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Real Estate Transparency in Pakistan: Addressing Regulatory Challenges and Market Growth

The PropTech Convention ’24 recently hosted a panel discussion on Real Estate Transparency in Pakistan. The session featured Mr. Hasan Nadeem (Moderator), Mr. Johar Iqbal, Mr. M. Rehman, Mr. Asif Abdul Karim, Mr. Irfan Alam, and Mr. Ali Makhdoom. They discussed regulatory challenges, market reforms, digital transformation, and government policies shaping the sector’s future.

Regulatory Challenges and the Need for Transparency

Pakistan’s real estate sector struggles with lack of transparency in property dealings, taxation, and approvals. The panelists pointed out that recent FBR property valuation changes caused transaction delays. As a result, registry offices halted operations, affecting investors and buyers.

The Federal Board of Revenue (FBR) determines property values. However, inconsistent policies create confusion and slow market activity. Panelists stressed the need for clearer guidelines and better consultation with real estate associations. A streamlined taxation process would help ensure stability and investor confidence.

PropTech’s Role in Property Transactions

With real estate digitalization on the rise, PropTech solutions are making processes faster and more transparent. The panelists emphasized how online property verification, automated valuation models, and blockchain transactions reduce fraud and delays.

Some progress has already been made. Karachi has introduced e-stamping and digital property transfers, reducing corruption and inefficiencies. However, wider adoption is still needed. Government support and stakeholder cooperation can accelerate digital transformation in Pakistan’s real estate sector.

Impact of Valuation and Tax Policies on the Market

Frequent changes in property valuation create uncertainty. The panelists explained that FBR’s increased valuation rates have made financial planning harder for developers and investors.

Earlier, Deputy Commissioner (DC) rates determined property values. However, since 2016, FBR’s valuation system replaced them, raising official property prices. While aimed at curbing tax evasion, it also increased the tax burden on buyers and sellers.

Karachi’s real estate representatives met FBR officials in Islamabad to discuss these issues. They successfully corrected valuation errors, allowing market activity to resume. This case highlights the importance of stakeholder involvement in policymaking.

The Role of Government and Real Estate Associations

Pakistan’s real estate sector supports over 40 allied industries, including cement, steel, and construction services. Despite its importance, policy inconsistencies continue to hurt investment.

Panelists stressed the need for long-term policies that encourage stability and investor trust. They cited Dubai’s real estate market as a model. Dubai’s consistent regulations and incentives have driven sustained growth. In contrast, Pakistan faces frequent policy changes that discourage investment.

Real estate associations in DHA, Clifton, North Nazimabad, and Scheme 33 are pushing for market-friendly reforms. Their efforts have improved documentation processes, infrastructure planning, and coordination with tax authorities.

Infrastructure Development and Its Effect on Property Values

Infrastructure directly affects property values. The panelists discussed how projects like the Malir Expressway and K-IV water supply are driving demand in Karachi’s real estate market.

However, delays in government-backed projects create price instability. Developers and investors depend on timely completion of roads, sewage systems, and utilities. The panel recommended better coordination between government and developers to align land use planning with infrastructure projects.

Addressing Housing Shortages and Affordable Development

Pakistan faces a housing shortage of nearly 10 million units. Cities like Karachi need at least 600,000 new homes annually. The panelists urged government support for affordable housing, including reduced taxes, quicker approvals, and incentives for developers.

One challenge is land encroachment and fraud in areas managed by the Malir Development Authority (MDA). Buyers often face legal uncertainties due to disputed land titles and unauthorized developments. A centralized digital property registry could help solve these issues.

Conclusion: A Call for Greater Collaboration

The PropTech Convention ’24 discussion emphasized the need for transparency, regulatory stability, and digital transformation. The panelists agreed that collaboration between government, real estate associations, and technology providers is crucial for sustainable growth.

Key takeaways from the session included:

  • The need for clear and stable property valuation policies.
  • Expanding PropTech solutions to boost real estate transparency.
  • Stronger partnerships between real estate associations and policymakers.
  • Prioritizing infrastructure development to support market growth.
  • Encouraging affordable housing initiatives with better regulations.

With the right reforms and technology, Pakistan’s real estate sector can become more transparent, efficient, and investor-friendly. The PropTech Convention continues to drive meaningful discussions and industry progress

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