Pakistan's 12 million housing shortage offers lucrative opportunities

Dubai: Pakistan is on the brink of a massive real estate boom.

With a housing shortage of over 12 million homes, the country offers a wealth of investment opportunities, especially in the housing and construction sectors.

Amidst an expanding population and a young workforce, now is the time for developers and investors to capitalise on the growing demand for housing, supported by government incentives and a shift toward more accessible financing options.

Housing crisis

Pakistan, with its population exceeding 240 million, is in the midst of an urgent housing crisis. The country faces a significant shortage of more than 12 million homes, a gap that continues to widen due to slow growth in the housing sector.

Why shortage

However, this crisis presents a unique investment opportunity for developers and investors willing to take a long-term view. As Pakistan's young population, with a median age of just 22 years, continues to grow and urbanise, the demand for affordable, quality housing is expected to skyrocket.

Goldmine

For developers, the expanding market is a goldmine. The government is actively seeking ways to accelerate growth in the housing sector, aiming to provide affordable housing for millions of citizens, particularly low-income families.

Recently, Hassan Bakhshi, Chairman of the Association of Builders and Developers (ABAD), presented a series of actionable proposals to Pakistan Prime Minister Shehbaz Sharif, who expressed his commitment to fast-tracking reforms.

Sharif's focus on practical, implementable solutions signals a clear intention to invigorate the housing market and make it more attractive for investors.

Economic growth

While the housing sector's potential to boost economic growth is clear, Bakhshi also highlighted untapped opportunities in Pakistan's cement industry, which is currently operating at just 30% of its capacity. With cement prices significantly lower than in the Middle East, there is room for growth in construction material production, further supporting a thriving housing market.

Challenges

For investors, the challenge lies in navigating the financial landscape. Bankers have voiced concerns about long-term financing risks, given the high default rates in the sector.

Despite this, recent cuts in interest rates have boosted liquidity, opening doors for investment in the property market. With more liquidity in the system, now could be an ideal time to jumpstart real estate development projects that could meet the soaring demand for housing while driving economic progress.

Mortgage financing

The lack of affordable mortgage financing remains a hurdle for many potential homebuyers. However, Pakistan’s government is already exploring solutions to make homeownership more accessible.

Bakhshi pointed to the previous government’s success in financing over 31,000 homes at subsidised rates, suggesting that similar initiatives could be revived. This could help unlock significant opportunities for both developers and investors, who stand to benefit from a more stable, long-term housing market.

Young population

With Pakistan’s young population entering the workforce and migrating to urban centers, the demand for housing will only grow. For investors looking to diversify their portfolios, the housing and construction sectors in Pakistan offer an attractive, high-potential area for investment, especially as the government aims to resolve financial bottlenecks and stimulate growth.