be confiscated by the government.

      BENAMI PROPERTIES are mostly bought will illegal money. So this will totally end this practice. Overheated property market of Pakistan is due to black money. As now no one can buy property with black money so prices will cool down.

      MANY PEOPLE REMEMBER MY WORDS, “Pakistan is heading towards a Dubai Style Property Price Crash”.
      At that time most people didn’t agree. Now I feel due to the recent laws that Pakistan Property Crash will make the Dubai Property Market like a Spring. In other words Pakistani Real Estate Crash will be even worst that of Dubai Property Crash.


      Properties worth 5-10 million will have good demand because of the affordability of people with white money.
      Properties worth more than 10 Million PKR will see big price crash as its already hard to find buyers with white money.




  3. Iftikhar

    on   said 

    Hassan, I acknowledge and second your opinion about present state of property market described in an excellent way. I further it, by discussing potential of future property market and how much it lag by highlighting two aspects:
    1- Availability and Generation of black money: Here in our country till date no significant and effective legal and administrative steps are being taken to stop creation of black money. NAB and FIA are uncovering past bad deals hence in that way it is not possible to address root cause that is creation of black money. Let we see how black money is created,
    a) Smuggling, no legal and economically hard hitting steps are being taken. Markets items reveal smuggling as it was.
    b) Wrong Invoicing, People are importing high value items but prepare invoices of low cost items and scrap. Containers are being cleared as was in the past.
    c) Bribes, No change in working of our municipal, legal,import export, law enforcement, revenue departments ect
    d) Kickback) Have we all observed any change in the legal framework which guides to preparation and execution of contracts,yet not.

    The point is made that black money is available and it will remain available. Now the question arises about the avenues avaliable for its investment. I name few : Stocks, Real estate, SMEs, Banks, LS Manufacturing, Gold and Currencies. Analysis of each investment type is not possible here but I conclude by considering the two points ¡.practical difficulties ¡¡.blackmoney hoaders capabilities, real estate will remain easy and safe way for investment for them one way or the other. Potential will remain. A new amnesty will give new life to black money hoaders.

    2. Hard Crash like Dubai is Ruled Out:
    a) In our country we cherish owning of properties. Irrespective of its impacts on owner’s life, we bear hunger but strive for good house.
    b)Demand of houses is increasing with each passing day
    c)Dubai businesses were impacted by heavy decrease in crude oil prices. Here in Pakistan it is not the case
    d)Holding power by and large will remain intact for few more years (few exceptions) as most people in property business had lucrative earrings from 2012 to 2016
    e)Remittances are increasing especially from Europe and USA
    f)We announce housing for millions but cannot develop few sectors in country’s Capital in decades for salaried personnel.ect ect

  4. Ahsan

    on   said 

    Property market in Pakistan is highly inflated to the income of average Pakistani…

    There are few type of investors .. Don’t get me wrong not all property owners are corrupt and majority are overseas investors, legit businessman, employees or investing their inheritance etc.. this is the only small sample of buyers..

    as there is no credit system in Pakistan most properties brought on cash and with mostly black money..

    Rental yield on extremely expensive property is crap maybe about 2 to 3% a year..and only way investors do benefit is flip flopping properties and making capital gains so the corrupts keep getting richer and richer.

    For example city like Peshawar which has nothing much to offer (economy wise) has 3 Marla plot for 1 core that is in residential not commercial area and about 40 minutes drive from main city.

    Same in Karachi, Lahore, Islamabad…

    90% of population earn less than a million pkr a year with large families and unnecessary expansive cultural traditions. People hardly save any money to buy a house so renters are increasing specially metropolitan areas.

    I thought PTI will investigate and seize corrupt property owners and majority will exit but its not changing. Investment in property is also not good for any country unless its based on credit where banks and government is making money by lending. In Pakistan gov is only making money on tax and transfer fee etc

    What are your thoughts on this.. looking at prices just make me not invest or buy anything in Pakistan

  5. Hasan

    on   said 

    It’s difficult to generalize on how market is doing in absence of real, broad-based, publicly available data on deals. So one is forced to rely on personal experiences garnered from own surroundings.

