The impact of Financial Action Task Force (FATF) on the Real Estate sector of Pakistan

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Introduction

Recently, the Financial Action Task Force (FATF) announced its decision to keep Pakistan on its grey list but ruled out the possibility of blacklisting the country as it has met most of the conditions under the recommendation plan. In light of this development, the Federal Board of Revenue (FBR) has intensified inspections against Designated Non-Financial Businesses and Professions (DNFBPs). The FBR has also proposed strict penalties for real estate agents unwilling to comply with the anti-money laundering and counter-terror financing regime. The top revenue collecting authority plans to impose heavy fines on all real estate agents, advisors, and brokers who are reluctant to register themselves with the board of Designated Non-Financial Businesses and Professions (DNFBPs), which is an important requirement put forward by the FATF to get Pakistan off the grey list.

 

Why is the real estate sector central in curbing money laundering and terror financing?

According to estimates, Pakistan’s real estate sector is worth USD 600-700 billion USD. If planned development accelerates in the country, real estate can become a multi-trillion-dollar sector. Although real estate is a national asset, it can be used for different financial crimes like money laundering, the whitewashing of money created through illegal sources, and the concealment of ill-gotten financial gains. Pakistan’s greylisting by the Financial Action Task Force (FATF) in 2018 set into motion several financial regulations by the government that involved streamlining major sectors of the economy. The FATF gave regular and updated recommendations to curb money laundering and counter-terror financing in the country. The recommendation plan has targeted several areas of the economy including the real estate sector, which lacks regulatory and financial transparency.

Pakistan’s real estate sector is largely unregulated and unplanned. Lack of rules, regulations, valuations, and planning has multiplied all sorts of administrative, socio-economic, and legal problems for the economy in general and the real estate sector in particular. Several loopholes in the regulation of the sector have resulted in its exploitation, making it a harbour of ill-gotten wealth. Real estate transactions and other processes in the sector are largely conducted off the record, which leads to under-invoicing of real estate assets and property. These practices disrupt proper documentation of real estate assets and boost non-transparent reporting. A lack of certified real estate agents, brokers and dealers has perpetuated this issue creating the potential for money laundering and terror financing activities.

 

FATF and its recommendations for the Real Estate Sector of Pakistan:

Under the recent review of Pakistan’s efforts towards curbing money laundering and terror financing, the FATF announced that the country needs to demonstrate Designated Non-Financial Businesses and Professions, their monitoring for terrorist financing, and supervision commensurate with the risks. Under the Anti-Money Laundering Act, the FBR is responsible for ensuring that DNFBPs, which include real estate agents, dealers in precious metals and stones, and FBR-supervised accountants comply with anti-money laundering and counter financing of terrorism obligations. Currently, in Pakistan, out of the 500,000 property dealers and real estate investors/agents, only 22,000 are registered with DNFBPs. Thousands of unregistered real estate investors and property dealers continue to trade unregistered open files, affidavits, and certificates. Under this new regulation, registered real estate and property developers need to check the buyers and sellers’ names on the proscribed persons’ list by the United Nations. If the name of a potential buyer or seller is on the list, the developer or builder has to immediately report it to the concerned authorities.

 

What is the way forward for the real estate sector of Pakistan?

Although the current government is currently obliged to implement the recommendations given by the FATF regarding the real estate sector, it needs a holistic and comprehensive plan to effectively regulate the sector in the long term. The real estate sector suffers largely from a lack of regulations and oversight from any proper authority. The implementation of a Real Estate Regulatory Authority (RERA) is a need of the hour. An overview of international best practices shows that majority of the countries with a mature and profitable real estate sector is governed by a competent regulatory authority. For instance, the real estate sector of Dubai has been able to attract millions of dollars’ worth of investment due to its streamlined and highly regulated real estate sector. The establishment of a real estate regulatory authority will increase transparency exponentially in every area of the real estate sector, from securing investments to the verification of property developers across the country.

