REPORT

REAL ESTATE SECTOR OF KARACHI

COURSE: ANALYSIS OF PAKISTAN

INDUSTRY
FACULTY : SIR MUHAMMAD ZUBAIR

SUBMITTED BY:
ABDUL JABBAR (21374)
USAMA FAROOQ (21354)
SYEDA MEHER UN NISA(20849)
HAMZA AHMED (18577)
S.SAMAN ZEHRA (19936)
1. ABSTRACT
Karachi, the financial hub of the country has proved to be very quick in responding to the
progress many people are dreaming to see in the near future. The mega city faces the massive
and sudden rise in transaction volume the very next day after the General Elections 2018.
According to reports, the buyers were keen to settle their transactions for lucrative real estate
developments.

Traditionally, the real estate sector has been used for parking of black money. To curtail this
activity and to regulate the sector, the Pakistan Tehreek Insaf (PTI) led government has initiated
various policy options to control the further flow of illicit money into the property market.
Through the Finance Act 2018, the government had prohibited non-filers of income tax returns
from buying property valued above PKR 4 million.

Market sources and our interviews/discussions with senior real estate professionals and seasoned
brokers indicate that registration issues with the government have slowed the pace of
transactions in the sector, but our view is that this is a temporary short term phase.

2. PROBLEM STATEMENT
Real estate sector of Karachi is suffering a lot due to difficult tax policies (filers and non filers),
uncertain economic conditions and high registration cost.

3. OBJECTIVE
1. To find out the impact of taxation policy on real estate sector of Karachi.

2. To find out reasons for decrease in the value of the property.

3. To find the reasons for decrease in demand of the property.

4. RESEARCH QUESTIONS
R1:​ Is tax policy the main reason for the decline in the value of the property in karachi ?

R2:​ Is prohibiting the non-filers of income tax returns reduces the buyers and sellers in the
market ?

R3:​ Is uncertain economic condition in the country affecting the real estate sector ?

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5. RESEARCH DESIGN
The research design includes question designing, sampling and data gathering.

The findings for this research project are objective.

The main source of the data will be primary data

Questionnaire will be focused mainly on obtaining objective answers from the sample. Type of
questions will be close-ended questions.

The survey questions will be worded in simple words, no jargon included. The sample is going to
be Real estate agents from different areas and deals in buying and selling of the property.

6. SELECTION OF SAMPLE
The target population for our research project are Real estate agents of karachi

The sample will be large enough to reflect the opinion of the entire population.

And it will be of size of 20 to 25 real estate agents.

7. DATA ANALYSIS
Descriptive analysis through Microsoft excel and charts from google forms will be used to
analyse the data.

The nature of the data will be objective.. The numerical data will also be provided along with the
detailed analysis.

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8. ANALYSIS OF THE FINDINGS

8.1

According to the above graph 96% of the real estate agents says that the current condition of the
country affects the property prices in karachi. where as only 4% are not in favour of this that
current condition of the country as an impact on property prices in karachi.

8.2

According to the above bar chart which shows reasons why people are not investing in real estate
sector in karachi so the major reason which these agents think is the taxation policy of
government as 88% people supported this.where as 52% think also think that uncertain economic
conditions and high inflation are also a barrier to the investment in real estate sector of
karachi.There are few agents says low return on investment and illegal documents are also the
minor reasons for low investment in the sector.

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8.3

Above pie chart shows the impact of tax issue of filers and non-filers on real estate sector.

76% of the respondents say that tax issues affect the industry negatively on the other hand 20%
of the respondents say that tax issues affect the industry positively.

And 4% of the respondents says that there is no effect of tax issue on the industry.

8.4

According to the above results 88% of the respondents say that taxation policy is the main reason
for the reduction in demand of the property and 12% did not consider taxation policy the main
reason for the decline in demand of property in karachi.

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8.5

98% of the respondents agrees that uncertain economic condition limits the buyer and seller in
the market as people are reluctant to invest in real estate sector. And 2% of the respondents says
uncertain economic condition does not limit the buyer and seller in the market.

8.6

Above graph shows that 56% of the respondents consider inflation the main reason for decline in
the property value and 44% of the respondents did not consider inflation the main reason for the
decline in the property value.

