Unveiling Pakistan’s Real Estate Landscape

July 3, 2025

The real estate business in Pakistan is one of the roadblocks of the Pakistani economy – devastated by the rapid urbanization process, population change, and economic policy adjustment. As an investor, policymaker or property professional, it is essential to know its latest size, dynamics and challenges. Through this comprehensive deep dive, we have disaggregated the latest data, mapped regional deviations, identified growth areas, and assessed the future outlook all in a relatable, conversational manner.

Market Size & Economic Impact

A Sector worth a Trillion Dollars

In 2024, the size of the real estate market in Pakistan is estimated to be about US$1.98 trillion, and it is projected to reach US$2.41 trillion by 2029, with the moderate annual growth rate of about 4 percent.

The residential assets are prevailing with approximately US$1.28 trillion in 2024.

In percentage of GDP, real estate and construction are consistently at 2 3%, a reasonable and sizeable percentage that reflects domestic wealth as well as absorption of labor.

City / Country Dynamics

Population Surge

As per the digital census of Pakistan in 2023, the population was 241.5M with a 2.55 percent annual growth rate. The rural/urban divide is ~ 62% rural, ~ 38% urban.

The pace of urbanization increased over the past few years: 36.4% urban in 2017 to now almost 39%.

Implications

This urbanization movement can be explained as an increase in the demand of apartments, gated community projects, and vertical residential and commercial developments – concentrated primarily in Lahore, Karachi, and Islamabad.

Sector-Wise Snapshot

Residential

The growth in house prices is at an average of 8 10 percent in a year with the luxury units in the metros recording a growth of 12 15 percent.

The housing sector in Pakistan experiences a gap of more than 2 million units every year; however, the formal construction is low–approximately 300,000 500,000 units annually.

In 2010, a shortage of 4.4-million urban units was reported; that number is still increasing.

Commercial

The project size of the commercial real estate business is estimated to be US$704 billion in 2024 and will grow at a CAGR of approximately 3.8% to attain an estimated size of US$851 billion by 2029.

The services industry and the nascent e-commerce facilities underpin the demand of office and retail space.

Industrial / Mixed-Use

Newer industries such as logistics centres, warehousing and mixed-use projects are expanding due to infrastructure spending and the growth of e-commerce.

Growth drivers applicable in the business include:

Demographics Urbanization

With a population of 241.5 million and rising, usage trends are pushing toward urban living, offering tailwinds to builders and developers.

Middle-Class Momentum

The middle class is growing, at an estimated rate of 5 percent a year, and is a continued source of demand in modern housing, gated communities, and other amenities.

Remittances

The Overseas Pakistani remittances were more than US$30 billion, which served as a lifeline investment in real estate, particularly by those with a long-term perspective of returns.

Mortgage Penetration Financing

By January 2025, housing loans increased to PKR462.7 billion (~0.44% of GDP), however, high real interest rates (~12.6%) remain an obstacle.

Regional Variations

Punjab

Punjab, with a population of ~127.7 million has experienced high rates of urbanization. The housing in Lahore costs approximately PKR21,850 per sq ft, whereas apartments cost PKR 15,870 per sq ft, and both have increased by approximately 7% YoY.

Rural settings continue to have a predominance of the traditional housing stock, whereas urban regions are experiencing a transformation to modern, asset based accommodation.

Sindh (Karachi)

The urbanization level of Sindh province is about 54 percent, dominated by Karachi. The residential market is still very solid in mid-level communities, but the mood is cautious because of the increasing taxes and regulation.

ICT & KP

Homeownership rates in Islamabad are ~53%, conservation issues, green areas, and well-established government entice residential and mixed-use investment in the city.

Khyber Pakhtunkhwa is less urbanized (~30%), but is slowly getting affordable schemes due to spill over effects of the economy.

Policy Regulatory Landscape

Tax and Subsidy Reforms

There are incentives like Roshan Apna Ghar and Mera Ghar Mera Pakistan by the government. Stamp duties on the affordable housing are low and the intentions to regulate the real estate market favour transparency and market access.

Market Oversight

There is also yet to be regular regulation, despite the talk of a Real Estate Regulatory Authority. The transparency of the market still depends on the trusted sources such as Zameen.com and Graana.

Digital & Smart Initiatives

Some of the technological advances entail digital listing, virtual tours, and arising urban planning centers. The rural land registries are also slowly computerizing which increases the security of transactions.

Emerging Challenges

Supply Shortage

There exists a wide disconnect between the demand (2m+ units/year) and the supply (~500k units synced annually) which acts as a limiting factor and continues to put an upward pressure on the prices.

Financing Constraints

Mortgage interest rates of around 12.6 percent discourage middle-income earners, who mostly remain cash buyers.

Risk & Volatility

Investor sentiment can be derailed by exchange rate pressure, inflation and political uncertainty thus slowing approvals.

Property & Accounting

In some areas of Punjab, digitization has taken place; however, in other areas, the old paper-based system is still in place; this has posed a risk in title verification and delay.

Opportunities Ahead

Middle-tier & Affordable Housing: This is an ignored market, which has enormous demand and subsidies are readily available.

Commercial & Logistics Hubs: The growth in the need of warehousing, e-commerce and office spaces.

