Great Incentives For Real Estate Builders And Investors In Pakistan

Driven by demographic and socioeconomic shifts, Pakistan’s demand for housing and development projects has surged. The country’s rapidly growing population, expanding middle class, and migration of people from rural to urban areas have increased the demand for housing and development projects. There couldn’t be a better time to invest in property and construction in Pakistan, coupled with government incentives and policies to facilitate the real estate sector.


Tax Rebates

One of the most significant incentives provided by the government is in the form of tax rebates and exemptions. It includes tax holidays for builders and developers for up to 10 years, exemptions from capital gains and withholding taxes, and breaks on purchasing construction materials. Real estate projects that begin construction before September 2022 will be eligible for these tax breaks.

Tax breaks have also been offered to people investing money in new residential buildings. Overall, the new policies significantly lower costs and risks for real estate businesses and investors. This promises lucrative returns for developers and greater savings for home buyers.


Improving Market Sentiments

While the construction package focuses mainly on tax incentives, various other policy measures are also being undertaken to facilitate the growth of the real estate sector. Foremost among these is the digitization of land records and improvement in property registration systems. 

Removing deficiencies and opaqueness removes uncertainty for land owners and investors, improving their confidence in investing in projects. Amendments in foreclosure laws now also allow banks to recover bad loans by selling mortgaged land, improving credit access.

Like building new shopping malls and housing schemes, real estate infrastructure development also caters to increased demand. By enabling master planning and development works, the government reduces risk and uncertainty for real estate builders and buyers. 

Improved infrastructure expands supply and enables vertical expansion in prime urban areas that couldn’t be redeveloped earlier due to regulatory hurdles. Opening up new areas for development is incentivizing investors to undertake greenfield projects on affordable land.


Catering to Diverse Investor Needs

The incentives are targeted not just towards a specific category of large-scale formal investors but also consider the diversity of real estate developers and investors operating in Pakistan. From tax breaks for REITs – which opens alternate investment and earning opportunities for small investors – to exemptions in duties on equipment imports for developers, policy measures aim to facilitate diverse profiles investing money in the sector.


Even expatriate Pakistanis investing foreign remittances in real estate are offered incentives like attractive dollar-denominated bonds. Such measures deepen the investor base and access to capital. This wide-ranging support enables greater financial inclusion and formal participation across all investor classes.  

Incentives to Boost Affordable Housing Construction

The real estate industry offers lucrative opportunities backed by government incentives to tackle the massive housing shortage. Estimates peg the shortage at around 10 million units – so there’s ample room for growth.

The construction package makes financing more accessible for builders and buyers, enabling large-scale, affordable housing projects. State Bank has allocated at least 5% of lending to real estate developers. Preferential interest rates and relaxed borrowing limits give builders attractive reasons to build affordable housing across Pakistan.

With credit more accessible and attractive returns up for grabs, investors can invest and earn in Pakistan through real estate while filling the considerable housing gap. Lowering taxes, providing subsidies, and digitizing land records are some of the best ways to invest money in Pakistan that the government is currently undertaking to incentivize the real estate sector. 


Incentivizing Private Sector Involvement

While most past infrastructure and new city projects were undertaken solely through government funding, the emerging PPP models incentivize greater private sector involvement. Viability gap funding, joint ownership projects, and land/infrastructure sharing models allow businesses to recover investments and profit while collaborating on public projects. 

Developers collaborating on government-backed projects can access incentives like tax breaks and cheaper loans and help acquire land. It makes risky projects more viable. So, these schemes attract private investment in initiatives they previously needed help to undertake.

Realizing Full Potential of Incentives

To fully achieve the vision of economic turnaround led by construction, consistent policy measures and regional developments must align with the incentives being provided. Sustaining a double-digit trajectory will need extensive multi-pronged efforts. Reforms across areas like land purchase, expediting permits, nurturing end-to-end construction industry ecosystems, upgrading allied infrastructure, and periodic evaluation of policies against market dynamics – all play vital roles. 

Effective implementation mechanisms must also be instituted for the timely delivery of projects and to prevent misuse of incentives. Sustaining investor confidence is critical to unlocking the full potential of the construction and real estate sector.  



The government’s current incentives provide unmatched benefits for people and businesses associated with the real estate sector in Pakistan. By addressing structural issues that impeded growth until now, these incentives can potentially transform the real estate landscape in Pakistan.