 




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Real Estate Sector and Smart Water Management

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It may seem that water is abundant to cater to our needs however, this perception can be overturned by the mere fact that our water resources are depleting like any other. Unfortunately, Pakistan is among those countries where the dark clouds of water scarcity loom and according to the various statistics by 2040 the country will hit absolute scarcity by 2040. Real estate and water are both linked together in multiple ways, be it the provision of water in the households or be it the water used for land irrigation the real estate sector has major stakes in the availability of water.

Graana.com through this blog brings to the light how water can be best managed and conserved in order to meet the upcoming challenges. Almost every country is encountering a conundrum where the growing population, water scarcity and increasing demand for housing are creating unprecedented challenges for the authorities. By adopting smart water management techniques Pakistan can avoid water scarcity in the forthcoming time.

Concept of Smart Water Management

As evident from the name, Smart Water Management is a system assisted by technology in order to manage the supply of water in the cities. This system can become an efficient tool of managing water and promoting the agenda of sustainable development as it reduces the operational cost while considering the supply and demand of water. Smart management is all about collecting real-time data and then communicating it to the managers and system operators.

In developing countries, this concept is gaining popularity as it is helpful in reducing the transaction cost which otherwise puts a burden on the financial budgets of the municipalities. This technology can provide incentives to the private sector to employ the latest technology which can prove useful in strengthening the supply of water in the localities.

Smart Cities and Water Management

Sustainable development has become a major talk of the town. In the discourse of smart cities, smart water management occupies a dominant position. By employing technology in water management, ad-hoc decision making can be avoided in view of the real-time data. In order to pursue the smart water management system a central authority can be created which can collect data from various organisations for smart water management. The European Union (EU) under its UrbanWater project has developed a web-based urban water management system for effective urban water management. Through the assimilation of estimates based on weather predictions and surface water reserves, customers will be able to obtain the right information to effect change in consumption patterns in urban areas.

Smart Metering

As per the statistics, the per capita consumption of water in Pakistan is 30ltr per capita per day. The variability in the supply of water depends on the variation in season, and the usage of individuals at every hour. For collecting real-time data smart meters can prove handy as they have the ability to collect information and transmit information in a prompt manner. Some examples of smart meters include flow meters, rain gauges and acoustic devices. Singapore has taken the lead in smart water management as it has established a Public Utility Board for Smart Water Grid System. In Punjab 86pc of the urban population is dependent on the water supply scheme, tap water and electric motor.

Reduction of Non-Revenue Water

One of the major problems that the water supply in rural and urban areas face alike is the non-revenue water (NRW). The term is used to describe a phenomenon where the water is lost before it reaches the homes in the form of leakages, lapses in metering, and illegal connections. This is the foremost challenge that is being encountered in urban management. This conundrum is specific to South Asian states where water conservation is given the least focus and most of the water is wasted before it even reaches the households. By adopting Smart Water Management (SWM), non-revenue water can be conserved and utilised.

Equity in Billing

Smart technologies to water management can bring a new transformation in the billing of water as a billing system based on equity can be introduced. Depending on the usage of water a consumer can be charged depending on his consumption rather than charging a consolidated amount which helps to negate the free riders who consume water more than any other consumer.

 

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Real Estate – Strengthening the Hospitality Sector | Graana.com Blog

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From the south to northern areas of Pakistan, the country is blessed with gigantic mountain ranges, iconic plains, and mystic shrines. These all are nonetheless an asset of Pakistan which contributes in a great manner to the economic development. The hospitality sector is one of the allied components of the tourist sector, if it goes unnoticed it can act as a missing puzzle. Most people have a very narrow view of the real estate sector, they often restrict the real estate sector only to the buy and sale of plots.

Graana.com, through this blog, takes a different path and establishes that the real estate and hospitality sector have an inextricable link. The hospitality sector can be one of the factors that can bring in the commercial real estate investment along with providing employment opportunities to the many. While traveling to the famous tourist destinations in the country, it can be observed that the hospitality sector has yet to be given a formal shape and there is great room for improvement.

