The real estate sector of Pakistan plays a major role in the country’s economic growth and success. Despite the sector struggling in the last couple of years due to the ban that did not allow non-filers to buy any property worth more than 5 million unless they registered themselves with FBR (Federal Board of Revenue), things are finally looking up.
This turn of events can be attributes to PM’s package for real estate. This package was announced as a part of effort to reduce unemployment and provide the nation’s labor force an opportunity to once again earn for themselves, a process that had halted because of coronavirus outbreak
Incentives for Real Estate sector
Pakistan is the 12th country in the world that faced a critical strike by coronavirus pandemic. The impact of COVID-19 has been critical for the growing economy of Pakistan.
1. Incentives for Real Estate sector Overall, the major effort of the plan is to increase investment into the construction and real estate sector of the country. This is considered as an open-ended scheme that will continue to be in effect till the December of this year, 2020. It will increase the opportunities for jobs for the manual labor workers.
Some of the incentives in this respect include:
• No Questions Asked. People who invest in the industry this year will not be questioned about the source of their investment money (something previously banned)
• Construction sector will have a fixed tax. Should an investor choose to invest in the Naya Pakistan Housing Authority this year, 90% of the tax levied will be forgiven.
• CGT (Capital Gains Tax) which is the profit you get when you sell a property for more than what you paid for it, its holding period will remain 8 years but the tax rate will start reducing from the fourth year forwards.
• Families selling houses will not be subjected to any Capital Gain fee.
• 20-year mortgage is allowed for long-term commitment With many other incentives like this, the PM package for real estate is already bringing new investors and the business has started booming in a time when every sector had dropped.
2. Benefits of PM’s Package for Real Estate The package is expected to bring a lot of revenue and investment into the country, substantially helping its economy and fighting unemployment due to COVID-19.
Some the major benefits that can already been observed include:
• Safe Haven at lower interest In a time when economy is poorly affected by a pandemic, real estate sector provides a breath of fresh air for investors. The reason is that at times of low interest, banks provide lower benefits to the money people have stored safely in their banks. But at the same time, the real estate sector provides a higher return.
This can be visible for investors who have put their money in Bahria Town Rawalpindi. Even at this time, people can get more benefit from the sector because the activity in property sector is booming. Property prices have been improving and the trend will continue providing a stable place for investors to put in their money.
• Protection against inflation When interest rates go down, inflation rates start rising. This means the money you have sitting in a bank or at home starts losing its value fast. As the real estate sector has enough investment to keep value, it also provides value to your money.
The experts don’t consider the inflation rate, they pay importance to the growth money is going to help in, and the return for an investor is in accordance with the value his/her investment made in the growth of the business. PM’s package for real estate brings value to property sector which in turn provides value for customers.
• Lower Tax Rates The plan brought by PM also includes lower tax rates for buying customized properties in Pakistan.
This means you can invest in the sector e.g. in Bahria Town Rawalpindi, at a reduced cost and reap the long-term benefits. Tax rates have also been reduced for the construction sector making it easy to start construction processes for different housing schemes, improving employment rates along the way.
• Wide range of opportunities With the relaxation provided through this scheme, you can invest in a plethora of options in real estate sector. These can range anywhere from plots, commercial buildings, residential areas, shops to farmhouses and showrooms. This is a great incentive to attract investors, local and international to put their money in use.
• Greater returns As mentioned before, the PM’s scheme provides a grater capital benefit. Investment in real estate at such lowered taxes and exemptions provides a greater ROI (Return on Investment) in the real estate sector, making it an ideal place for investment.
• Safety provided by Government With this plan, the government is not only helping the property sector grow, but it is also giving investors a chance to make their ‘black’ money ‘white’ through the no questions asked policy mentioned above. This is of great importance because before this scheme, a lot of investors were forced to make their white money black to avoid excessive taxes.
This initiative by the PM has proved to be silver lining that the real estate sector had been wishing for in its dark times. With this scheme in place, the construction and building processes for different housing schemes have already started, providing a helping hand to support the falling economy of Pakistan in times of a worldwide crisis.
If things continue the way the government is planning to, the real estate package will bring in huge revenue and help the sector and the country in the future as well