Formalising real estate in Pakistan

The real estate sector holds eminent status in Pakistan. From an investment viewpoint, it has offered lucrative returns primarily due to appreciation in land value, while rental yields remained subdued, mostly below the country’s risk-free rate. On the economic level, the sector is linked to a number of ancillary industries like steel, cement, brick, sanitary, timber, and marble and has a sizable share of national employment. The demand for real estate has grown manifold, especially in urban centres like Karachi, Lahore, and Islamabad. This is partly due to a shortage of residential homes and apartments fueled by excessive rural-urban migration and a burgeoning population. Besides, the living conditions in older localities have become deplorable, which makes citizens seek better options in recently developed communities. The other major chunk comes from investors who wish to benefit from capital appreciation. However, despite being of such utmost significance, the sector continues to be largely informal, which results in a lack of transparency, price misinformation, and malpractices like illegal land occupation. Many people often fall prey to fraudulent schemes and end up losing their hard-earned wealth. Some further engage in lengthy litigation.