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The year 2023 Pakistan real estate forecast | Best investments

Posted by Capt Shahnawaz on January 17, 2023
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What is the future of Pakistan real estate in 2023 |Analysis & predictions?

Happy New Year to all of you and thank you for being part of imlaak in 2022. In the year 2023 Pakistan real estate forecast, we will try to figure out the direction of the Pakistan real estate market in 2023. Our forecast for the year 2022 turned out to be almost 100% accurate in predicting market trends. I can almost feel all of you smiling and content with the decisions we made together in 2022.

Real estate in Pakistan has always been one of the most prominent investments made by Pakistanis all across the globe. It has paid huge dividends over the years, for an uninformed investor real estate may only be making a maximum of 10% per annum. However, for the savvy, it is the best instrument to amass wealth. The year 2023 brings a lot of challenges for the real estate sector and it is imperative that we strictly follow our plans, to be successful. The real estate investments in the year 2023 are going to check your patience, temperament, and your ability to concentrate in the right direction.

The dynamics of investments in Pakistan real estate are changing and therefore we need to change our practices as well. In this article, we will find out the best real estate investment available in the year 2023 in Pakistan’s real estate sector.

Summary Round-Up of 2022

The year 2022 proved very turbulent for the real estate market in Pakistan. It started with an increase in FBR valuation tables, and in the June Budget, the Government clearly dictated the direction of the real estate market towards the construction sector of real estate.

The Government of Pakistan and then finance minister “Miftah Ismail” did not shy in snubbing unproductive and traditional real estate, plots, etc. as one of the major hurdles in the economic progression of Pakistan.

In the budget, three major changes hurt traditional real estate such as plots. Firstly, the capital gain tax time period was extended to six years, and secondly, the rental deem tax was added to the property. Thirdly, withholding tax for filers was increased from 1% to 2% and for non-filers, it is increased from 2% to 5%.

In contrast, in the construction sector, the capital gain tax period is applicable only for two years. In addition, the rental deem tax is not applicable if rental income tax is being paid.

A lot of people remained in denial and thought that this would not affect real estate. Obviously, the year 2022 ended with regret for them as they could not see the writing on the well.

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Pakistan Real estate /economic conditions at the start of 2023

This is a Golden opportunity for Expats to invest in Pakistan real estate at lower prices, especially in installments and construction projects.

DHA Lahore transfer stats tell us that the transfers are down by only 70%. The end user areas such as Phase 6, Phase 7, and Phase 8 have been able to hold on their own, but most investment areas are struggling.

The appreciation in USD has nullified the gains made in plots and files and proved to be a disappointment for Expats.

The good thing is that we are now out of any threat of an immediate economic default. The Government has secured 11 B USD in the shape of aid and loans. IMF will soon offer another bailout package. This is a much-needed relief for our economy and is a positive sign for investors.

9 prism continues to slide downwards, DHA Multan after its high at the start of 2022 is now down by 20 to 30%. DHA Gujranwala is facing the same situation; however, the worst hit is DHA Quetta this year which is almost down by 50%.

On the flip side construction projects have gained momentum and prices of apartment projects both existing and new launches have risen to 50% this year. The biggest capital gains are seen in the new launches and projects such as Sixty6 Gulberg.

This is exactly why construction projects that cater to end users are always the best hedge against rising prices and inflation. Our strategy has paid us huge dividends in the year 2022 when most people perceived real estate is going down, we made huge gains.

Most people who listened to our advice in 2022 have gained more than 20 -30% on their investments even in terms of USD.

The year 2023 real estate forecast Pakistan

The year 2023 is going to be very critical for real estate. The lines have been drawn, and the stage is set. Those who turn a blind eye to reality will face the consequences in the coming years.

In addition, historically election years usually see less activity in the investment sector. Therefore, we are dividing our real estate into two sectors to gear up for the future.

  1. The investment grabbing short-term trading areas which include mostly plots and files sector.
  2. The end-use market of construction & rental properties.

Trading in plots and files

Trading in plots and files is now a thing of the past. We may see a few areas showing improvement, but the short-term highs will not last long. The general investor sentiment will be negative towards this sector as per the year 2023 Pakistan real estate forecast.

The Government of Pakistan clearly discouraged investors to invest in plots and files in the budget 2022-23. This trend will continue in 2023-24 and investment properties will take a big hit.