    For one thing, the ‘market’ is made up of multiple segments that could be quite dissimilar. It’s not like a regular cloth market or jewelry market where prices are fairly uniform for a given quality or texture. In real estate, two houses even of similar age & quality, that too within the same block, could have drastically different prices. Why? Because owners have different temperaments & holding powers. Quite different from cloth & jewelry retailers who do not quite have an emotional attachment with their products nor are they selling items once a decade. Theirs is a daily turnover business based on commonly available commodities. Hence, there exists uniformity in prices of different shops in a ‘market’.

    Having said that, we shall still try to decipher the property ‘market’ as if it’s one entity.

    And we are further going to divide it into two broad segments for simplicity:

    1/ Properties of value under Rs. 50 lacs

    2/ Properties of value around Rs. 25 crores

    These two ends are behaving like a two-headed snake with each head trying to go in opposite direction.

    Properties with values of Rs.20 lacs, 30 lacs, 40 lacs, or even 50 lacs are doing a roaring trade in settled areas of Karachi. The moment one buys a property in a nice & cosy little building in a bustling area, he gets an offer that is a couple of lacs higher than purchase price. Almost like clockwork. Quite a challenge even coming across available apartments.

    The other end is personified by DHA-Karachi with magnificent & vacant mansions gathering dust, all equipped with a chowkidar each to ward off mosquitoes & the like. No takers there for well over a year and in some cases several years. Many owners do have holding power but it’s not a nice feeling to have so much money stuck, all the while interest rates shooting up further escalating opportunity cost of holding such properties & not being able to sell at a ‘reasonable’ price.

    Most of these DHA owners have become mentally anchored to high values that had their foundation on black money (80 – 90% of deals). Profits of Rs.5 crores or higher per deal were the norm.

    And then the music stopped.

    Why that happened doesn’t really matter now. Main thing is that it has happened and those glory days are long gone.

    Now they cannot sell even to recover investment cost, let alone make profits worth crores. Whether they sell or not, they are making losses constantly. To give an example, a gentleman trying to sell a house for around Rs. 20 crores is making a loss of around Rs. 80,000. Daily.

    Another owner simply cannot comprehend why there are no appropriate offers for his reasonably maintained 1000 square yards house in prime area of DHA Phase 6. That house has been in the market for a long time. Many people, including companies, have come to see it. Yet, there are no offers. After months & months of this activity, brokers finally told him to lower asking price by 30%! But that’s not psychologically palatable since he remembers situation of 2016 or so when people used to make stellar offers.

    Also compounding the problem is that this owner simply cannot accept black money & wants the deal entirely in white. We all know white money was not the main driver of high prices all these years. But an individual owner finds it difficult to digest that the real value (based on white money) of his house is far, far lower – perhaps as low as 50% or half – of the offers they used to have back in 2016.

    Therefore, how is it possible for an individual owner to suddenly come to terms with the prospect that his Rs.20 crore mansion may have a real value of Rs. 10-12 crores, or a Rs. 15 crore house might actually have a value of Rs.8-9 crores. That’s the magnitude of distortion that abundance of black money in high value property caused over the years.

    The gap is too wide for the bottom to fall out (i.e. asking prices to fall by 50%). Moderate fall & then stagnation for a number of years is more likely. But of course that amounts to the same thing. From an owner’s point of view, there’s no way to avoid losses – whether by selling now at steep discounts or by holding it for several years & then selling at near asking price. It’s approximately the same loss; only psychologically different. This too then, is akin to a ‘crash’ or at least a slow bleed.

    For now they (sellers) are sitting dormant & holding on to high values for a number of reasons like:

    a/ Hope against all odds that a deal shall materialize soon

    b / They do not understand the concept of time value of money or opportunity cost of not selling for prolonged periods

    c / They have holding power and do not really care about selling right now

    d / They cannot risk becoming visible to NAB, FBR, FIA, etc by striking a high-value deal as that would raise questions as to how they managed to build that property in first place given their sheer lack of credible sources of income.

    So this high end of the market is where the slow bleed is taking place. Very different from the other end (properties below Rs.5 million) that show brisk activity.

    Hence, it all depends on one’s definition of crash whether it has occurred or not. No, it hasn’t. And yes, it has. Both opinions are correct.

