How CPEC can be a helping hand for Pakistan's real estate sector.
CPEC which is: “One Belt, One Road is aimed at (i) promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; (ii) encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and, (iii) jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.”
CPEC is a mix of projects that includes road networks, railway lines (connecting Kashgar with Gwadar), an optic fiber cable project, a dry port and energy-producing units.
The value of CPEC has been jacked up from $46 billion to $57 billion, because of the inclusion of new projects including the development of Diamer-Bhasha Dam, Peshawar-Karachi Railway Line, Karachi Circular Railways, Orange Line trains for all provincial capitals, the Keti Bander Port, Special Economic Zones (SEZs) and three energy projects in Sindh.
The connectivity that CPEC will provide to the Central Asian states, and the likely inclusion of Iran, Turkey, Russia and some European countries will make Pakistan a hub of economic activity, with Gwadar facilitating trade with neighboring countries, including China.
It is estimated that the cash inflow under CPEC will more than equal the Foreign Direct Investment (FDI) that has come into Pakistan since 1970, an amount that is forecast to equal nearly 17% of the GDP. Furthermore, CPEC projects are likely to create more than one million jobs in various sectors of Pakistan by 2030.
In addition to the direct economic impact of CPEC, economists believe that there will be a ‘multiplier effect’ and the volume of investments will increase manifold, as a result of the emergence of downstream projects and their spill-over effect into other sectors of the economy, specifically in real estate.
Sources in the Planning Division of Pakistan, which is handling the CPEC initiative, believe that it will trigger a boom in real estate and that the property market is likely to experience a four-fold increase in the existing volume of commercial and residential projects in forthcoming years.
Although, due to the unregulated nature of the sector, official figures are hard to come by, real estate experts estimate the existing monetary value of real estate assets to be anywhere between PKR4 to 7 trillion . Industry stakeholders are unanimous in their opinion that the immediate outcome of CPEC has been a rapid rise in property values along the arteries of movement in suburban and rural areas. Properties that were considered worthless a decade ago have suddenly become the most sought-after pieces of land in Pakistan.
The Gwadar-Kashgar route will pass through Turbat, Panjgur, Besima, Surab, Kalat, Mastung, Quetta, Qilla Saifullah, Zhob, D.I. Khan, Mianwali, Balkasar, Hasan Abdal, Abbottabad and Gilgit. The acquisition of land for constructing road networks in these areas is underway and mainly supervised by the Government of Pakistan. The development of this extensive road network will ensure that previously isolated areas in Gwadar will be easily accessible, further contributing to an increase in prices. Several railway line projects are also planned along the route.
As a result of all this, there has been a corresponding increase in investment and development of retail projects. Furthermore, builders and developers in Faisalabad, Lahore and Multan have reported increased investor interest in properties there, due to which they expect prices to experience a further boost as more CPEC projects are announced and approved.
Another crucial avenue for CPEC-driven real estate business and investment is the planned development of SEZs. Eight such Zones are to be built, with one each in the four provinces, as well as in AJK, FATA, Gilgit-Baltistan and Islamabad capital territory. The exact location of these zones has not been finalized and consultations with provincial governments are underway. These Zones will serve as primary hubs of industrial activity in the country.
CPEC is poised to give tremendous boost to the real estate industry in Pakistan, which even otherwise, has a promising outlook, given that a 2.8% annual population growth rate (source: Federal Bureau of Statistics, 2016) entails that more housing projects will need to be established.
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