The Biggest Impact of CPEC is on Karachi’s Real Estate

We must know where we would end up living in the future. Maybe near seashores, Major Highways, or around highly developed areas, but for right now, CPEC is the next go-to place! The Real Estate investor, realtors, and buyers look for one thing: Value. As the opportunity costs, future predictions, and changing economics come into play, we all must gather our thoughts and invest where our future values lie. Thus we have compiled a list of reasons and with a hard-boiled discussion on CPEC, its implication on Economics and Real Estate in Karachi to specific, therefore we believe this article will help you in making the best financial choice.

Overview: Is CPEC only a two-country thing?

The China Pak Economic Corridor has many implications as it connects surrounding regions together. The Pak China ministers consider this project as the key factor in regional stability. The majority of surrounding states that would benefit from CPEC are Afghanistan, India, other central Asia countries such Egypt, Saudia Arab, the UAE, etc, and some middle Asian countries such as Azerbaijan, Kazakhstan, Turkmenistan, etc. CPEC is not just a road that links China to Pakistani Port, it contains railroad, farmlands, formation of industries, property investments, and other series of development projects that will highly contribute to the development of Pakistan’s economy.  The Series of linkage to many different regions affects the linkage of different cultures, environments, and values that enhances cultural, academic and regional understandings. This allows a free form of trade, business ventures, investment opportunities, the flow of goods in an efficient manner, production enhancements and production efficiencies, value for opportunity cost in the Real Estate sector, and Energy production. The complete linkage of these sectors is a win-win model for the economy, on the other hand, the regional linkage would share development, harmony, and economic gains.

Real Estate is yet to Bloom

The Fifth Injection that would uplift the economy is Real Estate. The factors that contribute to a sudden rise in Real Estate are astounding. The Gwadar Port is soon to be recognized as the future hub of industrialization and investment as the last checkpoint of CPEC in Gwadar itself. However, the bloom and turn of events do not end at Gwadar. Every Land that is close to CPEC would see a roaring rise in value in the future.

Now, as Real Estate suggests, the investments are done on the account of many factors, some of those factors are the location of land and future rise in the value of such lands. The Real Estate crosses those check marks when it talks about the property in linkage to CPEC.

Britain State magazine writes about the emerging economy as:

“ The GDP of Pakistan marked the growth up to 5.7 percent, making it the fifth fastest-growing Muslim country of the world leaving behind other Muslim countries like Malaysia, Indonesia, Egypt, and Turkey”

Impact of CPEC on Real Estate of Karachi

How much should we expect? The Road linking to Karachi would make matters better for the residents but how much is at stake here?. Road belts being functional would be a significant event that would highlight the true networth of many real estate projects. The value of CPEC increased from 46 billion dollars to 62 billion dollars over a few years. The change in the value of the project highlights a high potential for a further increase in value in the future, especially in the case of Real Estate. As discussed earlier, the ratio of the housing industry fulfilling the demands vs the housing needs due to rise in employment potential is leaning towards the employment side because there are currently fewer houses built but the employment surge will come in greater numbers. This puts the real estate industry at the high-end, where meeting such needs would be expected.

Housing Sector: General Overview

As stated by a government site invest.gov, the 5th most populous country, Pakistan, has 220 million citizens, whereas many citizens are part of a labor industry contributing up to 60 million laborers. The Housing sector scales with the population.

Karachi exhibits huge potential for future investments as the majority of Pakistan’s total population resides in Karachi, 4 Million stronger than the rivaling Lahore city. However other cities fall in comparison as the Gap is high between Karachi and Lahore vs Other cities. This factor entails major recollection of housing sectors and population to be in highlights.

The Reports are highlighting Growth for Years to Come

As per the Surveys Conducted by Pakistan Economic Surveys, The housing and construction sector employs 7.61%. This figure will improve as the newer private industries take part and fund the construction sectors to meet such growth. If we consider the Fiscal year of 2020, the activity for construction activity grew by 8.06% which was primarily due to government expenditure. Now since we have investors such as China along with Local and foreign investors the expenditure scales towards the proper utilization of funds. The graph below shows investment projects where the funds are to be located

How Real Estate in Karachi is the next investment hub

As the construction industry plays a role in contributing to the economy by a margin of 2.53%, we expect these figures to rise. There are many schools of thought as to how the CPEC will favor Karachi thus we further explore the merits.

Karachi will be uplifted by China through CPEC with projects few of them greatly benefit its Real estate. Real Estates would benefit from the majority of projects under CPEC planted in Karachi. The economic zones that would be created would provide the potential for industries to grow and develop as resources and taxation-limited zones are key factors in bringing the economy of Karachi together, therefore a potential for houses would arise as well. The economic zones would benefit long-term and mega-projects such as 1100km road from Karachi to Lahore, Dhabeji project, Peshawar, and Karachi main railway line. The other development projects such as Karachi Circular Railway, Orange line trains, and the Ketibander port for all capitals of their respective provinces.  would improve the value of new plots in Karachi and the prices of existing real estate projects.

The next matter to consider for Karachi real estate projects is Foreign Direct Investment due to CPEC. The FDI has never been this high in Pakistan since 1970. The FDI is said to be 17% of the GDP of the country. Such a large influx in monetary gains would be poured into many sectors therefore we can see growth in transport, construction, materials and food, health and education, and skilled labor, agriculture industry, and the human resource quality will also improve significantly. All these factors provide improvements in the standard of life for the residents, resultantly, increase in prices in of the real estates as well.

Conclusion

We believe there’s going to be a boom in the economy soon, and more specifically in the Real Estate industry of Karachi. We believe any investor looking out for the opportunity to grow his/her net worth and expand his empire should not take their eyes off CPEC and its impact on the real estate market.

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Disclaimer: We are not claiming to be your financial advisors. Be sure to consult experts before making any investment or have sound knowledge before taking such steps.