IQI KARACHI – REAL ESTATE MARKET UPDATE

written by Junaid Hamid, Head of IQI Pakistan

Pakistan’s real estate market is at a pivotal moment, shaped by ambitious economic reforms, transformative fiscal policies, and emerging technological innovations. As investors seek opportunities amid global uncertainty, the market presents a dynamic landscape of challenges, opportunities, and future potential. This article explores these key factors, with a special focus on Karachi, Pakistan’s financial and commercial hub.

Opportunities Shaping the Market
Despite economic challenges, several transformative opportunities are emerging that promise to reshape Pakistan’s real estate sector:

1. International Support and Fiscal Incentives
   A key driver of optimism is the World Bank’s commitment to providing up to $20 billion in financial support over the next decade, contingent on Pakistan’s progress with critical economic reforms. This substantial backing is expected to boost investor confidence and drive long-term economic stability
2. . Tax Reforms and Investor-Friendly Policies
   – Recent tax reform proposals aim to enhance transparency and attract more investors:
   – Reduction in property transaction taxes for properties valued over Rs100 million.
   – Lower advance tax rates for filers, from 4% to just 0.5%.
   – A landmark policy update from the Federal Board of Revenue (FBR) now allows non-filers to purchase property up to PKR 1 crore, increasing market transparency and broadening the investor base.
3. Karachi’s Dynamic Market and Infrastructure Upgrades
   – Karachi remains Pakistan’s top investment destination, thanks to:
   – Strategic coastal location and a booming urban population.
   – Major infrastructure projects, such as the Malir Expressway, improving connectivity.
   – Growing demand for residential and commercial properties, driven by modern amenities and economic
   expansion.
4. PropTech & Asset Tokenization: The Future of Real Estate
   Technological innovations such as asset tokenization are revolutionizing the property market. Platforms like DAO PropTech are making real estate investments more accessible by allowing properties to be traded as smaller, digital units, increasing transparency and affordability.

Challenges in the Current Market
Despite positive growth indicators, the real estate sector faces several challenges that investors must navigate:

1. Economic Uncertainty & Reform Challenges

• While Pakistan has the potential to become a $1 trillion economy by 2035, achieving this requires sustained
  domestic economic reforms.
• World Bank Vice President for South Asia, Martin Raiser, emphasized that maintaining a 7% annual growth rate
  will be crucial for unlocking real estate potential.

2. Regulatory & Fiscal Hurdles

• The real estate market has long struggled with opaque transactions and a reliance on undeclared funds.
• Government efforts to increase transparency and tax compliance are positive steps, but the transition period may create short-term market fluctuations.

3. External Market Pressures

• Global economic volatility and geopolitical uncertainties can influence investor sentiment in cities like Karachi, known for its dynamic but fluctuating market conditions.

Looking Ahead: Growth & Resilience
The future outlook for Pakistan’s real estate sector is optimistic, supported by:

1. Economic Transformation & Stability

• With international backing and progressive government policies, Pakistan is laying the groundwork for long-term economic stability and real estate growth.

2. Expansion of Investment Opportunities

• Eased tax restrictions and FBR’s new non-filer policy create a more inclusive investment landscape, welcoming a new wave of investors.

3. Karachi’s Role as a Catalyst for Change

• With massive infrastructure developments, Karachi remains the heart of Pakistan’s economic activity and is set to lead the country’s real estate boom.

.4. Technological Disruption in Real Estate

• Digital transactions and property tokenization platforms are making investments more secure, efficient, and accessible to both traditional and tech-savvy investors.

Conclusion
In 2025, Pakistan’s real estate market, particularly in Karachi, presents a compelling blend of challenges and opportunities. Major reforms, regulatory changes, and technological advancements are reshaping the sector, creating unprecedented opportunities for local and international investors.

For investors looking for long-term gains, the current landscape offers a unique opportunity to be part of a
transformative era in Pakistan’s real estate sector. By embracing these changes, investors can position themselves for success in a more resilient, transparent, and lucrative market.