Islamabad: The federal government has restored the 2020 floor area ratio (FAR) charges for hotel and motel plots in Islamabad, providing significant relief to the hospitality sector and easing cost pressures on ongoing and planned projects.
Under the decision, FAR charges for enhancing covered areas of hotel plots have been reduced from PKR 6,300 per square foot to PKR 930 per square foot. The revised rate will remain in effect until December 2028, allowing developers additional time to complete projects without the higher cost burden introduced last year.
The decision was approved by the federal cabinet through circulation and has been communicated to the Capital Development Authority for implementation. Officials said the move aims to facilitate the timely completion of hotel projects, particularly in view of Islamabad’s preparations to host major international events, including the upcoming Shanghai Cooperation Organisation summit.
In June 2025, the CDA had increased FAR charges sharply as part of a revision in development fees, a move that drew concern from hotel developers and industry stakeholders. Representatives of the hospitality sector argued that the higher charges significantly increased project costs and threatened the financial viability and completion timelines of hotel developments, which typically involve large capital investment and long payback periods.
Following representations from stakeholders, the matter was reviewed by the CDA and referred to the federal government for a final decision. After consultations, the government agreed to restore the earlier FAR rate as a time-bound facilitation measure for the hotel and motel industry.
Officials said the restoration of the lower rate is intended to support tourism-related infrastructure and ensure adequate accommodation capacity in the capital. Under existing regulations, hotel plots measuring 10,000 square yards or more are permitted a FAR of 1:8, while smaller plots are allowed a FAR of 1:6.
Industry sources welcomed the decision, describing it as a positive step toward improving the investment climate for hospitality projects in Islamabad. They noted that lower development charges could help accelerate construction activity and support the broader tourism and services economy.
The restored FAR charges will apply specifically to hotel and motel plots in the capital and are expected to remain in place until the end of 2028, subject to compliance with applicable development rules and timelines.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