The real estate and hospitality sectors are inextricably linked in the following manner

Why Hospitality Sector Matters

The concept of the hospitality sector has a very wide scope, and it is observed that the real estate and hospitality sector can not operate in isolation. To reap out maximum benefits both sectors correspond to each other and with the increasing inflow of tourists in the country, the mutual relation between the two sectors should be explored.  Moreover, Bringing the hospitality sector into the limelight which had remained out of mainstream sectors to create a skilled workforce equipped with modern techniques is the

Vacant Spaces and Services

Real estate is all about optimising the land value. A state, be it Pakistan or any other has ample area of vacant land which can be used for the purpose of maximizing the utility of land. It has been seen that many states lease their lands to gain maximum returns. Hence, the vacant lands which are the property of a state can be leased out to establish hotels, or start a business activity that can benefit foreign and domestic tourists. This strategy will add to the revenues of the government along with attracting Foreign Direct Investment (FDI) in the country. Across the globe, renowned hotel brands have adopted this business model and are creating ripples in the hospitality sector.

Invigoration of Allied Industries

In 2019, the number of tourists in the country increased by 12.19pc as compared to 2018, with increasing tourist influx, industries associated with the hospitality sector will also get a new vigor which will contribute to the GDP growth. This fact can be illustrated from a very basic example that the construction industry will be one of the beneficiaries if the hospitality sector acts as a precursor to stimulating the output of the industries. In this whole supply chain, the associated sectors particularly private businesses will benefit the most. In short, it can be said that the allied industries are the major stakeholders in the consort of the hospitality and real estate sector.

Replicating Airbnb Models

The Airbnb case studies are of particular interest to those who have kept a thorough eye on the real estate sector. The business model was started by two friends who had difficulty paying their rents. Replicating this model at the local level can prove fruitful for the residents who have free spaces in their homes which can be rented out. The use of technology can prove beneficial in this aspect as the residents can upload their listings on a particular application which can be explored by the tourists. This strategy will be a means for the local population to earn from the existing resources.

Strengthening SMEs

One of the major portions of Pakistan’s economy is dependent on the contribution of Small and Medium Enterprises and they pool in 30% of the total GDP. In the case of tourism, the mode of earnings for many locals of tourist destinations are dependent on the Small and Medium Enterprises simultaneously, they are also a medium of self-sustenance of many households. By remodeling the real estate in the major tourist destinations, the SMEs can become a major tool for revamping the tourism industry. Moreover, the hospitality sector will be given a new dimension.

 

For news and blogs, visit Graana.com.




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Impact of State Bank of Pakistan Regulations on the Real Estate Sector | Graana.com Blog

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Introduction

In countries where construction financing is a separate product, housing finance is not provided for under-construction projects. However, the State Bank of Pakistan (SBP) has developed guidelines to help mortgage providers provide housing finance for under-construction projects. The procedures mentioned by the SBP are extremely detailed and require many bureaucratic documents. This can have a negative impact on the adoption of the process as it will be costly and time-consuming. It can also be argued that some of the functions defined by the SBP fall in the ambit of a Real Estate Regulatory Authority (RERA). However, the guidelines also ensure that developers have all the necessary documentation and approvals before selling to anyone, thereby increasing transparency in the sector. Continue reading to understand the impacts of SBP regulations on the real estate sector of Pakistan.

 

State Bank of Pakistan as Regulator of Real Estate

The State Bank of Pakistan (SBP) plays a vital role in ensuring the financial sector’s stability. As a central bank, it has been entrusted with the responsibility to regulate Pakistan’s monetary and credit system under the State Bank of Pakistan Act 1956. As no aspect of any industry can act independently of the financial system, the real estate sector of Pakistan is also susceptible to policy shifts from financial institutions. Commercial banks have always remained reluctant to provide loans and mortgages based on allotment letters only. However, under the new SBP scheme, housing finance providers will give assurances to the purchaser that once the building has been developed according to the approved layout plan, the funds will be given to purchasing the unit, thereby allowing for financing of under-construction buildings, apartments, and homes. This will also limit the risk for financial institutions, as in the case where the developer does not complete the installation, the funds will not be discharged. The SBP has also laid out clear and extensive guidelines on multiple aspects of the process, such as checking necessary ownership documents and approvals by regulatory authorities. However, it has also stipulated that a No Objection Certificate (NOC) be obtained for every unit sold under the financed project. This is a peculiar detail that might cause many bureaucratic delays in the completion of the project.

