Incentives for Real Estate Builders and Investors

Great Incentives for Real Estate Builders and Investors in Pakistan

Real estate investment is among the safest long-term investment options due to the real estate sector’s market durability and increasing demand for residential and retail units.  Real estate investment is a popular trend in Pakistan, and the country’s growing demand for apartments has attracted plenty of newcomers.

Fareena Mazhar, Secretary Board of Investment (BOI), advised investors to look into Pakistan’s housing business during Dubai’s “Construction and Housing for Sustainable Development” conference. A few possibilities and incentives for property investors during the seminar were also highlighted. Below is a summary of the discussion.

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PAKISTANI INCENTIVES FOR REAL ESTATE INVESTORS

Local and international investors have made many investments in various industries during the last several years. Prime Minister Imran Khan’s current government focuses on economic reforms, policy improvements, and stimulating different sectors for economic growth. These measures have undoubtedly aided in attracting new investment and encouraging new participants in all industries.

The Pakistani government has also urged contractors, engineers, and investors to submit new projects. According to Fareena Mazhar, Pakistan’s current yearly residential demand is at 700,000 units, with barely half of it being supplied. The country has a shortage of residential units and commercial structures. This provides an opportunity for current builders and investors to expand their investments for better profits.

TAX EXEMPTION

While discussing at the conference, the BOI secretary mentioned that an amendment to the Tax Ordinance was made mainly to identify Pakistan’s building sector as an industrial venture. The industry now qualifies for advantages, incentives, and discounts offered to other sectors as a result of this legislation.

Contractors and developers who acquire construction supplies are entitled to a withholding tax exemption. On the acquisition of construction supplies other than cement and steel, the restrictions of sections 150 and 153 of the Income Tax Ordinance will not apply to engineers and contractors.

Apart from services provided by corporations, it also stipulates that withholding tax would not be imposed on plumbing, electrification, and other comparable services Dividend income provided to a person by a builder or developer firm from project earnings is also free from tax withholding duties.

TAX PAYABLE ON INCOME AND PROFITS

The government has launched the Naya Pakistan Housing Scheme, which aims to provide low-cost residential units to everyone who wants to own a home. The government offers these residential units at discounted prices via bank financing with low monthly payments.

 Contractors and engineers working on developments under the Naya Pakistan Housing and Development Authority (NAPHDA) or the Ehsaas Program would have their tax liability reduced by 90%.

These developments are taking place in both public and private territories. In terms of conditions stated by the NAPHDA, the models for both establishments differ. Both projects have the same services and incentives, which are as follows:

  • Contractors will benefit from NAPHDA’s assistance in obtaining necessary permissions and NOCs.
     
  • NAPHDA will also assist in coordinating fundamental requirements essential for the project’s development, including power, roads, water, and sanitation systems, with the relevant local governments. The foundation will be built up to the worksite, and the builder will take care of the remainder.
     
  • For the lower-income group, NAPHDA will assist in locating end purchasers and obtaining mortgage financing from banks. In the event of developments on private property, the administration will find buyers and provide mortgage financing for 20% of the low-income population.
  • Builders of low-cost homes will be eligible for a 90% tax break.

OPPORTUNITIES FOR INVESTORS AND DEVELOPERS

The government has offered these services and incentives to real estate investors and builders since this sector has tremendous potential and continues to grow.

Islamabad, Lahore, Faisalabad, Karachi, Multan, and Rawalpindi are some of Pakistan’s stable and viable real estate markets. Individuals in these cities have the need and the purchasing means to invest in excellent real estate projects.

Not everyone can manage to set aside large quantities of money for new investments. Thankfully, Pakistan’s State Bank has set necessary objectives for local banks to develop the country’s residential and building industries.

Author Bio

Muhammad Junaid is the CEO of VM Sol, senior Analyst, and Search Engine Expert. Extensive experience being an IT Manager in Kingdom Valley Islamabad. Work for years with local and international enterprises. Also, represent well-known brands in the UAE.



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