Urbanization and Its Impact on The Real Estate Industry of Pakistan

February 11, 2022

The real estate industry is one of the most important sectors in any country. It has been estimated that this sector contributes about 10% to 15% of a nation’s GDP and provides employment for nearly 25 million people across the globe. In developed countries, it accounts for 20% of total corporate profits. In developing economies like India, Indonesia, China and Pakistan, the share is even higher. The real estate industry has a direct impact on the economy of any country. If we look at Pakistan, then the contribution of this sector towards our national income is estimated to be around 8%. However, as per the current economic condition of Pakistan, it seems that the contribution of this sector will come down drastically. 

In recent years, there has been an increase in urbanization all over the world. As cities become more crowded and the population increases, the demand for residential units also rises. This leads to increased construction activities in many parts of the world. Pakistan is no exception. Since its independence, the country has undergone tremendous change with regards to demographic growth, industrial development and political instability. All these factors have had their impact on the real estate market in Pakistan. 

Here’s How Urbanization Has Impacted the Real Estate Industry in Pakistan 

  1. Residential Housing

With increasing population, the need for residential units increases. This is because the population density increases in the urban areas and space becomes scarce. The demand for residential units also goes up due to the shortage of jobs available in the urban areas. With the availability of jobs, the demand for houses increases and prices go up. This is a vicious cycle which can only end when the economy improves or the government takes some drastic measures to curb the rising cost of living. 

  1. Commercial Property

Commercial property is usually located close to the residential properties. The reason being that commercial properties are used by large numbers of people who live nearby. For example, if you own a shop in the heart of the city, chances are that your customers will live very close to your shop. Therefore, the demand for commercial properties is high. However, in case of Pakistan, the demand for commercial property has decreased considerably over the past few years. This is mainly due to the fact that the government has not taken adequate steps to improve the infrastructure of the cities. 

  1. Office Space

Due to the rapid growth of the business sector, there has been an increase in the number of offices in Pakistan. As a result, the demand for office space has also increased. The demand for office space is influenced by several factors such as the level of competition between businesses, the size of their organizations and the location of their offices. In case of Pakistan, the demand for office space has increased in the last few years due to the influx of foreign companies into the country. 

  1. Industrial Buildings

Industrial buildings are constructed for various purposes. Some of them are used as warehouses while others are used as factories. Due to the high demand for warehouse space, industrial buildings are quite popular among investors. However, since Pakistan lacks sufficient industrial facilities, the demand for industrial buildings remains low. 

  1. Hospitals

Hospitals are built to provide medical services to the public. They offer quality health care to the masses. The demand for hospitals is therefore high. However, the demand for hospital spaces is not so high. This is because the number of hospitals is limited and they do not have enough capacity to meet the growing needs of the population. 

  1. Educational Institutions

Educational institutions are one of the most important assets for any country. If educational institutions fail to produce talented students, the country fails to progress. Therefore, it is necessary for a country to invest in education sector in order to develop itself. Pakistan has recently seen a rise in the number of private schools and colleges due to the increase in the number of affluent families. As a result, the demand for educational institutions has also increased. 

  1. Shopping Malls

Shopping malls are usually located near the residential areas. This is because the demand for retail spaces is high in residential areas. Most of the shopping malls in Pakistan are owned by the government. These malls are primarily used for the purpose of providing basic amenities to the citizens of Pakistan. 

  1. Sports Facilities

Sports facilities are essential for the development of any sportsman. However, in Pakistan, there are very few facilities for the development of professional athletes. The lack of these facilities is a major deterrent for the growth of professional sports in the country. 

  1. Hotels

Hotels are another asset which is highly valued in every country. However, in Pakistan, the hotel industry has not been able to achieve the desired results. This is mainly due to the fact that the number of hotels in Pakistan is too small. There is also a dearth of trained professionals in the hotel industry. Moreover, the number of tourists visiting Pakistan is not sufficient to support the existing number of hotels. 

  1. Entertainment Centres

Entertainment centres are often located in the suburbs of cities. This is because the entertainment sector in any city is closely related to the residential area. In case of Pakistan, the demand for entertainment centres has increased over the last few years. However, the demand for these centres has been unable to keep pace with the supply due to the absence of skilled manpower. 

Final Words 

As mentioned earlier, the real estate sector is very important for any country. Therefore, it is necessary to understand the impact of urbanization on the real estate industry. This will help us identify the problems faced by the real estate industry in Pakistan and suggest ways to solve them. 

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