Banks will also have to devise a selection criterion for project assessment and eligibility criteria for those developers who can apply to the program. The builder criteria may include the builder’s/developer’s financial soundness, track record, compliance background with legal and urban planning issues, and milestone completion on previous projects.  These builder’s/developer’s can be private or government entities. Furthermore, the banks will ensure a physical and legal inspection of all relevant documents such as title documents, NOCs, and approved site and layout plans. The selection criteria may also include access to schools, hospitals, transport, utilities, and marketability of the housing units. Once all verification has been done, the banks will sign a Master Financing Agreement (MFA) with the builder/developer. This agreement will include the construction plan, milestones, project completion time, and loan disbursement and repayment plan. The SBP has also stipulated that the mortgage provider for units under the project must be the same as the construction lender.

 

Possible Impacts of SBP Guidelines

The function of the central bank in any country is to strike the right balance between market structure and regulatory frameworks to ensure the functional efficiency of the economy. Over-regulation can suppress financial innovation, while an imperfect market structure can reduce the efficiency of the system and affect consumer interests. Regulations are introduced to change the behaviour of regulated institutions because unregulated market behaviour can lead to suboptimal outcomes.  A majority of commercial banks in Pakistan usually invest in government-backed securities as they offer high returns and large capital buffers. However, some of the conditions set by the SBP for approval of housing finance in under-construction projects indicate a foundation lack of confidence in commercial banks. It says that banks do not have the capacity and capability to assess the credit risk of construction projects. In contrast, a majority of these commercial banks have risk departments stacked with well-qualified risk professionals. Suppose the SBP pursues micro-management of housing loans on such a level. In that case, it is feared that commercial banks will prefer to invest in government-backed securities instead of economy-driving and consumer-serving products.

Furthermore, the builder and legal counsels should agree upon any agreeable structure for the security of purchase. In the case of defaulters, the builder usually has access to deposits made earlier and can use them to sell the unit at a discounted price later. Therefore, as long as the bank has completed due diligence, other approvals from authorities like NOCs should not be required for the sale of units. Moreover, dealing with delinquent purchases also falls under a real estate regulatory authority (RERA). Overall, the guidelines can bring a positive change in the real estate sector and increase the number of housing finance in Pakistan; however, the establishment of RERA in each province is vital for consumer welfare and bringing transparency to the real estate sector.

 

Conclusion

The State Bank of Pakistan (SBP) has initiated a new scheme that allows commercial banks to give housing finance for under-construction projects. However, the central bank has imposed several guidelines and processes for the approval of projects and developers. Tight guidelines and strict conditions can lead to a show of mistrust of commercial banks in their capacity for risk assessment. Furthermore, requirements like obtaining NOCs for each unit in a high rise are bound to increase bureaucratic delays in projects. Therefore, establishing a real estate regulatory authority is necessary for the real estate sector to release financial institutions from the burden of carrying out tasks of a real estate regulatory body.

 




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Significance of Professional Education and Specialist Training in the Real Estate Sector

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Introduction

Real estate activity in Pakistan has been booming in recent years. It has become a lucrative investment field for both local and overseas investors. However, there is a shortage of professionalism and academic research and development in the real estate industry. Most investors in this sector have previously experienced a scam investment or a fraudulent investment scheme. Pakistan’s real estate sector also lags in technology adoption and transparent practices, which increases the chance of speculation-driven price increases rather than letting market forces regulate it. Lack of formal education in real estate is directly responsible for most of these problems. To make the real estate sector a professional and intellectual field of study, Graana.com is leading the formal education sector in Pakistan. The company has collaborated with the National University of Sciences and Technology (NUST) to provide a real estate certification course. In addition, Graana.com has partnered up with the University of Central Punjab to start a four-year professional bachelor’s degree in real estate. These developments mark the beginning of professional education in the real estate sector of Pakistan.

