Real Estate Sector Needs Tax Holiday and Regulatory Reforms: Foreign Investor

ISLAMABAD: A prominent international investor in the real estate domain has strongly advocated for a decade-long tax exemption on Foreign Direct Investment (FDI) within the sector. Additionally, they propose the free transfer of profits and the establishment of a specialized regulatory body operating under the Special Investment Facilitation Council (SIFC).

During discussions with select journalists on Friday, Tarek Hamdy, the CEO of EIGHTEEN Housing, highlighted the significant obstacles and potential benefits present in Pakistan’s real estate market. The core suggestions from the foreign investor aim to bolster regulatory structures, draw in international investments, and simplify administrative procedures to stimulate economic advancement.

Tarek Hamdy stressed the crucial need to appoint technical experts to the proposed real estate regulatory authority. He lauded the SIFC for its substantial contributions in assisting foreign investors and streamlining investment processes across various sectors of Pakistan’s economy.

He shared his experience, noting that the SIFC’s creation was a positive stride towards diminishing bureaucratic complexities, fostering investor confidence, and nurturing a more business-oriented climate. To further enhance the SIFC’s effectiveness, Hamdy suggested broadening its framework by including technocrats, economists, legal professionals, and seasoned experts from diverse sectors and financial industries to guarantee well-rounded and informed decision-making.

A crucial aspect of Hamdy’s recommendations involves cultivating a more appealing and dependable investment landscape for global investors through ambitious and strategic financial incentives. He passionately championed a ten-year tax break specifically designed for Foreign Direct Investment (FDI) in the real estate sector—an industry he believes possesses unrealized potential for boosting economic expansion and urban revitalization. Furthermore, he highlighted the paramount importance of providing a transparent and assured mechanism for profit repatriation, which would signal to global investors that Pakistan is receptive to business on competitive and investor-friendly terms.

The CEO of Eighteen questioned the reasoning behind expecting international investors to allocate their capital in Pakistan without guarantees of substantial returns or a straightforward exit plan. He questioned, “Why would a foreign investor invest their funds here if they cannot recoup them with profit?” thereby emphasizing the fundamental necessity of Return On Investment (ROI) as a cornerstone of global capital flow.

Tarek Hamdy also tackled the pressing matter of excessive taxation in the real estate sector, deeming it a major barrier to growth and investor assurance. He contended that disproportionate and often arbitrary taxation has become a manifest burden on the industry, directly affecting sales volumes and discouraging both domestic and international investment. He stated, “When taxes increase, sales decline. It is a straightforward equation,” while advocating for a more sensible and equitable tax policy that promotes development rather than hindering it.

He criticized the actions of certain revenue authorities, asserting that some institutions have turned to intimidation tactics instead of supporting legitimate projects. He highlighted how investors and developers frequently encounter sudden raids and pressure without adequate legal justification. He specifically mentioned an instance involving the Federal Board of Revenue (FBR) and the Punjab Revenue Authority (PRA), where EIGHTEEN Housing was targeted by such actions. He stated, “They raided our offices, attempted to undermine our reputation, but when the matter went to court, they could not substantiate a single claim.”

He characterized these actions as not only harassment but also profoundly detrimental to Pakistan’s investment environment. He commented, “You cannot expect individuals to invest in an environment where regulatory bodies behave like bullies instead of facilitators.”

Addressing bureaucratic inefficiencies, Hamdy expressed concern over the challenges presented by conflicting laws and regulations across various government bodies involved in approvals. He advocated for implementing a streamlined, single-window operation approach, empowering entities like the Board of Investment (BOI) to facilitate smoother processes and minimize red tape.

Tarek Hamdy raised significant concerns regarding the uncontrolled proliferation of illicit housing societies throughout Pakistan, considering it one of the most alarming threats to the credibility and stability of the real estate sector. He emphasized how these unregulated entities operate without proper approvals or oversight, exploiting legal loopholes and the absence of coordinated regulatory enforcement. Consequently, numerous individuals—particularly overseas Pakistanis—have become victims of elaborate scams, investing their hard-earned savings into projects that either do not exist or never materialize.

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