ISLAMABAD (ABC) — Amid the current economic challenges, uncertainties and additional taxes have hindered investment in the real estate sector. However, the sector has remained a crucial driver of economic activity in the country over the last two decades.
Talking to WealthPK, Khawaja Umair Mumtaz, Marketing Head of Rawaha Real Estate and Builders, emphasized that despite being a preferred investment avenue for Pakistanis globally, the sector faced unprecedented challenges in 2023.
Pakistan’s real estate market is highly sensitive to both domestic and global economic conditions. Fluctuations in the GDP growth, inflation and interest rates have significantly impacted the property prices and demand.
Additionally, changes in government policies, such as tax reforms and regulatory measures, have a profound effect on the market dynamics.
He said after the IMF agreement, the government backed down on its promise to provide incentives to the real estate industry.
Furthermore, the facilities previously available to overseas Pakistanis, such as exemptions in real estate sector investments linked to remittances, have also been withdrawn.
Umair noted that there had been increases in the rates of withholding tax (advance tax on sale and purchase of immovable property, with the withholding tax ratio for filers [of income tax returns] raised from 2% to 3%.
He highlighted that the escalation in taxes on property sales and purchases didn’t solely affect the real estate agents but also imposed additional financial burdens on the general public through heightened taxation costs on property transactions.
Umair emphasized that the added taxes effectively discouraged investment in the sector, impacting not only real estate professionals but also builders, developers, and clients.
He emphasized the need for real estate investors to adopt a proactive approach to navigate market fluctuations. This involves conducting a thorough market research, staying informed about the macroeconomic trends, and diversifying investment portfolios to mitigate risk.
Talking to WealthPK, Official Coordinator of Islamabad Estate Agents Association Nawaz Basra emphasized the need to abolish unfair taxes, such as the seven-E tax, from the real estate sector.
He asserted that the real estate industry held the key to revitalizing the country’s economy and providing a solution to the current challenges.
Basra highlighted the real estate sector’s potential to attract billions of dollars in direct investments and advocated for a partnership between the government and private sector to bring about a revolution in this industry.
He suggested that without engaging with the stakeholders, positive outcomes from decisions were unlikely to be achieved.
Basra further stressed that the government must prioritize the real estate sector and demonstrate trust in its potential.
With an estimated shortage of one million houses in Pakistan and a growing population, formal attention and support from the government are essential for addressing the housing needs and fostering economic growth.