 

Growth of the Real Estate Sector in Pakistan – Incentives and Opportunities

Compared to the real estate sector in developed countries, the perception of real estate in Pakistan is primarily negative due to a lack of transparency, regulations, and widespread malpractices. Pakistan is the fifth most populous country in the world. The demand for real estate development is growing exponentially, citing population trends and growing economic and industrial needs. In the next ten years, nearly 120 million people will require homes in Pakistan. Considering that the average family size in Pakistan is around six individuals, the actual requirement for homes will be around 20 million housing units. To cope with this demand, the Prime Minister of Pakistan envisions 1 million housing units every year. Although many remain sceptical of this tall claim, it is not impossible. Real estate has the highest potential of all other sectors of Pakistan’s economy. More than 80 per cent of a country’s total asset value is based on real estate. Pakistan’s total real estate assets are valued at USD 1 trillion. According to the Ministry of Commerce, the real estate sector was valued at around USD 600-700 billion seven to eight years ago. There is also more than 25 per cent year on year growth in terms of value in planned areas of Pakistan.

Pakistan’s currency is shedding its value at an annual rate of 5 per cent compared to the US Dollar. This is a massive challenge for the country’s economy. Even if the economy grew, in 20 years, the actual worth will be equal to half of the estimated value. The real estate sector can help change this situation. However, the industry is the biggest challenge for the country and, at the same time, holds the greatest opportunity too. Currently, more than 70 per cent of court cases in Pakistan have to do with real estate. However, in terms of opportunity, the demand for real estate expansion is calculated at USD 1.5 to 2 trillion, which can be fulfilled through construction, real estate development, and allied industries. There are around 4.5 million units in planned areas of Pakistan, which makes 0.5 per cent of the total land of Pakistan. This planned area is worth USD 500 to 600 billion. If the required demand for housing units in the next 20 years is met using planned areas, it only requires an additional 1 per cent of the land area of Pakistan. Consequently, it will add USD 1 trillion in value to Pakistan’s real estate sector, and most of this will be in the form of low-cost housing.

In order to make 1 million homes every year, Pakistan requires USD 29 billion annually to be invested in real estate. Looking at overseas investments in Pakistan, a total of USD 25 billion was invested last year in the real estate sector in remittances and direct investments. However, up to 70 per cent of these investments get stuck due to a lack of regulation and lack of best practices. If Pakistan realises the potential of its RE sector using effective regulatory measures and introduction of professionalism, issues of economy, employment, industry, and agriculture can be solved.

It is estimated that in the next 20 years, Pakistan will spend USD 750 billion in construction activities alone. However, more than 70 to 80 per cent of building material is currently being imported by Pakistan. This can be tackled by allowing foreign companies to establish their manufacturing plants in Pakistan. It only requires the availability of a proper framework under which these companies can perform. Therefore, the real estate sector holds the key to revitalising the economy and providing jobs and employment to the over burgeoning youth of Pakistan. Although Pakistan is gifted with a knowledgeable and talented youth base, a lack of self-confidence remains the most significant factor in implementing positive changes.

 

Academia-Industry Linkage in Promoting Entrepreneurship and Job Opportunities in Pakistan

The contributions of Mr Shafiq Akbar have been tremendous in bringing innovation and revolution to the real estate sector of Pakistan. The University of Central Punjab has launched a BS program in Real Estate in collaboration with Graana.com and the Imarat Group of Companies. The industry-academia linkage is very important for the development of any sector. Since the first university in the 10th century in Morocco, set by a Muslim lady named Fatima, the first two generations of universities played a pivotal role in societies as creators of new knowledge and acted as agents for the dissemination of knowledge that already existed. Then came the entrepreneurial university, which focused on transferring the newly created knowledge towards the industry. And now universities have moved towards exercises in sustainability from a whole spectrum perspective.

As the universities grow better, they continue to strive to attain higher linkages between multiple stakeholders of society. In the first and second generation of universities, the industry required input on what research must be carried out. This usually meant that the challenges faced by the industry were highlighted, and research was carried out in order to mitigate those challenges. It also resulted in the establishment of further sectors. Industry academia linkages are also strategic. It is very important to have a national innovation ecosystem to promote innovation and economic development in any country. The industry, society, and government universities must come together in collaboration. Countries pursuing innovation and development can be seen as having a strong and intimate system of industry-academia linkages.

