Impact of COVID-19 on Real Estate Industry of Pakistan

The global construction industry is being impacted by COVID-19 (coronavirus), with projects encountering unemployment problems, production chain challenges, and financial pressures. The COVID-19 pandemic has had negative consequences outside of the health sector, and it has sparked a global crisis that is affecting various economic sectors, including real estate. Since the beginning of 2020, the global health emergency triggered by the COVID-19 pandemic has changed living and working situations. The epidemic has triggered a crisis that is affecting all areas of the economy, including the real estate market, anda will continue to do so.

The emerging COVID had a huge influence on the residential real estate market as well as the income of Real Estate Agent. Fewer buyers were hunting for property, and fewer sellers were willing to offer their properties during a pandemic due to health concerns and stay-at-home orders.Residential real estate activity is highly dependent on local conditions, so while practically every major metro area saw a considerable dip in activity during the spring, certain places that were particularly hard struck by the pandemic saw particularly steep drops e.g. Nova City Islamabad, Capital Smart City Lahore, etc. 

Pakistan's economy was struggling to stay submerged before the COVID-19 outbreak, but it was not in forthcoming danger of collapsing. The pandemic, on the other hand, has had a devastating effect on the country's economy. While the global health catastrophe has had a significant impact on practically all countries, Pakistan's economy cannot handle the pandemic's tremendous disruption.

Higher vacancy rates for Real Estate Agent in the commercial real estate industry are projected as a result of these unfavorable events e.g. Nova City Islamabad Payment Plan, Blue World City Payment Plan, etc. Low growth prospects, combined with a higher level of uncertainty, resulting in a devaluation of commercial property portfolios held by high net worth individuals, private equity firms, private and public real estate investment trusts, or developers. As a result, these large losses are accompanied by increased leverage ratios and risk premium requirements for future investments.

In Pakistan, there is a growing interest in the real estate industry. It provides a relatively safer investment choice with consistent payment streams for many investors. Property prices in Pakistan have risen steadily over the last two decades. Housing services in Pakistan are significantly fragmented and are handled by individuals and scores of small private builders who are unable to keep up with growing property prices, resulting in an even bigger demand for property and residences. With the government's heightened focus on home development, activity at both the individual level and the rollout of new major housing projects is projected to expand.

·        Offices, plots, residential property, and houses make up the majority of the real estate supply side. The majority of Pakistan's housing infrastructure is based on suburban designs. Although there has been a recent increase in apartment complexes, it is only seen in big cities such as Karachi, Lahore (Capital Smart City Lahore), and Islamabad (Nova City Islamabad).

·        The impact of the corona pandemic has slowed real estate construction, which came to a halt during the COVID-19 lockdown. Real estate activity is reducing while prices are rising a little during the third corona wave and lockdown.

·         Property management fees, marketing, and other expenses are included in the operating costs. Due to the property's constant wear and tear, 35% of the budget is set aside for property management and maintenance. 

·   Due to lower demandand a hard economic environment in previous years, both revenue and operating profit grew slowly. The COVID-19 lockdown caused damage to the sector's cash flow since many tenants were given hefty rental waivers. 

·   In the last two years,the tax rate for real estate corporations has remained unchanged. For projects, a fixed income tax rate has been implemented.

·   The chairman of the regulatory body will be appointed by the federal government. For Real Estate Agents selling any form of property in Pakistan, registration would be required. This involves selling land, residences, and buildings.

The ongoing third wave of COVID-19 could force GOP to impose yet another lockdown, with catastrophic consequences for the industry. Furthermore, historically low borrowing rates are likely to have aided the recovery.