However, this is actually good news for savvy investors. It is time they start making an entry into real estate investments when prices are undergoing correction.

The big question is should you invest in real estate in 2023 or wait for further correction in 2024? Let me know what you guys think in the comments below.

End-user market | construction sector | rental properties

This is the evergreen market which is not dependent on investor sentiment as such. These areas are fueled by the real demand in the market and therefore will remain lucrative in 2023. The higher-than-usual inflation and PKR depreciation will further add to gains in this sector.

This is where Expats can really enjoy the full potential of paying in USD and enjoying the appreciation due to PKR depreciation. Installment projects which will produce rental income are my instrument of choice as you will be paying overtime thus minimizing the impact of PKR depreciation while enjoying 100% of capital gains on leverage.

As per calculations, you will pay 20% less approx in USD if you invest in an installment project. For e.g if you invest in an apartment that costs 70000 USD today, you will only pay 60000 USD as Dollar is expected to increase in value over the 2 or 3 years installment period.

Lahore Masterplan 2050

The Punjab Govt has also revealed Lahore Masterplan 2050. I do not see any immediate impact of the master plan in the real estate sector in 2023. However, we will discuss it in detail in an upcoming blog for planning purposes.

At Imlaak we only deal in select societies and bring the safest of investments with maximum growth potential, from all over Pakistan. The list of societies and projects in Pakistan which are best for investment in the year 2023 is as under:

Watch the Full Video on Real estate forecast for the year 2023

Apartment / Construction Projects Investment in Pakistan

The Government is going to focus more on real estate construction projects in the year 2023. The housing demand in Pakistan can only be met through high-rises.  The major factors which support and strengthen the case of high rise are:

  1. Pakistan has the fastest rural-to-urban migration trend in Southeast Asia, it is expected that by 2025 more than half of Pakistan’s population will live in the cities.
  2. The population of Pakistan is expected to rise to 35 crores by 2050 and most of them will be living in the cities.
  3. Lahore is experiencing an unprecedented urban sprawl and due to a population growth rate of 4% per annum, the population of Lahore is expected to reach 30 M by 2050.

The best thing I love about installment projects is the flexibility and hedge against bad markets and even USD appreciation. As you are paying slowly over years, the ROI is usually much, much better than you can get in plots. In addition, they make great rental properties if you have a bit of patience.

The projects listed below are the best available and will offer you 20 to 40% annual returns.

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Sixty6 Gulberg Luxury Serviced / Hotel Apartments in Lahore

As part of our 1 crore challenge, Sixty6 Gulberg has already gained more than 50% in 2022 and is expected to gain another 60% till its completion in Dec 2024.

Sixty6 Gulberg developed by imperium developers consists of 1, 2 bed serviced/hotel apartments and 3 Bed penthouses, purpose-built for short-term rental management.

It is the first-ever smart rental building in Pakistan. Sixty6 Gulberg is the ace of serviced and hotel apartments in Lahore. It is a complete hybrid model offering a 5-star experience. It has three fine-dining restaurants, a coffee and pastry shop, a health bar, and a cigar lounge.

The building has been designed to maximize rental income for its owners and introduce a transparent pool rental management system to be run through an online portal.

Surprise Project coming soon

Yes, we are almost ready to launch our second purpose-built serviced apartment building designed to generate rental income.

The details of the project are still a secret; however, you can register your interest if you want to avail of pre-launch prices and we will get back to you as soon as we are ready to launch the project.

Just like our previous projects the prices and planning of the building will be optimized to maximize investors’ profits.

Goldcrest Mall and Residency DHA Lahore

Goldcrest Mall and residency continues to thrive after its possession. The apartments give a rental yield of more than 15% to those who invested in this project in 2018 or 2019.

1 Bed rental is approx. 1 lac and 2-bed rental go up to 2.5 lacs. Prices of apartments vary between 23000 to 27000 per sqft. Now we also have fully furnished options available for sale.

The commercials, however, are still waiting for an upward boost. The reason is slower than expected expectancy and delay in the opening of the cinema, play area, and food court.

This is all about to change before June 2023 as over 22000 sqft of the first floor has been rented out by Alfatah and other brands are likely to open up shortly on the first floor.

Besides this food court, play area, and cinema should be operational as well before June 2023.

This is the best time to invest in the commercials of Goldcrest commercial malls which are already giving a guaranteed rental return to their owners.

