pakistan real estate

Will The New Government Prove Beneficial For Pakistan Real Estate?

On August 8, 2018 (Wednesday) the Islamabad Chamber of Commerce & Industry (ICCI) expressed its concerns by appealing the new government (in formation) to bring reforms in current taxation system. The reason to urge for taxation reforms in Pakistan was made for bringing a stability in national economy that has not shown any progress in past 6 months. In his talks with the Traders Welfare Association (TWA) in Gulberg, Islamabad the ICCI president Shaikh Amir Waheed asserted that the Pakistan Real Estate can prove a vital role in strengthening the national economy. But due to indirect taxes on different sectors and industries, the Pakistan real estate industry has been seeing some dark days. He stated that the accumulating taxes from different industries indirectly influence on Pakistan real estate industry and discourages the buyers.

Shaikh Amir Waheed (President ICCI) has made very valid points in his short interview and we hope the new government will work for the betterment of Pakistan real estate industry. To help you understand how these indirect taxes impact on the buyer’s decisions, we have gathered some interesting facts about how this whole ecosystem works.

  • One of the reasons for high property prices is that the country is dealing with different types of taxes in which GST, VAT, WHT and property taxes top the list. These all taxes influence the decision of a prospective buyer and holds him back from investing a property.


  • The VAT included into all sellable products also plays a vital role in price hikes. As well know that to make a property (of any nature), we need brick, mortar and so many other items. Due to a considerable percentage of VAT or GST, the prices of each item increases the construction cost of a property. This notion of increased prices impact on the prices of new properties that are ready to be sold but discourage the investors.


  • On the other hand, the general public is also dealing with the increased consumer goods prices. In such scenario, if a typical family decides to own a house and become a property owner from a tenant then they reconsider their decision. The connection between price hikes and purchasing power are affecting the Pakistan real estate industry in a negative manner and demand government’s attention to address the issue.


  • Even if we put aside all the taxes for a second and assume that construction material is in our reach then still the real estate is dealing with some more issues. The property taxes are on a verge to extract the ability to purchase from a typical citizen. The current property tax stands around 30% of total valuation of the property exceeding Rs.40 million threshold.

If the new government fails to eradicate the issues for Pakistan real estate then it is unlikely to see any positive changes in the industry. It is high time for the relevant departments to propose such policies that are in favor of Pakistan real estate industry, general public and other industries that are linked with the real estate industry so the National Economy can witness a considerable contribution from this sector.

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