Pakistan’s real estate and property sector is one that can bring investors big returns. It is also one that lacks a proper structure and regulations. Despite being worth around PKR 7 trillion, the real estate economy is largely undocumented. This is the reason the government went after the sector last year when it announced the new taxes.
Until recently, no serious attempt was made to regularise the property sector. Nevertheless, it seems things may be changing for the better. For a newbie investor or homebuyer, the sector can prove to be brutal. Take the example of Gwadar for instance, while there is a plethora of new opportunities, there is also a good number of scams on the floor. Some real estate projects in the country have even forced the National Accountability Bureau (NAB) to get involved.
A new dawn?
According to the recently proposed Companies Act 2017, a new provision will be applicable to companies that deal with real estate developments, and are registered with the Security and Exchange Commission of Pakistan (SECP). According to new sources, the real estate sector will be handed over to the SECP, which will serve the role of a watchdog.
According to the legislation, which awaits approval from the National Assembly (NA), real estate companies will not be able to advertise their projects or book units without the SECP’s approval. The commission will also be empowered to block business operations of not just real estate developers but also property agents. Moreover, it will be responsible for safeguarding investors’ interests and promoting real estate projects that are legal and safe for investment.
It is important to note here that according to the proposed legislation, the concerned land and building control authority will continue to work under their predefined set of regulations. In terms of funds collected by a developer, SECP will ensure that money collected by the developer from buyers is strictly used for the development and construction of the project it was meant for. This will curb the practice of misusing development funds, which is often also the reason behind project delays.
In order to tackle the practice of extensive project marketing, which at times begins before a project has acquired all its approvals from building control and land development authorities, SECP has a plan in place. It will ensure that no developer can announce or market a project until it gets all the required approvals from all departments concerned.
Let’s wait and see how and in what form the Companies Act 2017 is approved. Hopefully, the SECP will regularise the real estate market of Pakistan in a manner that makes it more investment friendly. Making buying and selling property an easier and hassle free task in a country that faces a housing shortfall of over one million can change a lot.
I will be keeping you all updated on what becomes of this law. Meanwhile, if you wish to add something to this article, feel free to leave a comment below.