The skyline of Pakistan’s major cities is all about modern high & mid-rise buildings these days. The rapid demand and development of luxury residential towers and commercial skyscrapers essentially reflects that gone are the times when living in a separate house was considered a sign of prestige and honour. Are the real estate trends in Pakistan shifting from plots to high rise constructions? let’s discuss it today.
As time goes by, the construction of mixed-use and residential buildings has seen a drastic increase in the metropolises. These skyscrapers and residential towers not only increase the beauty of exterior constructions across the city but also offers all modern amenities and facilities.
If we dig down deeper to find the cause of this shift in real estate trend, we will find that there are many reasons behind this sharp demand for high-rise developments in Pakistan. The first and the most important reason is the rapid growth of the population in urban areas. The massive influx of people migrating from rural areas to urban centres has forced developers and investors to focus upwards constructions. The shortage of lands and high prices are all some of the key factors behind the real estate investment shift from plots to high-rise and mid-rise towers. The government has also taken strict steps to prevent the horizontal expansion of major cities to avoid any kind of urban sprawls, which is yet another factor that has contributed to this trend.
Demand for Apartments and Houses
If we look at the stats of just the past two years, we can say that the demand for houses and apartments in Pakistan has grown massively.
The rough analysis of the user data record reflects the demand for plots in Federal Capital Islamabad dropped from 26% in 2018 to 21% in 2020. During the same period, the demand for apartments increases from 15% to 17%.
A similar pattern was observed in other parts of the country as well. For example, if we look at the stats from Punjab, the demand for plots fell to 20% in 2020 from 22% in 2018. However, the demand for apartments rises from 15% in 2018 to 17% in 2020.
The real estate in Sindh also showed a more or less similar trend. Where the demand for plots decrease from 15% to 12% and demand for apartments rose from 23% to 25% during the span of two years.
Real estate trends in KPK also showed a decrement in the demand for plots from 22% to 20% and a rose in the popularity of apartments from 17% to 19%.
The Recent Trends of Real Estate Market
The increasing trend of high-rise development in the country has drawn the attention of real estate investors as well as developers. At this moment, around 85% of newly launched projects comprises high-end apartment complexes whereas remaining15% of the newly launched mixed-purpose and residential project in major cities feature plots for sale.
Considering the demand for apartments and houses, some of the most prestigious builders and housing societies have started to launch villas, townhouses, penthouses and flats. Easy instalment plans have been introduced to attract more buyers.
Loans, Mortgages And Construction Financing
The government is also working to make home loan procurement easier for investors. Commercial banks have also been instructed to utilize 5% of their total lending towards housing finance whereas the State Bank of Pakistan has also introduced steps to incentivise construction financing to developers.
The government is attempting to develop a mortgage finance structure 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 Naya Pakistan Housing Programme (NPHP) has also rolled out a plan for home loan procurement at a lower mark-up.
Please note that we never recommend our readers to opt for any option of financing which involves an interest in any form.
How This Shift In Real Estate Trend Impacts The Overall Sector
The rising demand for high-rise and mid-rise construction is directly proportional to the construction activities in the real estate sector. This will result in, generating more employment opportunities and more economic growth for the country. This will also boom the business of 100s of industries associated with the construction sector.
Additionally, the development of high and mid-rise buildings is a realistic solution to tackle urbanization using a smaller piece of land. Horizontal expansions of cities not only cause urban sprawls but also leads to the disappearance of agricultural land, posing a threat to natural resources and environmental peace. From that perspective, we can say that vertical expansion reduces these problems by a significant margin.
Another impact of the real estate investment trend from plots to high-rise towers is that this practice allows investors to earn capital gains as well as enjoy rental income unlike in plots.
However, Urbanisation is still the biggest factor that has led to the vertical expansion of cities. The need to accommodate the massive influx of people in major metropolises led the government and builders to choose high-rise buildings to serve the purpose.
Considering the aspects we discussed above, we can conclude that this shift of real estate trends from plots to mid and high-rise buildings will not only benefit the construction business across the country but also provide an affordable living option for people looking to settle in urban areas.