    • Hasan
      Your detailed analysis and personal experience is much appreciated. I would like to add few words;


      Historic Record low interest rate in 2016 = 5.75% SECOND PROPERTY BOOM
      Interest Rate in 2019 = 10.25% SECOND PROPERTY CRASH


      Firstly, realtors are closing their offices to record low deals. Many agents who turned investors have lost their life savings.
      Secondly, there is filer buyer crisis in the market as hard to find a filer buyer
      Thirdly, property prices are decreasing more in areas will low demand but high speculation: Markets of BAHRIA / DHA are almost dead
      Fourthly, new laws by governments have diverted the money from real estate to other sectors. It looks government will make all laws necessary to divert dead capital from property sector to industries.


      Most investors in market are of the view that property prices just go up. They should remember that property prices in DUBAI have already dropped by 75%. Such a crash is also possible in PAKISTAN as abnormal prices can’t stay higher without black money.


      Government has imposed restrictions on the development of new housing schemes on agricultural land. This has crashed the prices for big lots. In Sue-i-Asal Lahore (road connecting Ferozepur Rd and Raiwind Rd) 1 acre land price was 8 crore n 2016 now hard to find buyer at 3 crore.


      NAB arrests real estate agent for over Rs1bn graft;

      Media persons, real estate tycoons in FBR’s hunt list;

    • Jaffer Ali

      on   said 

      Dear Hasan,
      You have posted very fantastic report, showing the real and true picture of real estate.
      Thanks for sharing.
      Jaffer Ali

    • Mirza Nabeel

      on   said 

      Dear Hassan,

      Next questions is buying decision. What about those who want to invest ?

      And what about those who want to have own house ?

      Based on above analysis, I think those who need a small house priced around 10 million. Those people should not wait. right?

      While those who want big house 20 million + should wait. right ?

      Suggestions are appreciated.

  6. rizwan

    on   said 

    Pakistan planning amnesty scheme to mobilize undocumented money
    By Correspondent ( 05-Mar-2019
    KARACHI: PTI government is planning an amnesty scheme to bring the undocumented money, present in the country, into the industrial sector rather than boosting revenue collection.

    It may be mentioned here the last PML-N government had announced a scheme to allow people to declare their hidden domestic and offshore assets amid a drive against tax evasion by the Organisation for Economic Cooperation and Development (OECD). The revenue body was able to collect only Rs120 billion.

    To recall, IMF had opposed amnesty scheme introduced in Pakistan and said that such schemes failed to achieve their intended objectives. “Experience from Pakistan and other countries with repeated tax amnesties shows that these often fail to achieve their intended objectives while potentially undermining the perception of fairness of the tax system and future efforts to improve tax compliance,” IMF’s mission chief for Pakistan Herald Finger had said.

    President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Daru Khan Achakzai referring to the meeting with Prime Minister Imran Khan said proposals had been invited from the business community to make the amnesty scheme productive.

    “Government wants rapid industrialization and export-led growth and for this purpose undocumented money present in the country needs to be mobilized into the industrial sector. A scheme is now being planned, which is not aimed at revenue collection and government does not even want this money to go into the real estate sector either,” Achakzai said speaking at a press conference on Tuesday.

    Although there are no authentic or official numbers, but it is estimated that country’s undocumented economy is no less than the documented one.

    Senior Vice President FPCCI Mirza Ikhtiyar Baig said FPCCI had invited recommendations from its member trade bodies and a comprehensive proposal would be submitted to the government soon.

    FPCCI also expressed reservations over the conditions proposed by International Monetary Fund (IMF) for a $12 billion bailout package saying if the conditions were accepted it would be disastrous for country’s industrial and export sectors.

    “Government announced to increase electricity tariff by 25 percent over next 4 months increasing from Rs12.98/unit to Rs16.24/unit to bring the power sector losses to zero from July 01 2019,” Baig said adding if implemented it would be ‘suicidal’ for the industry.

    He also criticized IMF’s conditions of increasing sales tax, increasing policy rates and further depreciation in the currency.

    Chairman United Businessmen Group (UBG) S.M Muneer criticized the hike in gas and electricity prices saying the government did not have a clear strategy to increase industrialization and exports.

    “Over Rs400 billion of refund claims are stuck up causing severe liquidity crunch for the export oriented industry. Finance Minister had announced in the mini-budget that discountable promissory notes would be issued to settle Rs80 billion worth of claims, but the noted have not been issued as yet,” he added.