Industry academia linkages can bring a win-win situation for an economy in any country. A university’s essential function can be described as providing the human resource that the market needs. Human resource development is the first step towards uplifting a slow or stagnant economy. A strong linkage between industry and academia can ensure that necessary skills required by the industry are taught to students for better employment opportunities. At present, the universities are churning out students that are not fit for the market.

Knowledge transfer is another function of universities. However, most of the knowledge taught to students is either outdated or not relevant to the industry. Therefore, there is a need for strong industry-academia linkages so that only relevant and valuable knowledge is transferred to future generations. The concept of entrepreneurial universities has also become very popular over time. These universities focus on partnerships, networks, relationships with public and private organisations and force interaction, collaboration, and cooperation among the core elements of any national innovation ecosystem. For example, Stanford University, after the first world war, established the Stanford Research Park. They incentivised the industry to be located over there, which gave rise to what is now known as Silicon Valley. The research and innovation carried out at Stanford Research Park fuel the world of technology all over the world today. Coming to the United Kingdom, Cambridge Science Park was established nearly five decades ago. The purpose was to promote technology start-ups in the UK. More than 7000 people are working in that science park today, with more than 130 companies that operate worldwide. Moving towards China, their investments in universities in the late 1990s can be seen today as they emerge as a significant world power. A science park was established in 1994, which hosts more than 25000 employees and 400 companies now. All these universities aim to become a bridge between innovation and technology in the industrial zone.

Coming to Pakistan, its universities are primarily in the first-generation model, where the focus is mainly on spreading the already existing knowledge. However, they have begun to realise the importance of industry-academia linkages. A striking example is the National University of Sciences and Technology (NUST), which established it’s National Science and Technology Park (NSTP). Similarly, NED Karachi and IBA Sukkur. Bahria University and Air University are also moving towards establishing science parks for generating and cultivating a culture of innovation. However, there are some challenges concerning Pakistan, such as there is no national innovation ecosystem, public policy, or incentive that require industry-academia linkages to be formalised. Also, the industry shares its problems with universities and requires a perfect solution; however, students who are not exposed to industries cannot give a complete and integrated solution for such issues. Lastly, local industries are generally reluctant to spend money on research and development. They expect this to be done by public entities or the higher education commission.

If proper industry-academia linkages are established, it can not only lead to enhancement in entrepreneurship and generate employment, but it can also stem out entities that leverage on the reservoir of stronger industry connections. In terms of a way forward, Pakistan requires a national innovation action plan. A proper policy framework is the need of the hour. Industries can be given incentives and tax breaks if they collaborate with universities. Secondly, these linkages depend heavily on a country’s technological and institutional endowments, showing a willingness to contribute towards these linkages. As part of the broader Science Technology and Innovation Policy Program, a policy was made in 2012 but remains unimplemented. Incentives must also be given to universities to transform into third-generation institutes in line with modern trends. Establishment of incubators, science and technology parks, and other innovation centres must be encouraged and become part of the university ecosystem.

 

Real Estate Education – Taking the First Step

Imarat Group of Companies has taken the first step towards establishing industry-academia linkages in the real estate sector of Pakistan. Real estate is the second-largest sector in employment; however, no real attention towards educating professionals has been paid over the years. This has led to people setting up estate agencies with services offered by “property dealers” all over Pakistan that are more known for their malpractices in the market. The activity has accrued a negative perception towards the professionals working in the sector. This perception is now being changed through education, and the establishment of best practices followed worldwide.

Real Estate Science Level 1 offered by Graana.com in collaboration with PDC NUST was the first step towards making this change. The course targeted a foundation level knowledge for individuals who are not well versed in the best practices of real estate markets. The study looks upon real estate history and moves on towards Pakistan’s land and revenue system. One cannot understand the real estate sector unless there is a firm understanding of the country’s laws governing land, revenue, and tax. The course discusses laws and regulations and the differences between a real estate agent and an advisor. The course also details the features of primary and secondary markets specific to Pakistan. Perhaps the most crucial part is highlighting the ethical and moral standards required by a real estate advisor. Market malpractices are explored to understand the scope of right and wrong practice. Lastly, the course delves into the technology side of real estate. It explains the impact and role of the latest technologies like blockchain and Artificial Intelligence (AI) in the real estate sector.

