Pakistan to pin all it’s hope on real estate miracle
Pakistan’s economy is showing signs of revival after being low for two years. Also, the evidence is early and this are not like the roar of an awakened lion; more the cooing of a bird that senses some mitigation in predatory circumstances. Also, the government of Imran Khan expects the real estate boom; to rev up the economy.
Much of this revival — better GDP growth figures, more credit utilization and parts of the economic sectors like agriculture; and large-scale manufacturing posting growth — would not have been possible if this wasn’t for the push from the real estate.
So, big construction to push up demand for all of its affiliated industries ; about 18 of them and has made cement factories work overtime.
Recovery in Real Estate
The government has deliberately fuel this engine of recovery by showering it with concessions like; low interest rates and fast-tracking its low-cost housing schemes.
Most of the industrialists deal in real estate as well and thus qualify for these incentives .Furthermore, on top of those that are granted to them for their other businesses. They are loving it and are quickly expanding their financial activities, breathing life back into a deflated economic body.
The Imran Khan government hopes that this activity would see another spurt in a year’s time — closer to the next elections — when not just the super-rich, but the middle and lower middle classes also begin to take part in real estate related deals.
Buying, selling and construction cycle
If that happens, the happy assumption is, Pakistan would be able to generate enough wealth to keep feeding the cycle of buying, selling and construction. The assumption should not surprise anyone.
Construction-led growth is the go-to theory of applied economists; who see this as a potent anodyne to the headache of shaking a comatose economy.
Moreover, Pakistan has a hunger for land. From those dreaming of building their small homes to those aspiring to become Rupee billionaires to those wanting to graduate to the trillionaire-club, the land ownership schemes never fail.
But the real concerns around real estate centred economic revival is that it not sustainable in the long run; that it generates inflationary pressures; and that it forces a consumption-oriented behaviour which leads to deficits and eats into the savings.
