Ultramodern high-rise and mid-rise buildings now dominate the skyline of major cities in Pakistan – a country where living in detached homes was once considered a sign of pride and prestige. The growing popularity of luxury residential towers and commercial skyscrapers has made it evident that the real estate sector in Pakistan is witnessing a major investment shift from plots to high-rise developments.
Over the past years, the number of mixed-use and residential buildings being proposed and constructed in densely populated metropolises has seen a sharp increase. These residential towers and skyscrapers not only boast an impressive façade but also offer modern amenities and facilities at par with international standards.
There are many reasons behind the rising demand for high-rise and mid-rise developments in Pakistan. Firstly, the rapid growth of population in urban centres has forced developers and investors to focus upwards. The scarcity of land and the subsequent rise in its prices are also the key factors behind the real estate investment shift from plots to high-rise buildings in the country. The government has also imposed restrictions on the horizontal expansion of major cities to prevent them from turning into urban sprawls, which is yet another factor that has contributed to this trend.
Since Zameen.com has always strived to provide its readers with the latest analysis of the real estate sector in Pakistan, it was about time we delved into the investment shift from plots to high-rise developments and its implications.
Growing Demand for Apartments and Houses in Pakistan
The demand for apartments and houses in Pakistan has grown dramatically in recent years. Just looking at the stats from the past two years would give you a clear picture of the shift in the real estate investment trend in the country.
The analysis of user data recorded on Zameen.com shows the demand for plots in the Islamabad Capital Territory dropped from 26% in 2018 to 21% in 2020. During the same period, the demand for apartments increased from 15% to 17% whereas the searches for houses in the region rose from 39% to 45%.
A similar real estate investment trend was observed in other parts of the country as well. For instance, the demand for plots in Punjab fell from 22% in 2018 to 20% in 2020 while the demand for apartments saw a hike from 15% to 17%. The demand for houses in Punjab also grew from 44% to 47%.
The property market in Sindh wasn’t much different. While the demand for plots decreased from 15% to 12% between 2018 and 2020, the popularity of apartments among prospective buyers rose from 23% to 25%. On the other hand, the demand for houses increased from 50% to 54% during the same period.
In Khyber Pakhtunkhwa, the demand for plots saw a slight depreciation by falling from 22% in 2018 to 20% in 2020. The demand for apartments in the area saw substantial growth as the user search volume increased from 17% to 19%. Moreover, the demand for houses appeared to increase from 47% to 57%.
Analysing the Real Estate Market at Present
The popularity of high-rise developments in Pakistan has drawn the attention of real estate developers. Presently, around 15% of the newly launched residential and mixed-use projects in major cities feature plots for sale. Meanwhile, the remaining 85% comprises high-end apartment complexes. The ultramodern Creek Vista Apartments in Karachi and the upscale Highland Resort in Islamabad are the prime examples of such premium apartment projects in Pakistan.
The state-of-the-art project of Zameen Aurum is also a brilliant high-rise development that deserves to be mentioned here. Located in the popular neighbourhood of Gulberg, Lahore, this 15-storey luxury apartment complex is a project of Zameen Developments and offers investors all the latest facilities required for a superior lifestyle.
To keep up with the growing demand for apartments and houses, most reputable housing societies in Pakistan are now launching villas, townhouses, penthouses and flats as well. These residential units are usually available on easy instalments to attract more buyers. The meticulously-planned projects of Bahria Town Karachi, Eighteen Islamabad and Al Kabir Town in Lahore all offer houses and apartments for sale in addition to selling plots.
Home Loans, Mortgages and Construction Financing
To keep up with Prime Minister Imran Khan’s vision for vertical cities, the government is actively working to make the conditions and process for home loan procurement much easier for investors. Commercial banks have also been directed to utilize 5% of their total lending towards housing finance whereas the State Bank of Pakistan has introduced special measures to incentivise construction financing to developers.
The government is currently trying to develop a mortgage finance market in Pakistan. It has slashed the tax on bank income generated from low-cost housing finance from 39% to 20%. This will serve as an incentive for banks to provide mortgage and home loans to the middle and lower-income groups.
The procurement of home loans at a lower mark-up is also expected to make the Naya Pakistan Housing Programme (NPHP), a flagship project of the present government that promises low-cost housing for the poor, a definite success.
Construction Industry Relief Package in a Nutshell
In early 2020, the prime minister announced a construction industry relief package that was widely hailed by the real estate and construction sectors as well as the affiliated industries. The new package not only focused on spurring economic growth by promoting construction activities in Pakistan but also aimed to provide daily wage earners with better employment opportunities. Moreover, it included added incentives for developers and builders to build affordable housing under the NPHP.
The Tax Laws Ordinance 2020 introduced significant tax reductions for the construction sector. The withholding tax on all construction materials, except iron and cement, was also waived off. As part of the package, the government announced that those investing in the construction sector would not be inquired about their source of income.
A 2019 study conducted on urbanisation in Punjab had stated the vacant plots in housing schemes made up 68% of the total real estate in the province. However, construction was only being carried out on 10% of those plots. Therefore, to prevent urban sprawl and encourage developers to initiate more construction projects, tax reductions for the industry were much needed.
Developers and builders can now easily register with the Federal Board of Revenue to avail the tax concessions introduced under the construction industry relief package. The increased activity in this sector will benefit the investors and buyers along with the raw material suppliers and the labour force.
Effects of Real Estate Investment Shift from Plots to High-Rise Developments
The growing popularity of high-rise and mid-rise developments is directly related to increased construction activities. This, in turn, would generate more employment opportunities and lead to the economic growth of the country along with strengthening over a hundred local industries linked with the construction sector.
Moreover, the construction of high-rise and mid-rise buildings is a practical way to urbanise using a smaller piece of land. Horizontal expansion of cities adds to the urban sprawl, which usually leads to the disappearance of agricultural land, posing a burden on natural resources and damaging the environment. Vertical expansion reduces these problems by a substantial margin.
Another effect of the real estate investment shift from plots to high-rises is that they allow investors to score capital gains as well as enjoy rental yield – something that is not possible with plots.
It is also important to point out that urbanisation is the biggest factor that has led to the popularity of high-rise developments in Pakistan. The concentration of population in major metropolises led the government and development authorities to expand vertically in their quest to address the growing demand for housing.
To conclude, the construction of residential and mixed-use high-rises in urban centres will benefit the construction industry while simultaneously enabling people to buy affordable residential units in their preferred area.
For instance, if we talk about Lahore, the centrally located neighbourhood of Gulberg has drawn the attention of investors as an ideal area for high-rise developments. Therefore, for those looking to either dwell or invest in this area, buying a residential unit in Zameen Aurum is no less than a golden opportunity.
This high-end project has been launched under the banner of Zameen Developments, one of the most prestigious real estate development firms in Pakistan. The prime location of this apartment complex is complemented by its ultramodern design and top-notch amenities. The high-tech security system and a convenient payment plan also add to the features that make Zameen Aurum the hottest investment in Lahore right now.
If you want to learn more about this upscale project, make sure to check out Zameen Aurum’s page. You can also get in touch with the experts at Zameen.com by calling our 24/7 helpline at 042-111-333-333.