US investor sees Pakistan’s real estate as ‘sleeping giant’ ready to awaken

KARACHI: Pakistan is poised to emerge as a regional property investment hub by adopting key measures such as digital land records, title insurance, provincial realty regulators and special economic zones (SEZs), while ensuring consistent policy and governance, according to a US-based real estate investor.

The real-estate market in Pakistan is the second-largest sector for employment generation, following agriculture, and plays a significant role in driving economic growth by stimulating demand across various industries.

According to a report from House Building Finance Company, Pakistan’s construction sector -- a vital component of the economy -- contributes over 2.5 per cent to the GDP. The real estate sector, valued at more than $1 trillion, outperforms other major sectors within the economy. This sector is not only crucial for economic growth but also essential for addressing Pakistan’s housing crisis.

“Pakistan’s real-estate sector is indeed a sleeping giant, but several systemic challenges limit its growth,” Dr Anosh Ahmed, a leading real estate investor based in Dubai and the US, said in written responses to The News’s questions.

“First, there’s a lack of transparency and clear land ownership records, which discourages institutional and foreign investors. Second, inconsistent regulations across provinces create hurdles for large-scale development,” Ahmed said.

He said that financing options are limited, and mortgage penetration remains low compared to regional benchmarks. The absence of reliable zoning laws and master plans in many areas also leads to unplanned urban sprawl, reducing investor confidence.

“Finally, political instability and currency depreciation further increase perceived risk. To unlock its potential, Pakistan must implement structural reforms that ensure transparency, legal clarity and investor protection,” he added.

In the US, Ahmed’s real-estate portfolio includes multi-family residential developments, commercial properties and healthcare-related real estate. In Dubai, his focus has been on high-end residential and mixed-use developments, especially in freehold zones that attract international investors. According to him, both markets are strong but distinct. The US offers long-term stability, structured financing and strong regulatory protections. Dubai offers fast growth and high returns, though with a bit more volatility. “Diversifying between these markets allows us to balance risk and opportunity,” he said.

Over the past decade, Pakistan has attracted various foreign investments for development projects. However, this influx has slowed down for several reasons. Foreign direct investment (FDI) fell by 45 per cent year-on-year (YoY), reaching $95 million in February, according to data from the central bank.

However, for the period from July to February of the current fiscal year, FDI increased by 41 per cent, totalling $1.618 billion.

The construction sector received a net FDI of $13.8 million from July to February of FY25, compared with $18.3 million during the same period last year.

Ahmed said that to attract foreign investment, Pakistan needs to take a multi-pronged approach.First, introduce digital land record systems and title insurance to create trust and reduce fraud. Second, establish real estate regulatory authorities in each province, similar to Dubai’s RERA [Real Estate Regulatory Agency], to oversee compliance and protect investors, he said.

According to him, creating SEZs with streamlined approval processes and tax incentives for foreign developers can also boost interest. Encouraging public-private partnerships in housing and infrastructure is another avenue to attract long-term foreign capital.

“The biggest challenge will be consistency in policy and governance. Investors seek predictability, and frequent regulatory shifts or political disruptions undermine confidence. Addressing these foundational issues can transform Pakistan into a regional investment hub in real estate,” Ahmed said. The Association of Builders and Developers of Pakistan (ABAD) recognises the importance of the Special Investment Facilitation Council (SIFC) in attracting foreign investment to the country’s property sector.

Senior Vice Chairman of ABAD Syed Afzal Hammed said that while the SIFC aims to attract FDI into key sectors such as agriculture, livestock, IT and telecommunications, and mining, the construction sector has not been included in this list. He emphasised that foreign investors require government trust and consistency in the real estate and construction sectors, particularly concerning incentives and taxation.

Hammed noted that Pakistan’s property market has been revitalising and has seen investments from local investors over the past two months, thanks to improved economic stability. Although these investments are progressing slowly, low interest rates and falling inflation have encouraged investors and savers to funnel money into the real estate sector to purchase properties. However, larger investors have preferred to invest in Dubai over the last two to three years.