Foreign Investor Advocates Tax Breaks and Regulatory Reforms for Pakistan’s Real Estate Sector

ISLAMABAD: A prominent international investor in the real estate domain has strongly suggested a decade-long tax exemption for Foreign Direct Investment (FDI) within the sector. The investor also proposed the ability to freely move profits earned abroad, and the establishment of a specialized regulatory body under the Special Investment Facilitation Council (SIFC).

Speaking with a select group of journalists on Friday, Tarek Hamdy, the CEO of EIGHTEEN Housing, highlighted both the considerable obstacles and potential benefits present in Pakistan’s real estate market. The core recommendations centered around strengthening regulatory structures, encouraging foreign investment, and simplifying bureaucratic procedures to stimulate economic expansion.

Tarek Hamdy stressed the importance of appointing technical experts to the suggested real estate regulatory authority. He acknowledged the SIFC’s crucial assistance in helping foreign investors and refining investment processes across different sectors of Pakistan’s economy.

Based on his personal experience, Hamdy noted that the SIFC’s creation was a significant advancement in reducing bureaucratic obstacles, fostering investor assurance, and cultivating a more favorable business climate. To enhance the SIFC’s effectiveness, Hamdy suggested broadening its composition to include technocrats, economists, legal professionals, and seasoned experts from various sectors and financial industries, ensuring well-rounded and informed decision-making.

A central element of Hamdy’s proposals involves establishing a more appealing and predictable investment environment for global investors through ambitious and strategic fiscal incentives. He passionately championed a ten-year tax break specifically designed for FDI in the real estate sector — an industry he believes possesses unrealized capacity to fuel economic progress and urban development. Moreover, he emphasized the necessity of providing a transparent and reliable mechanism for profit repatriation, signaling to international investors that Pakistan is accessible for business under competitive and investor-friendly conditions.

The CEO of Eighteen questioned why international investors would commit capital to Pakistan without guarantees of substantial returns or a clear exit plan. He emphasized the vital importance of Returns On Investment (ROI) as a fundamental aspect of global capital flow, asking, “Why would a foreign investor invest here if they cannot take their profit back?”

Tarek Hamdy also tackled the critical problem of excessive taxation within the real estate sector, which he views as a major hindrance to growth and investor confidence. He contended that excessive and often inconsistent taxation has placed a burden on the sector, negatively affecting sales volumes and discouraging both domestic and foreign investment. He asserted that tax increases lead to decreased sales and proposed a more logical and balanced tax strategy that promotes growth.

He criticized the actions of certain revenue authorities, asserting that instead of enabling legitimate projects, some institutions have used intimidation strategies. He noted that investors and developers often face unexpected raids and pressure without sufficient legal justification. He specifically mentioned an instance involving the Federal Board of Revenue (FBR) and the Punjab Revenue Authority (PRA), in which EIGHTEEN Housing was targeted. He stated that despite the raids and attempts to undermine their credibility, the authorities could not substantiate any claims in court.

He characterized these actions as not only harassment but also as severely damaging to Pakistan’s investment climate, stating that one cannot expect investment in an environment where regulatory bodies act like bullies rather than facilitators.

Addressing bureaucratic inefficiencies, Hamdy expressed concern over the difficulties caused by contradictory laws and regulations across different government bodies involved in approvals. He supported the implementation of a streamlined, single-window operation approach, enabling organizations like the Board of Investment (BOI) to simplify processes and minimize bureaucracy.

Tarek Hamdy raised serious concerns about the uncontrolled proliferation of unauthorized housing societies throughout Pakistan, describing it as a major threat to the credibility and stability of the real estate sector. He noted that these unregulated entities function without proper approvals or oversight, exploiting legal ambiguities and a lack of coordinated regulatory enforcement. Consequently, numerous people, especially overseas Pakistanis, have been victimized by complex schemes, investing their savings in projects that either do not exist or never come to fruition.

Hamdy also suggested the creation of a centralized digital registry encompassing all housing societies in Pakistan, which he believes is crucial for restoring transparency and investor confidence in the real estate sector. He proposed that this registry should serve as a publicly accessible platform where investors—particularly overseas Pakistanis—can verify the legal status, No-Objection Certificates (NOCs), development progress, and regulatory approvals of any housing project before committing their funds.