Plan to revive real estate sector with Gulf investment amid war

ISLAMABAD (Dunya News) – The government has finalized a comprehensive package of measures aimed at reviving the real estate sector, sources revealed.

The initiative seeks to stimulate market activity by attracting dollar-denominated investments from overseas Pakistanis and foreign investors, particularly in response to shifting economic dynamics in Gulf countries.

According to sources, the proposed package includes the establishment of Special Investment Zones, promotion of Real Estate Investment Trusts (REITs), and the introduction of escrow accounts to enhance transparency and security in property transactions.

Under the escrow system, buyers will deposit funds with a third party or bank, which will release payments to sellers only after both parties fulfill their contractual obligations. This mechanism is intended to reduce fraud, minimize financial risks, and strengthen trust in the sector.

The package is expected to be unveiled on April 7, although the timeline may change. Authorities are also considering a regulatory framework similar to the Real Estate Regulatory Authority (RERA) model practiced in Gulf countries. This would mandate registration of developers and agents, ensure transparent information for buyers, enforce timely project completion, and establish a formal complaint redressal system. Escrow arrangements would be integrated to further safeguard buyers’ funds.

The government also aims to capitalize on shifting investment trends in the Gulf by channeling funds into Pakistan’s property market. Incentives are expected to primarily target tax filers, with limited relief for non-filers.

To facilitate overseas Pakistanis, proposals include abolishing Federal Excise Duty (FED) on property purchases for expatriates and removing the requirement for a No Objection Certificate (NOC) for tax exemptions. A broader plan to eliminate FED on real estate transactions is also under consideration, with the expectation that it will boost construction activity and increase overall tax revenues.

Additional measures may be introduced in the upcoming budget, subject to IMF approval. These could include revisions to FED for late filers and non-filers, as well as adjustments in withholding taxes on property transactions.

Plans are also underway to formally register builders and developers associated with the sector. Furthermore, the package proposes a fixed markup rate of 5 percent on home financing for properties valued up to Rs10 million, aimed at promoting affordable housing and expanding access to mortgage facilities.