Abstract
This is the second of BMI’s reports on the real estate sector of
Pakistan.
Two major themes continue to dominate Pakistan’s real
estate sector in Q309. The first is a chronic
shortage of housing in a
country that has experienced a population boom. According to the Asian
Development Bank, Pakistan’s population is currently 163mn and is
growing at around 1.8% annually.
Press reports in April 2009 cited
minister for housing and works, Rahmatullah Kakar, as noting that the
officially estimated shortfall nationally is 7.9mn houses. The current
government is committed to building
1mn houses – principally for
low- and medium-income groups – in the coming years.
The second
theme is that, to the extent that major projects are progressing in Pakistan,
they are generally
the result of partnerships between risk-tolerant
land-owners – frequently the Defence Housing Authority
(DHA) or the
government itself – and large-scale and risk-tolerant property
developers from the Gulf
Cooperation Council (GCC) countries. Landmark
projects such as The Centaurus – reportedly Pakistan’s
first
mixed hotel-retail-office-residential project – in Islamabad are
progressing as scheduled. However,
there have been signs that other huge
developments – such as the Karachi Waterfront – have been
delayed
indefinitely.
In coming months, we will continue to focus
on:
! The absolute level of bank lending. At this stage, there is scope
for mortgage lending to grow
very rapidly – albeit from a miniscule
base.
! Slowing construction. Although by world standards construction
activity in Pakistan has been
modest, the availability of materials and
workers appears not to have been a constraint on major
developments such
as The Centaurus.
! Any clear sign of improvement in bureaucracy and the
legal system.
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