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8.7

According to the above graph 96% of the respondents say that limit imposed on non-filers to
purchase property reduce the investment in the sector.

9.CONCLUSION
According to the findings of the research it is found that taxation policy is the major reason
which affects the real estate sector of karachi whereas uncertain economic conditions and high
inflation also plays a role in reducing the investment in the real estate sector.

10.RECOMMENDATIONS
1.Government should increase the limit for non-filers so that investment can increase in the
market.

2.Inflation has to be controlled to increase the demand for property.

3.Government should make policies which brings certainty in the market.

4.Government should make registration process for property.

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11.APPENDIX

11.1. QUESTIONNAIRE:

REAL ESTATE SECTOR SURVEY

Assalam alaikum. We are the students of IOBM , currently enrolled in the course of API
(ANALYSIS OF PAKISTAN INDUSTRIES).Our research area is the real estate sector of
Karachi. We intend to collect information from various real estate agents for the purpose of
knowing the impact of government policies on this sector and the reasons behind the reduction in
investment and declining property value. The questionnaire wouldn’t take more than 15 minutes
of your time. Thank you for your help.

* Required

1. Real Estate Agency Name *

2. Area Name . *

3. When was your agency created? *

4. How long have you been in this field? *

5. What activities are done in your agency? *

Check all that apply.

❏ Sales
❏ Renting
❏ Co-ownership management
❏ Above All

6. How many members of staff work in your agency (including you)? *

❏ 0-1
❏ 2-5
❏ 6- 15
❏ 16 or more
❏ Other:

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7. Are you a member of an association or national network of real estate agents? *
❏ Yes
❏ No
❏ Other:

8. Which type of property do you sell most? *

Check all that apply.

❏ Flats
❏ Detached houses
❏ Semi-detached houses
❏ Terraced houses
❏ Commercial premises
❏ Other:

9. Do you have a website? *

❏ Yes
❏ No
❏ Other:

10. How would you describe the level of competition in the area around your
agency? *
❏ Intense competition
❏ Mild Competition
❏ No Competition at all

11. In what age group your client of your agency? *

❏ Under 30
❏ 30 – 45
❏ 45 – 60
❏ Over 60 / retired
❏ Other:

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12. What occupational group does your clients belong to? *
Check all that apply.

❏ High income occupation

❏ Intermediate income / occupation
❏ Lower income / occupation
❏ Retired
❏ Unemployed
❏ Other:

13. Who are your clients? *

Check all that apply.

❏ Single
❏ Married couples
❏ Families with children
❏ Other:

14. How often do you take part in real estate events? *

❏ Never
❏ Sometimes
❏ Often
❏ Very often
❏ Other:

15. Which media do you use to promote your agency? *

Check all that apply.

❏ Internet
❏ Flyers
❏ TV
❏ Radio
❏ Ads in newspapers
❏ Others:

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16. How many residential real estate transactions have you been a part of in the
past year? *
❏ 0 - 10
❏ 11 - 20
❏ 21 - 30
❏ 30 and above

17. What was the price range of homes you helped clients buy within the last
year?*
Check all that apply.

❏ 5 - 20 million
❏ 21 - 40 million
❏ 41 - 60 million
❏ 61 - 80 million
❏ 81 - 100 million
❏ 100 million and above

18. Do you think the current condition of the country affects the property prices?*
❏ Yes
❏ No

19. Why people are not investing in real estate sector in Karachi? *
Check all that apply.

❏ uncertain economic conditions

❏ taxation policy
❏ inflation
❏ Low return on investment
❏ Illegal documents
❏ Other:

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20. In what way Filer and Non-filer tax issue is affecting Real estate industry?*
❏ positively
❏ negatively
❏ no affect

21. Is taxation policy the main reason for reduction in demand? *

❏ Yes
❏ No

22. Does uncertain economic conditions limit the buyer and seller in the market? *
❏ Yes
❏ No

23. Is inflation the main reason for the decline in the property value? *
❏ Yes
❏ No

24. Will the limit imposed on non-filers by government affect the investment in the
market? *
❏ Yes
❏ No

25. Which era do you consider to be the most favorable for the real estate
industry?*
❏ 2001-2008
❏ 2008-2013
❏ 2013-2018

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