Written by Junaid Hamid, Head of IQI Karachi Pakistan
RESIDENTIAL REAL ESTATE IN PAKISTAN: MARKET ANALYSIS 2025
Pakistan’s Housing Market 2025: Navigating Gaps and Gains
Pakistan’s residential property market in 2025 remains shaped by a persistent housing deficit. With a population surpassing 241 million and a 19% rise in households since 2017, the demand far
outpaces supply.
• Current Inventory: 36.2 million units
• Deficit: Over 2.1 million basic units; up to 27 million when factoring in substandard housing
• Urban Impact: Major cities face acute shortages, while some secondary cities still show temporary oversupply
Rental Sector Snapshot
Rental housing supports millions:
• 11.9% of households nationwide, jumping to 23.8% in urban areas
• Rents in key cities are rising by about 10% annually
• Yields remain attractive—Islamabad leads with 6.75%, Karachi follows at 6.21%
Investment returns remain attractive in the rental sector despite economic challenges, with gross apartment rental yields averaging 6.24% nationwide. Islamabad offers the highest yields at 6.75%, followed by Karachi at 6.21%.
Market Movements
Home prices continue to climb, influenced by inflation and construction costs:
• Karachi: Houses +10.54% YoY; apartments +3.82%
• Islamabad: High prices despite some corrections
• Multan & Gujranwala: Emerging hotspots with rapid appreciation
Rise of Apartments
Urban densification is fueling vertical living:
• Karachi: 55% growth in mid-tier apartment supply projected
• Islamabad & Lahore: Strong demand for upscale and mid-market apartments
• Factors: land scarcity, shifting lifestyles, and developer preference for multi-unit projects
Challenges Ahead
The market faces significant hurdles:
• Affordability: Widening gap between income and housing costs
• Financing: Limited mortgage options and high interest rates
• Costs: Rising material and labor prices
• Speculation: Investor-driven demand overshadows end-user needs
Looking Forward
Despite challenges, fundamentals remain promising:
• Economic stabilization and interest rate cuts could ease access
• Urban growth and younger demographics will sustain long-term demand
• Policy reforms, innovative financing, and PPPs are critical to closing the supply gap
Pakistan’s real estate market in 2025 offers both risks and rewards. While structural imbalances persist, strategic investments—especially in location and housing type—can deliver solid returns as the country continues its urban transformation.
