Foreign Investment in Pakistan Real Estate – Current Trends

Foreign Investment in Pakistan Real Estate – Current Trends

For decades, real estate in Pakistan has been regarded as one of the most reliable ways to secure wealth and build long-term financial stability. The sector traditionally thrived on the interest of local investors and end-users, but over the past few years, the dynamics have begun to shift. A growing number of overseas Pakistanis, as well as foreign stakeholders, are now becoming active players in the property market. This rising international interest is being driven by several factors: proactive government policies designed to attract capital, the introduction of digital banking and financing tools that simplify cross-border transactions and the rapid pace of infrastructure development across the country. As we step into 2025, these elements are working together to reshape the flow of foreign investment, making Pakistan’s real estate sector more accessible, transparent, and promising than ever before.

Overseas Pakistanis Driving Real Estate Growth through RDA and Roshan Apna Ghar

Overseas Pakistanis continue to play a vital role in driving foreign investment into the country’s real estate market. Their contributions are not only consistent but also steadily increasing as new opportunities and streamlined processes emerge. The government’s initiatives, particularly the Roshan Digital Account (RDA) and Roshan Apna Ghar scheme, have transformed the way expatriates participate in property investments. These platforms allow overseas Pakistanis to buy and finance properties remotely with greater ease, providing them with secure payment channels, access to housing finance, and the assurance that their profits can be repatriated without unnecessary hurdles. The impact of these reforms is evident from recent data, which revealed that in January 2025 alone, expatriates invested more than PKR 16 billion in Islamabad’s real estate sector. This surge reflects a strong vote of confidence in the local property market. Key destinations attracting this capital include well-established developments such as DHA, Bahria Town, and Gulberg Islamabad, alongside emerging hubs like Blue World City and strategic CPEC-related zones in Gwadar, where long-term growth prospects are particularly strong.

Foreign Direct Investment (FDI) in Real Estate

While remittances and overseas Pakistani investments remain a strong source of capital for property, formal foreign direct investment (FDI) in Pakistan’s real estate and construction sectors has struggled to gain momentum. Official data confirms that the construction sector’s FDI declined sharply from US $155 million in FY2021 to US $79 million in FY2022, reflecting the cautious stance of global investors. The reasons behind this limited inflow include regulatory hurdles, policy uncertainty, and concerns over investor protection. Recognizing these challenges, the government introduced the Investment Policy 2023, which aims to create a more investor-friendly environment.

Key reforms include the abolition of the minimum equity requirement for foreign investors and the removal of restrictions on foreign developers in the housing and commercial real estate sectors. The policy also sets an ambitious target of attracting US $20–25 billion in FDI across multiple industries, with real estate positioned as a priority area for growth.

Emergence of Real Estate Investment Trusts (REITs)

One of the most significant shifts taking place in Pakistan’s property sector is the emergence of Real Estate Investment Trusts (REITs). These investment vehicles are changing the way both local and foreign investors participate in the market by offering a structured, regulated, and more accessible alternative to direct property ownership. Instead of purchasing and managing individual plots or buildings, investors can now buy shares in a professionally managed property portfolio. This model is particularly attractive for overseas Pakistanis and international institutions, as it allows them to benefit from Pakistan’s real estate growth while avoiding the complications of managing assets from afar.

REITs also provide several advantages that traditional real estate investments often lack. They distribute regular dividends, operate under transparent regulatory frameworks, and typically carry lower risk, since investments are spread across multiple assets rather than concentrated in a single property. Recognizing their potential to draw institutional capital and enhance liquidity in the market, the government has taken deliberate steps to promote their adoption. In the 2025 federal budget, special incentives were introduced, including tax exemptions on REIT dividends and a reduction in corporate tax rates for REIT entities. These reforms signal a strong policy shift toward institutionalizing real estate investment and creating a more investor-friendly environment. If these initiatives gain traction, REITs could play a pivotal role in transforming Pakistan’s real estate sector into a more modern, transparent, and globally competitive market.

Strategic Infrastructure & CPEC’s Impact

Any conversation about foreign investment in Pakistan’s real estate sector would be incomplete without highlighting the role of the China Pakistan Economic Corridor (CPEC). Since its launch, CPEC has had a transformative effect on the country’s property market, creating entirely new investment opportunities while reshaping existing ones. The establishment of Special Economic Zones (SEZs) under CPEC has triggered sharp increases in land values by some estimates, as much as 50% in certain regions. Nowhere has this impact been more visible than in Gwadar, where property prices have surged by nearly 300% over the past decade, fueled by expectations of trade growth, port development, and industrial expansion.

Beyond Gwadar, the broader network of motorways, ports, and industrial corridors built under CPEC has improved connectivity between major urban centers. Cities such as Islamabad, Rawalpindi, and Lahore have experienced rising property demand as a result, particularly in housing societies located along these new routes. Developments like Capital Smart City, Rudn Enclave, and Blue World City are prime examples of projects that have directly benefited from enhanced accessibility, making them attractive not only to local buyers but also to overseas Pakistanis seeking long-term gains. The influence of CPEC is not limited to metropolitan areas. Improved infrastructure has also opened up opportunities in tourism-driven regions such as Skardu and Hunza, where better roads and facilities are encouraging the growth of hospitality, resort, and residential projects. This combination of industrial, urban, and tourism-focused development illustrates how CPEC has become a catalyst for real estate expansion across Pakistan, positioning the sector as a key beneficiary of the country’s largest infrastructure initiative.

