Destruction Scale of Covid in Pakistan:

The scale of the destruction and impact of Covid-19 is global gigantic that some experts have indicated it to be even worse than the Great Depression (1929–1933).

Just like every single country on earth was shocked by the devastation caused by the novel COVID-19. Pakistan was on the list of shattered countries. Pakistan was already struggling with the economic crisis even before covid-19, mainly due to substantial fiscal and current account deficits, overburdening of foreign and local debt, and the local currency’s deflation alongside the US dollar.

The Covid infected developing economies like Pakistan. It has been reported that Pakistan has lost one-third of its revenue and exports are fallen by 50% due to the Covid outbreak and lockdown. The worldwide Economists have warned about the extreme recession rate in Pakistan. When Imran Khan’s government came into power, Pakistan's GDP growth was 5.8% now it stands at 0.98% and chances are that it will deteriorate in the future. The country's fiscal deficit is 10% and revenues have dropped in the past two years.

With the drastic effects on the economy, the Real Estate business was a hard hit.

Impact of Covid on MSMEs:

The Foremost sufferers of the Covid outbreak are the micro, small, and medium-sized enterprises (MSMEs). The firms in Pakistan are facing unprecedented adverse effects on their businesses. Moreover, the unavailability of labourers, slowdown of production, shortage of raw materials, and transportation restrictions will have major ramifications on the business. The outcome had a significant impact on the national economy as, Pakistan’s government seized the tough and unpopular decisions including the reduction in public expenditure, extraction of tax exemptions, speeding up the tax broadening the measures and linking the exchange rate with market forces, etc.

Impact of Covid on Real Estate Industry:

This industry includes all kinds of industrialized or emergent land, housing schemes or societies, or commercial projects including sky-high business infrastructure, arcades, restaurants, hotels, industrial projects, etc. With the spiking high cases of Covid, the government-imposed different kinds of limitations and regulations on daily busy life followed by lockdown which led to followed difficulties in this business.

• Unemployment in Pakistan.
• Inflation in construction Material.
• Problems of housing affordability.
• Extortionate property prices.
• Delayed Projects

Unemployment in Pakistan:

Unemployment discusses the working community that is without work but seeking employment. The unemployment rate in Pakistan was increased when state-imposed lockdown led to an unprecedented level of economic insecurity, resulting in pervasive redundancy business closures, a slowdown in business activity, and reduced working hours. A lot of businesses went bankrupt and they were shut down which was followed by the aftermaths of unemployment. In 2019 rate was 3.98%, in 2020 the scale went up to 4.65% and now it is expected to reach 5.00 per cent by the end of 2021.

How unemployment is affecting the real estate business? The answer is crystal clear that with the increase in unwaged. The sectoral analysis exposes that during the time of Covid, construction and manufacturing sectors remained the most vulnerable sectors during this Pandemic. There are no investors or buyers to invest in the real estate business as people do not have enough sources to finance.

Inflation in Construction Material:

One of the numerous reasons that affected the investments is the high cost of construction materials which is constantly rising in Pakistan. With the obligatory lockdown, export and import have been affected. Construction materials like cement, steel, bricks, concrete, sand, glass, wood, etc. prices have been increasing in the last two decades. The income level of the masses is unable to keep up with inflating property prices resulting in an even higher demand for rental property and houses.

 Problems in housing affordability:

As we know real estate mainly involves offices, plots, residential property, and houses. Pakistan housing infrastructure is mostly based on suburb design. Although high inflation is pushing up prices of apartments and buildings it is not only restricted to major cities such as Karachi, Lahore, and Islamabad. Due to aggregate demand for houses, their prices spiraled from PKR-9,894 Square feet to PKR-12,324 Square feet. Residential property prices also boosted from PKR-5,092 Square feet to PKR-6,683 Square feet. Such an increase is becoming a problem for people looking for affordable housing projects.

Extortionate Property prices

The land is one of the permanent assets whose price escalates over time, henceforth land financing is always in demand. But investing in land can be tricky but worth a shot if invested at right time. The price of land has been increasing since the start of Covid. Rising house finance and high developmental infrastructure are overpriced. Which is a drawback for the investors and buyers in the business. Expensive properties in the time of covid, it was a loss for both investors and people who are interested in financing.

Delayed Projects

With the surge in Covid cases in Pakistan, Government enforced lockdown, temporary shutdowns of aerial operations, restricted import and export, and seized transportations, the ongoing and under construction of projects were affected as there was a shortage and high priced construction material, insufficient labour, and inflated market prices are some of the biggest factors in the late delivering of projects or sometimes the sudden back out of buyers disturbs the construction of projects

These are some of the factors that were affected by the Covid-19 from 2019 till now. It has been estimated that in the future the effect would be more drastic as we are facing different waves and new variants of Covid-19 globally and nationally. Whether it is about procurement or being the stakeholder both are facing different challenges in the landholding market.

But what we can appreciate is that with the pandemic surge, diverse new firms are introducing themselves in the market with new emerging and modified aims that are not only compromising on their infrastructure and projects but also presenting affordable housing schemes or business villas.