FDIs in Pakistan Real Estate

Investing 20/04/2018

FDIs (Foreign Direct Investments) are the investments made across the countries. This means that an individual or a company in one country invests in the business or project set up in another country.

Like other sectors, mobilization of foreign resources can potentially impact real estate sector as well. With projects like CPEC and the increasing number of Pakistani expatriates in foreign countries, the sector is likely to attract more foreign investments in future. As investors are getting smarter, they are keener to have direct control on their investments now, which is accessed through the tool of Foreign Direct Investment. It is this direct control that makes it a favorable option for the key players in this industry.

Amounts Received in FDIs

The amounts received in FDIs is varying according to the location it is received from. Where investments from China are increasing at a good pace each year, those from the United States have been seen deteriorating. Places like Saudi Arabia, Germany and Egypt showed nominal trends in investing in Pakistan with the highest volumes of investments coming from the region of United Arab Emirates. Generally, it is the averagely sized investors who prefer investing in Pakistan’s real estate.  

Potential Benefits of FDIs in Real Estate

Since real estate contributes significantly to the economy of Pakistan, investing in property may bring fruitful rewards in near future. The FDIs in Pakistan have been witnessed for being more sustained and stabilized. Moreover, there are lesser restrictions and legal requirements in case of FDIs than other forms of investments. Higher returns have also been observed in the previous years in real estate sector on the Foreign Direct Investments. With the increasing populations and urbanization trends, housing needs are increasing as well, which make the real estate one of the most lucrative sectors for potential investors.

The Barriers to FDIs

Despite the potential economic benefits of Foreign Direct Investments in real estate, the net amount in FDIs decreased by almost 1.5 percent in the last two to three years. This is probably because the government does not facilitate bringing in these investments.  There is a need to devise policies, budgets, and plans, deciding a ratio for these foreign investments, developing a mechanism and confirming terms and conditions between the investors and other concerned parties. Although there is quite a margin foreseen in real estate sector for these investments in Pakistan in this year and the coming years, experts are of the view that it will still take some time to bridge all these gaps.

Future of FDIs in Real Estate

Pakistan is now emerging on the hubs of global trade and investments. It is said that government has now started working on formulating a plan to regulate the flow of FDIs.   Security Exchange Commission of Pakistan (SECP) is specifically working on a framework to control the cashflow of foreign investments in real estate sector. With the initiation of China Pakistan Economic Corridor (CPEC), the real estate sector is likely to attract more global investments now. To further promote and encourage the trend, representatives from Pakistan can also showcase their businesses and services at international forums to attract more FDIs.

We at ilaan.com call out to all foreign investors who look forward to investing in Pakistan. We find you the best options to invest your capital with lesser risk and higher expected returns.