Recent Deals & Foreign Partnerships

Foreign investment in Pakistan’s property sector is no longer limited to traditional residential projects; it is increasingly entering the market through mergers, acquisitions, and joint ventures. According to the Competition Commission of Pakistan (CCP), during FY2024–25, a total of 69 merger and acquisition deals were approved, representing nearly US $50 million in foreign direct investment (FDI) across a range of industries. While these transactions spanned multiple sectors, a significant portion was tied to real estate-related activities such as logistics, infrastructure, and industrial development, which directly support property growth.

Several high-profile agreements stand out. For instance, DP World Logistics from the UAE partnered with Pakistan’s National Logistics Cell (NLC) under the umbrella of the Special Investment Facilitation Council (SIFC), a move expected to strengthen both logistics infrastructure and the commercial property market. Similarly, Italy’s Euricom S.P.A. entered into a joint venture in Pakistan’s rice milling sector, indirectly boosting demand for industrial real estate linked to agro-processing. Meanwhile, Berkeley Square Holding BV acquired stakes in prominent advertising and media firms, reflecting growing foreign interest in Pakistan’s urban business and commercial property ecosystem.

On a broader scale, foreign partnerships expanded further in September 2025, when Pakistan and China signed agreements worth US $8.5 billion. These included nearly $1.5 billion in joint ventures spanning industries such as steel, renewable energy, agriculture, and industrial production. While these investments are not purely real estate transactions, they are expected to drive demand for commercial offices, warehouses, and industrial zones, demonstrating how foreign capital in diverse sectors continues to fuel growth across Pakistan’s property landscape.

Regulatory & Fiscal Reforms

To build confidence among investors and bring greater stability and transparency to the property market, the government has rolled out a series of regulatory and fiscal measures. One of the most notable steps has been the introduction of a flat 15% capital gains tax for active taxpayers. This move not only simplifies the taxation process but also helps curb speculative short-term buying and selling, which has long fueled artificial price hikes in the market.

In addition, property valuation rates have been revised upward by nearly 75% across 56 major cities. By aligning official valuation benchmarks more closely with actual market prices, the government aims to reduce underreporting of property values, increase documentation, and improve revenue collection. This adjustment also helps establish a more transparent investment environment, making it easier for both local and foreign investors to assess the true worth of real estate assets.

Looking ahead, further investor-friendly reforms are under consideration. Proposals include the creation of a specialized real estate regulatory authority under the Special Investment Facilitation Council (SIFC), as well as streamlining approval processes for foreign developers and in situational investors. Together, these measures are designed to minimize bureaucratic hurdles, strengthen investor protection, and build trust. If fully implemented, they could play a decisive role in making Pakistan’s property sector more attractive to long-term foreign capital.

Real Estate as a Safe-Haven Asset

Despite ongoing economic headwinds, Pakistan’s real estate sector continues to stand out as one of the most reliable avenues for wealth preservation. For both local and foreign investors, property remains a preferred hedge against inflation and currency depreciation, offering stability that few other asset classes can match. One of its strongest appeals is the steady stream of income it generates major cities such as Islamabad, Lahore, and Karachi consistently deliver rental yields averaging between 6–7% annually, making property an attractive option for those seeking regular returns.

Beyond rental income, the potential for long-term capital appreciation adds another layer of security. Investors who hold assets over time often benefit from rising land values, especially in high-demand urban areas and regions linked to infrastructure growth. Compared to the volatility of equity markets or the unpredictability of currency fluctuations, real estate offers a tangible, resilient, and relatively low-risk investment.

For foreign buyers in particular, Pakistan’s property market presents an appealing entry point. Prices remain comparatively lower than many regional markets, allowing investors to acquire assets with strong growth potential at accessible costs. This blend of affordability, income stability, and long-term appreciation ensures that real estate retains its reputation as a safe-haven asset, particularly for those looking to balance security with sustainable returns in an emerging market.

Final Thoughts

Foreign investment in Pakistan’s real estate sector is gradually moving beyond sporadic inflows and shifting toward a more structured, policy-driven framework. This evolution reflects the government’s ongoing efforts to modernize the market, attract long-term capital, and create opportunities that appeal to both individual expatriates and institutional investors. Still, the sector faces important challenges—chief among them the need for clear regulations, consistent political stability, and stronger investor safeguards to ensure that foreign capital feels secure.

At present, the Pakistani diaspora remains the backbone of foreign investment, fueling steady growth through remittances and property acquisitions. However, with the introduction of reforms, the expansion of Real Estate Investment Trusts (REITs), and the transformative impact of CPEC-linked infrastructure and economic zones, the landscape is broadening to include institutional players and direct foreign investors. This gradual diversification signals a more mature and globally integrated real estate market in the making.

If Pakistan is able to maintain reform momentum, strengthen transparency, and build long-term trust among investors, its property sector could position itself as one of the most attractive destinations in South Asia. With a combination of affordability, strategic location, and growing international interest, Pakistan’s real estate market is on the cusp of becoming not just a safe-haven for wealth, but also a dynamic engine of investment-driven growth.