 

Role of Federal and Provincial Governments in Promoting Best Practices in the Real Estate Sector

When considering the role of the state and private sector, the government’s role is that of a facilitator of activities that boost the private sector. An environment is created by the government where the private sector is flourished. Historically, in the first four decades of Pakistan’s creation, the real estate sector saw activity sponsored by the state to develop satellite towns and housing societies. However, in the last two decades, the private sector activity in real estate has generated significant momentum. Pakistan has seen players that define a thriving market, such as brokers, speculators, developers, etc. The real estate market has become self-sustainable now. Nevertheless, the state is not catching up with the level of growth achieved in the real estate market. There are huge gaps in terms of unlocking value potential through regulatory measures and job creation.

Pakistan has a plethora of sound policies that remain unimplemented. Policies must be implemented into laws based on objectives articulated in the policies. There is no overarching law for real estate regulation in Pakistan. Financing laws, corporate regulations, and joint ventures are missing in the real estate sector. Currently, there are no requirements for real estate agents in terms of training and education. This is a critical gap in terms of the development of high-quality players in the market. Another weakness is that every other sector has a trade body on the federal level; however, there is no thriving trade body in the real estate sector of Pakistan. Some authorities encompass builders across Pakistan, but the real estate sector is broader than just construction. Therefore, as long as proper implementation of laws and regulations are not practised, the challenges of the real estate sector will remain challenging to mitigate. There also needs to be a dispute resolution mechanism that can swiftly accommodate the large number of cases pertaining to real estate on a timely basis. Financing is another issue. The mortgage market is essentially non-existent in Pakistan, and the State Bank of Pakistan has recently brought welcome initiatives for boosting the mortgage sector. However, the collaterals demanded at the last stages of the application make many people ineligible for the scheme. Digital land records are another challenge for the real estate sector. Lastly, in terms of skills and training in the real estate sector, it is the responsibility of the government and the private sector to provide it.




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Pakistan’s real estate sector to welcome biggest REIT funds

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ISLAMABAD: To benefit from the booming real estate sector of Pakistan, a private company is planning to raise the biggest Real Estate Investment Trusts (REIT) funds in the country.

According to the details, the private company is planning to raise $500mn by establishing a private entity.

The private company aims to raise the 60pc of total funds by welcoming foreign investment in the country while raising the remaining funds from domestic investors.

The funds will be utilised to finance three real estate projects in the country.

 

For news and blogs, visit Graana.com.




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SBP introduces new mechanism for overseas Pakistanis in real estate sector

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KARACHI: State Bank of Pakistan has introduced a new mechanism to extend financing facilities to non-resident Pakistanis for investing in the real estate sector.

According to the details, the SBP has allowed funding facility to Roshan Digital Account (RDA) holders using their PKR accounts using digital channels.

The central banks have allowed the overseas Pakistanis to invest directly in the shares of companies in Pakistan, and units of funds licensed by the Security Exchange Commission of Pakistan (SECP).

Earlier, transactions in RDAs were allowed only through banking channels however, inflows through Money Transfer Operators (MTO) in RDAs have also been allowed by the central bank.

This initiative will increase the inflows of remittances in RDAs.

 

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LSM sector witnesses 16 year high growth of 14.85pc in FY 2021

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ISLAMABAD: Adviser to Prime Minister (PM) on Commerce and Investment Abdul Razak Dawood, on Monday, announced that the Large Scale Manufacturing (LSM) sector observed a growth rate of 14.85 percent in FY 2021 which is the highest in 16 years. 

The adviser, on his official twitter account, stated that the growth is attributed to the reversal of de-industrialisation that was previously in place. The present government’s pro-industry policy has been a major contributor towards the unprecedented growth rate. 

According to Razak Dawood, the growth was led by Chemical, Fertilisers, Minerals, Automobiles,  Petroleum, Textiles, Food, Beverages, Tobacco, Pharmaceutical, Steel and Iron products. 

 

For more news and information, visit Graana.com 

 

 




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