Downtown Mall & Residences Gulberg Lahore

Downtown Mall liberty possession may have been delayed but that did not stop the prices to reach above 40000 per sqft landmark.

Owing to its superior location the project is expected to be completed by the end of this year.

The hotel rooms seem to be a good option, which is around 37000 to 39000 per sqft as compared to 55000 to 65000 PKR per sqft price in a similar type of projects in Gulberg.

DHA Lahore Residential Plots | Year 2023 Pakistan real estate Forecast

This year we may see more corrections in areas that are not developed yet. Firstly, it is an election year, and we may see some political instability, secondly, Government policies do not support investments in plots & files.

This further correction might bring some wonderful opportunities for investment for long-term investors. It is the start of a downtrend cycle, and you will have to be careful to select areas to invest in.

For the end-user, 2023 brings a lot of opportunity as you can now secure a plot at a good price if you want to build your house in a year or two.

Lastly, if you are an Expat, 2023 may be the best year for you to invest in Pakistan real estate as the USD is all-time high and plot prices are coming down.

Remain tuned for any trading opportunities in the residential plot sector that may arise during 2023.

DHA Lahore Phase 9 Town

9 town is now an end-user market, and we will see stable prices and growth in this phase. In 2023 it is only suitable to buy a house to rent out and not a plot.

DHA Lahore Phase 7

Phase 7 showed has sustained its prices in 2022 and only experienced a correction of 5% at the max.

DHA is planning a lot of activities in Phase 7 and this should keep Phase 7 of DHA Lahore in limelight in 2023.

Already carrefour and Mcdonalds are opening up in Phase 7 and most possibly we will hear news about theme parks etc.

DHA Lahore Phase 6

DHA Lahore Phase 6 remained steady throughout 2022 and kept gaining bit by bit. It is now an end-user area and unlikely to suffer any major correction in 2023. It is also the best phase to look for rental income options in the residential sector.

DHA Lahore Phase 8

DHA Lahore Phase 8 is expected to remain steady as well just like Phase 6 in 2023. It is an enclosed and secure Phase and in time will become the best place to own a plot for your own home in all of DHA Lahore.

DHA Lahore Phase 9 Prism

Phase 9 Prism has already undergone a correction of 2 M as predicted in our yearly real estate forecast for 2022. Possession of more blocks in this year is positive news for 9 prism, but the overall negative sentiment will keep it under pressure.

If you are a long-term investor, it might be a good idea to invest in 9 Prism late this year if another 15 – 20% correction takes place.

DHA Lahore Phase 10

If you did not take an exit in 2022 as advised in our real estate forecast 2022, you may have to wait a bit more now.

Phase 10 DHA Lahore still needs a bit more time to gather momentum. If prices go around 8 -9 M, I suggest that you invest for a quick short-term trade.

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DHA Lahore Commercial Investments Forecast

Commercials like construction projects remain my favorite in our real estate forecast for the year 2023 due to the prospect of generating rental income as well as capital gains.

DHA Lahore offers a lot of well-planned commercial areas with multiple opportunities for high-end investors.

Defence Raya Commercials

Defence Raya commercials are fast becoming a hub of commercial activity in Phase 6. The prices vary from 37 crores to 55 crores and the rent varies from 12 lacs to 18 lacs per month.

This amounts to around 4% yield from rental income per annum. 4% is usually the average in most commercial areas of DHA Lahore.

You can further expect anywhere between 6 to 10% capital gains per annum on average.

CCA 1 & CCA 2 of Phase 8

CCA 1 and CCA 2 of Phase 8 have not shown any huge gains so far. It may still be a few more years’ wait to see them blooming but if you want to secure a good commercial at a low price CCA 1 and CCA 2 may be good areas to look at.

Broadway commercial Phase 8

Broadway offers better commercial potential than CCA 1 and CCA 2 both in terms of immediate rental income and capital gains in the future.

If you have budget issues, this may be suitable for you to construct a commercial here and put it on rent for the long term.

Holding a plot that can offer good rental income if the plaza is built on it does not make sense to me. It may be a while before it gives real capital gains therefore if you have a plot it is best to construct it and rent it out.

Park View 4 Marla files Phase 8

Billions of rupees are stuck in these files and there is no clear policy so far. The prices have gone up to 30 M and I would suggest bailing out if you haven’t already in 2022.