    President FPCCI informed that Prime Minister Imran Khan will be visiting China to hold an investment conference in the last week of April. “A large number of businessmen will accompany PM and will hold business-to-business meetings with their Chinese counterparts.”

      • RIZWAN
        I had said earlier, ‘one way or other golden days of real estate sector are over’.
        If such amnesty scheme is offered, it will crash property prices beyond imagination. Even more severe crash than DUBAI where property prices have decreased by 75%.

    • RIZWAN
      If we consider the last mini budget Jan 2019,
      Government provided no relief for reality sector but auto industry was honored. Government is after job creating sectors. So dead investments of real estate will be diverted towards industry.
      The capital outflow will crash the reality sector.

  7. Hamid umar

    on   said 

    Can any please tell me what is the future of ghauri town Islamabad? Will they get NOC? Will CDA overtake or something or regularise ghauri?

  8. Mirza Nabeel

    on   said 

    Please Please Sir!

    All the claims are not true. Don’t show fake picture.

    I have been visiting market on daily basis.. Giving offers but have not bought anything.

    1. Yes rate are a bit low in some societies which are away from city. Only few
    2. Rates are slowly increasing in city. Like Johar Town and its neighboring areas. Like Dha Phase 5 and its neighborhood.

    No one should expect price decrease in populated areas. Mark my words. I have missed 4/5 good locations. Only because my offer was low.

    • rizwan

      on   said 

      when u go out to sell your property ul get the real picture …there are no buyer in market…. ppl r not willing to pay these artificial hiked prices

    • Mirza Nabeel

      on   said 

      Sir, in Johar town lahore. Good location properties are selling.

      I’m telling you my experience. I gave offer with token. Later they sold at higher margin. I faced this situation thrice in last one month.

      This is not a calculation. Its my real experience. Even i confirmed from different source also. Those properties are sold out.

      In societies away from city. Like Lake city, bahria, NFC 2 very less buyers. But in populated areas like PCSIR, Johar TOWN, abdalian etc. Property is going up!

      • rizwan

        on   said 


  9. Umer

    on   said 

    Who should we contact to buy property if this is really the case? Because talking to dealers would negate everything said above and while they agree that market is slow, prices are not low at all.

    • Umer
      This is a serious issue.
      Many dealers have closed office but others are trying hard to keep the prices intact.
      But prices are falling with every passing day.
      I have discussed the mater with dealers. All say if current property laws are not changed immediately, they see big price drop.

      • M ANWAR

        on   said 

        sir g, in actual, there is not price down,
        can u strengthen ur comments with data which that what were rates in year 2017, 2017, 2018 .
        I hope u will reply me

        • M ANWAR
          The plots selling for 255 LAC in DHA Phase 8 LHR selling now at 180 LAC.
          This is just one example. These trends can be found in all over Pakistan because its hard to find filer buyer especially for luxury real estate

        • Malik

          on   said 

          No data, always speculating from last 3 years, in normal business its part of game some where it drops a bit, and some where it gains depending on the maturity of location, surrounding changes and lot of other factors. prices are stagnant from last 2.5 yrs but no crash situation. in some societies it gained too like DHA Town 5 mrla plot is now 65-75 which was 55-65 2 yrs before . same is lakecity, and DHA Peshawar. Guy should provide last two yrs comparison of all major cities and societies to see the difference.

          • Muhammad azeem uddin

            on   said 

            Agreed your views. NO PRICE CRASH. I have seen price have gain 20% just last six months

          • Abdullah Idris

            on   said 

            Well, price has already crashed 25% provided one kept accounts it in $ terms. You are asking for data, you can go to and look at their price indexes. They have flattened over year, even though i believe as zameen is property portal and supports property dealers rather than investors so data is manipulated.
            One thing is guaranteed, we might not see big crash of property prices in rupee terms but we will surely see further drop in property prices in $ terms in next couple of years.

      • Jaffer Ali

        on   said 

        All over in Pakistan. Inflated prices, give me the reason why Pak property expenses than Japan, UK and USA? How many new industries we had created? Look at the reserves holding SB of Pak. Mostly corruption and black money invested in real estate. We lost Rupee value 25% in Jan 2019. I am agree with Malik Sahab, his analysis is very real and perfect. It is matter of time property will collapse and back to its real value.


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