Smart Cities & Mixed-Use Projects: Integrating residential, commercial and tourist activities along with sustainability characteristics.

Investor Friendly Assets: The assets are aimed at the overseas Pakistanis and the urban middle income.

PropTech & Digital Platforms: Technological appraisals, management of the property, and brokerage transparency.

What Experts Say

When policy rates start to decline slowly, property prices can either increase subsequently, signifying the interconnection between macroeconomics and real estate recovery.

The passive speculation is being checked by the regulatory pressure, more particularly in Karachi. Nevertheless, tax modification has generated renewed interest in grade-A plots in DHA.

Forward-Looking Outlook

Stable development: It is projected as stable 49% CAGR in both segments of residential and commercial segments to 2029.

Investment opportunity: Excess supply in the urban areas and restrained mortgage lending suggests further expansion in the use of cash.

Policy development: Predicted introduction of regulation and digitization may ensure better visibility and access to financing.

Sustainability premium: Green, closed, or intelligent projects can provide 2-3 per cent premium and long-term profit.

Final Takeaways

Enormous market size: close to US$2 trillion industry with compounding potential over the long term.

Urban oriented demand: The lack of housing and urban drift sustains the long term growth of the sector.

Undeveloped funding: The cost of borrowing funds is high to maintain a cash-based market system.

New sectors: Affordable housing, mixed-use and digital platforms are very rewarding.

Risk factors: Volatility, title record problems and regulatory lag are the main factors of concern.

Conclusion

The real estate sector in Pakistan is at a fascinating turnpoint: supported by the constant demand and demographic dividends, as well as the increasing institutional appetite, but limited by the lack of financing, inconsistent regulation, and economic risks. To the investors and other stakeholders in the industry, now is the time to get involved, but in a very strategic manner:

Address those housing categories where demand is increasing, and competition is diminishing. Keep an eye on the policy changes, new mortgage incentives, and electronic registration programs. Focus on stable assets, urbanized assets and mixed-use assets that have clear titles and legal status.

Thought out in a right way, the real estate of Pakistan offers a great potential not only in the terms of generating wealth, but also in terms of investing into the urban infrastructure and the social growth of Pakistan.

Projects We Deal in:

Bahria Town Lahore
Bahria Orchard Lahore
Bahria Nasheman Lahore
Bahria EMC (Bahria Education and Medical City)
Bahria Town Karachi
DHA’s in all cities of Pakistan

Many residential and commercial societies in Pakistan are evaluated carefully to help our clients make the better decision. Pakistan Property Services helps the clients invest in projects with good prospects that depend upon the parent company, developers, location, payment plan, amenities they can have in the desired project.

Lahore:

Lahore is the cultural and economic hub as well as the provincial capital of Punjab. The city is well known for its huge economic opportunities in different sectors. People come from different areas to grab these opportunities and have a residence here. Below the list of some of the top Projects in Lahore:

Karachi:

Bahria Town Karachi is a benchmark within the landscape of Karachi with its world-class excellent-planned society. This society is sketched with an area concept to supply outstanding lifestyle facilities to its residents and can introduce new benchmarks of community development in Karachi. Below the list of some of the top Projects in Karachi:

Bahria Town Karachi

Islamabad:

Islamabad is nestled against the backdrop of the Margalla Hills. It is a modern, planned city with wide tree lined streets, large houses, elegant public buildings and well-organized bazaars. It is however; always under construction to improve transportation or develop new housing areas for its growing population. The walkways are shaded, safe, and separated from the traffic by rows of flame trees, jacaranda and hibiscus. Roses, jasmine and bougainvillea fill the parks, and scenic viewpoints show the city to its advantage. Below the list of some of the top Projects in Islamabad:

Gulberg Greens Islamabad
Al Hafiz Grand Shopping Mall Gulberg Islamabad
Naval Anchorage Islamabad
Nexus Mall Islamabad
Mall of Arabia Islamabad
Discovery Gardens Islamabad – All You Need to Know
Nexus Mall Islamabad – Bahria Town Islamabad
Park View City Islamabad
Verify Land Status from Property Verification Centre in Islamabad

Rawalpindi:

Rawalpindi is an important administrative, commercial, and industrial centre. Its industries include locomotive works, gasworks, an oil refinery, sawmills, an iron foundry, a brewery, and cotton, hosiery, and textile mills; it also produces shoes, leather goods, pottery, newsprint, and tents. Below the list of some of the top Projects in Rawalpindi:

Blue World City Rawalpindi
Citi Housing Rawalpindi
Faisal Town Rawalpindi

Gwadar:

Gwadar, town and seaport, southwestern Balochistan province, southwestern Pakistan. Located on the sandy Nuh headland that juts southward into the Arabian Sea, the town is an important fishing (sardines and sharks) and trade centre. Below the list of some of the top Projects in Gwadar:

Naval Anchorage Gwadar
Canadian City Gwadar
Gwadar Golf City

Suggestions:

We can see that the Pakistan Real Estate Forecast suggests investing more in this market as it promises a huge profit in the coming future. The investors should purchase the properties at a low rate so that they can earn more by selling it once the rates are good enough.