13/06/2021
Impact of Budget on Real Estate
Investors, Dealers & Realtors think that budget have no impact on real estate. But some facts are to be considering because directly or indirectly, budget 2021-22 has many positive impacts on real estate sector. I agree with Mr. Humayun who discussed the factors stated below:-
1. No new taxes on real estate sector as were imposed in 2019-20.
2. Reduction in DC rates on many areas in different cities will reduce the tax amount.
3. There will be a continuation of low cost loans for housing policy.
4. Real estate in Pakistan heavily depends on remittances, and an increase is expected in remittances for at least next 2 years.
5. Government is willing to remove WHT tax regime up to 40%. Any amendment afterwards, in application of section 236C (WHT Purchase of Property) and 236K (WHT on Sale of Property) will give real estate sector a boom.
6. Incentives from DHA Bahawalpur & Multan for development charges waiver off till December 2021.
7. Possibility of amnesty extension, although probability is 50% only but they will try to give further stimulus to construction industry.
8. Government has decided to start new housing projects under PHA.
9. Overseas Pakistanis’ income will increase due to rupee devaluation as compared to 2018.
10. Interest rate is still at 7%, and real interest rate is negative as per precedence, and seems to remain single digit as government wants to go towards growth, instead of financial tightening once again. So people will avoid bank deposits. This cash will go in real estate or stock exchange.
11. Government is going to abandon National Defense Savings, 25000 & 7500 denomination prize bonds, to start documentation of new name registered prize bonds on FATF pressure. This will cause almost 11 billion rupees to flow towards real estate or stock market.
13. All of above factors are increasing demand for real estate, but the supply of real estate investment options is limited. Means most of the genuine societies are more than 5 years of age. No new DHA, no new Bahria Town, no new CHSs.
14. Government is going to regularize majority of housing societies that are developed but not granted any NOC yet.
15. The real estate is our national investment avenue because people in general have lack of investment knowledge in stock exchange.
16. Lack of knowledge of investment in physical bullion gold. Hence, people buy gold from jewelers which is not much profitable.
17. Restrictions in purchasing of foreign currency, hence creating a hurdle in investing in foreign currency.
18. There are many more factors that can be analyzed such as DHA Lahore is going to announce possession in few blocks in phase 8 & 9. Ballot in DHA Gujranwala s due before December 2021. DHA Quetta is going to announce commercial Plots. Bahria Town is going to launch new Blocks in BTK BTR & BTL sooner. Furthermore, Bahria Peshawar is still in waiting because they are still in a phase to hire & train the employees there. Such individual events are also important in real estate sector.
We hope all these factors will keep on moving the real estate sector forward for next few years.
Regards,
Muhammad Ashraf Ali Khan.
