Govt loans turn out to be stimulant for real estate

In the wake of Pakistan's Prime Minister's housing scheme, the real estate sector has experienced a noticeable boost in recent months, according to builders and developers. The program, which provides loans of up to Rs10 million on easy instalments, has offered much-needed liquidity to a sector that has been struggling with a shortage of houses and rising construction costs.

Hassan Bakhshi, chairman of the Association of Builders and Developers (Abad), noted that most individuals cannot afford an apartment due to the prohibitive purchasing price for the middle class. The scheme has reportedly stimulated purchasing activity and liquidity in the market.

Builders admit that banks are cautious about issuing loans as many projects remain illegal due to lack of proper design and approval from the Sindh Building Control Authority. Consequently, banks have not issued loans at the scale anticipated, but they face legitimate challenges in providing financing. This reluctance from banks has encouraged builders to complete projects that were previously unfulfilled due to a lack of funds from borrowers.

The positive momentum in the construction industry has been a boon, not just for the real estate sector, but also for over 70 related industries. The outflow of money from Pakistan to Dubai for property purchases has decreased as investors now prefer to invest at home, leading to a correction in property prices. Defence Society, a popular area for property investment, has seen a 60pc rise in prices over the last month, as investors seek stability and liquidity within the country.

Overall, the government's housing initiative has catalyzed the construction industry, bringing growth and development to a sector that has long been in need of revitalization.