Relief Measures in Real Estate Sector Aim to Boost Investment
The government has introduced relief measures in the real estate sector to stimulate investment and instill confidence in the market. Federal Parliamentary Secretary for Planning and Development Hafiz Mian Muhammad Nauman emphasized the urgent need for Pakistan to transition from uncontrolled horizontal expansion of cities to vertical urban development.
Addressing a seminar organized by the Lahore Chamber of Commerce and Industry (LCCI), Nauman highlighted the interconnectedness of the construction and real estate sectors with approximately 70 industries, underscoring their significant role in generating employment opportunities.
LCCI President Faheemur Rehman Saigol, who presided over the event, commended the government for the tax relief initiatives, such as reducing withholding tax on property purchases from 2.5% to 1.25% and on sales from 5.5% to 2.75%, as well as eliminating Section 7E. Saigol expressed optimism that these measures would bolster investor confidence. He also urged for the extension of the Federal Board of Revenue (FBR) property valuation reduction to encompass other housing societies and regions to ensure equitable treatment within the sector.
Nauman disclosed that he had addressed real estate reform concerns with Prime Minister Shehbaz Sharif a year ago, advocating for a comprehensive construction package. He underscored the adverse impact of unchecked urban sprawl on green spaces surrounding major cities, particularly Lahore.
Pointing out Lahore's expansive growth into adjacent districts like Sheikhupura and Kasur, Nauman stressed the necessity of promoting vertical development over further horizontal expansion to optimize existing urban infrastructure. Highlighting the abundance of vacant residential plots within Lahore, estimated between 150,000 to 200,000, he emphasized the government's recognition of the challenges faced by the real estate sector in recent years, leading to diminished investment and economic activity.
Nauman mentioned extensive consultations with industry stakeholders, including the Association of Builders and Developers (ABAD), to devise reforms aimed at facilitating the sector while safeguarding investor interests. He hailed the abolition of Section 7E as a significant relief for property owners, citing concerns raised by investors regarding taxes on non-income-generating assets and the necessity of restoring market confidence through reforms.
Regarding affordable housing, Nauman underscored the inaccessibility of home ownership for the common citizen due to high financing costs. He emphasized the imperative role of the banking sector in providing long-term mortgage financing, akin to models in developed countries where banks offer financing spanning 15 to 20 years.