MB commercials

One of the best places for steady rental income is DHA Lahore. MB has established itself as the commercial hub of DHA Lahore and we will see more activity in 2023. However, prices shall remain stable because of rental income prospects.

CCA 2 Phase 6

Why bother when you have MB? Keep your focus on MB in Phase 6 in 2021 until the Bedian road expansion project. If you are looking for a mid-range commercial investment, then the Broadway commercial of Phase 8 is more relevant.

CCA 1,2,3,4 & 5 Phase 7

I don’t see a lot of rental income potential on Phase 7 commercials in 2023. However, if you are looking for a long-term investment of 5 to 10 years, this may be a good place to secure a commercial as per year 2023 Pakistan real estate forecast.

9 Town 4 Marla Plots

I do believe that with the ever-increasing population of 9 town, commercial activity will soon start thriving. However, I expect mid to low-level rental activity for now which is suitable if you don’t have the budget to invest in high-end commercial areas such as MB, Raya, or Broadway.

Zone 1 , 2 & 3 & Oval commercial Phase 9 prism

Commercials in 9 prism may go through speculative bubbles but it is still years away from producing any significant rental income.

I will not recommend it except for speculative trading if prices undergo a correction of 30 to 40%.

DHA Phase 11, Phase 2 Ext Rahbar commercial

You can not invest everywhere, select the best in your budget. In this investment, look at 9 Town commercial or preferably Phase 7.

Other Cities Year 2023 Pakistan real estate forecast

DHA Gujranwala year 2023 Pakistan real estate forecast

DHA Gujranwala balloting did not significantly trigger any major boon. The prices are still around 1 crore for plots and suitable for investment with a time frame of 2 to 3 years.

Residential plots and main commercial areas near GT road will remain my priority. It is a good time to invest in DHA Gujranwala if you have the patience or you can wait for 2023 to be over to decide what to do.

DHA Multan year 2023 Pakistan real estate forecast

As per year 2023 Pakistan real estate forecast DHA Multan is much ahead of DHA Gujranwala in terms of development. The prices have also gone through a 20 to 30% correction and now you can almost purchase a plot at the same price as of a file a few years ago.

This is especially true for Expats who purchase using USD. You can now safely invest in DHA Multan without worrying about correction, just keep in mind a 2 years tenure at least in your plan for this investment to be fruitful.

DHA Quetta 2023 yearly Pakistan real estate forecast

DHA Quetta is a train wreck, and that always brings the best opportunities for investment. Balloting has already taken place without any respite for investors. The low prices and correction point towards a possible entry for investment.

However, I will be careful when it comes to DHA Quetta and will only invest if I am able to hold my property for at least 5 years. The speculative bubbles are hard to predict so keep a long-term target and wait for the reward.

Gwadar Pakistan yearly 2023 real estate forecast

Gwadar real estate has shown a negligible change in 2022. The low prices or any major shift towards CPEC by the Government may spark the interest of investors in 2023. Although a bit risky. Your money is safe as you will buy at lower prices and can hold it for a couple of years to sell when the market rises. It will not be a surprise to me if investor focuses shifts to Gwadar in 2023.

If you have a big portfolio of investments, it may be the right time to put some eggs in Gwadar for the long term.

Conclusion year 2023 Pakistan real estate forecast

  1. Rental properties including commercials, high-rise apartments, and offices will offer the best investment opportunities in the year 2023.
  2. Investment in plots and files should only be made with a long-term perspective.
  3. For Expats, this is the right time to invest when the USD is higher, and the real estate market is crashing.
  4. Rental properties should remain the focus for all investors, Expats, or locals.
  5. Installment projects will offer the best returns in capital gains and rental income, especially for Expats.

As per year 2023 Pakistan real estate forecast, speculative trading in plots & files will be under a lot of pressure as unpredictability surrounds this sector. It is better to take an exit and wait for the next opportunity if you are a speculative trader or move your investments toward rental properties.

The best places you can look into in 2023 are rental properties such as commercials in DHA, Luxury apartments including serviced apartments, and hotel rooms in DHA & Gulberg.

________________________________________

Captain (Retd) Shahnawaz Yaqub Bhatti

Investment Consultant and CEO at Imlaak

Mob : +92 333 1616160 (WhatsApp)

Mob : +92 300 2048048 ( WhatsApp)

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Jay

This is your analysis of Lahore not Pakistan. You didnt mention Karachi at all.

Ahsan

Excellent analysis

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