“Reviving Pakistan’s Real Estate: From Bahria Town’s Confidence Boost to Current Taxation Woes – A Plea for Government Intervention”
Until the beginning of the nineties, the property business was thriving in Pakistan, but its pace was like a snail. Most people preferred the new societies launched by the government over engaging in the property market, as there was widespread fraud and deceit in the private sector. Due to this, investors were hesitant to invest, and those interested in buying property were also skeptical, staying away from the private sector due to fear and suspicion.
In this scenario, in the early nineties, a person named Riaz launched a project called Bahria Town in Gwadar. While there were big talks and widespread discussions about it, those who invested in it did not face any fraud, gradually restoring confidence in developers. Hurdles such as objections from HEC (Higher Education Commission) were there, but it is a bitter reality that revitalizing trust in the real estate sector played a crucial role in introducing the latest residential facilities and elevating real estate to the status of an industry in Pakistan.
It is crucial to note that after this, several developers took an interest in building residential colonies, and numerous residential projects started in Pakistan. They gained control over their clients, strengthening the industry. DHA (Defence Housing Authority) is also a part of such projects. Consequently, the journey of real estate development continued, with the most significant progress seen during Pervez Musharraf’s era. With the influx of new investments, the property business began to flourish, leading to the construction of large residential and commercial projects.
During this time, Pakistan experienced a construction boom. Sand, cement, bricks, steel, and other materials were available at reasonable prices, and people could afford high-quality living standards with minimal investment. However, suddenly, an era of uncontrolled inflation began, resulting in a decline in the real estate market. Prices of sand, cement, bricks, steel, and all construction materials started rising every day. Not only that, as in the example mentioned earlier, the government also started imposing new taxes on the real estate sector, causing turmoil.
In this sequence, the government needs to come into the field, and the easy solution is to negotiate with the IMF (International Monetary Fund). However, it is essential to reduce taxes on construction materials immediately. Withholding tax and capital gains tax should also be reduced to the minimum level. Developers want to work, but they are also burdened by the onslaught of taxes. The tsunami of inflation has devastated the public’s pockets, and investors are also backing away. Developers, troubled, started transferring their capital to other businesses and countries.
Hence, it can be said that the real estate business in Pakistan has almost come to an end. Rather, it would be more appropriate to say that the real estate business has once again entered its infancy. The burden of taxes is the reason for this. In this regard, the government has to come forward, and the easiest solution is to increase the pangs of love with the IMF. But in the future, the government will benefit the most from it.
We urge our government to please save this sector from destruction. The livelihoods of millions of people are connected to this industry, especially during the pandemic. The government is also considering an increase in capital gains tax and withholding tax. If this happens, it will be the death knell for this industry. Please exercise caution and let us live.
