Real Estate Sector Needs Tax Holiday to Attract Foreign Investment

ISLAMABAD: A prominent foreign investor in the real estate domain has strongly suggested a decade-long tax exemption for Foreign Direct Investment (FDI) within the sector, alongside profit repatriation and the establishment of a dedicated regulatory body under the Special Investment Facilitation Council (SIFC).

Speaking to a group of journalists, Tarek Hamdy, CEO of EIGHTEEN Housing, highlighted both the critical issues and potential benefits within Pakistan’s property market. The investor’s key proposals aimed at refining regulatory structures, drawing in foreign capital, and simplifying administrative procedures to stimulate economic advancement.

Tarek Hamdy underscored the immediate requirement for appointing technical experts to the real estate sector’s regulatory authority. He recognized the SIFC’s pivotal contributions to assisting international investors and improving investment processes across Pakistan’s diverse economic sectors.

According to him, the establishment of the SIFC signifies a step forward in diminishing bureaucratic obstacles, enhancing investor assurance, and cultivating a pro-business atmosphere. To bolster the SIFC’s efficacy, Hamdy proposed expanding its framework by including technologists, economists, legal professionals, and seasoned experts from various sectors and financial industries to ensure well-rounded and enlightened decision-making.

A crucial component of Hamdy’s recommendations involves establishing a more appealing investment environment for global investors through strategic fiscal incentives. He advocated for a ten-year tax break specifically for FDI in the real estate industry, believing it possesses untapped capacity to stimulate financial progress and urbanization. Furthermore, he emphasized the significance of providing a transparent mechanism for profit repatriation, assuring global investors that Pakistan welcomes business under competitive and investor-friendly conditions.

CEO Eighteen questioned why international investors would invest their funds in Pakistan without guaranteed returns or a defined exit plan. He questioned the logic of expecting foreign investors to bring capital if they are restricted from repatriating profits, stressing that Returns On Investment (ROI) are vital for global capital flow.

Tarek Hamdy also highlighted the critical problem of excessive taxation in the real estate sector, which he sees as a significant barrier to growth and investor confidence. He contended that high and arbitrary taxes have burdened the industry, negatively affecting sales and discouraging investment from both local and foreign sources. He promoted a more sensible and balanced tax policy that promotes development.

He also voiced his disapproval of certain revenue authorities, stating that instead of assisting legitimate endeavors, certain organizations have employed coercive measures. He noted that investors and developers frequently 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 claimed that their offices were raided and their credibility was questioned, but the courts found no evidence to support any claims.

He described these actions as detrimental to Pakistan’s investment climate. He commented on the absurdity of expecting investment in a climate where regulatory agencies act as bullies rather than facilitators.

Hamdy emphasized the need for a streamlined, one-window operation approach, enabling organizations such as the Board of Investment (BOI) to expedite procedures and eliminate red tape, while addressing bureaucratic inefficiencies.

Tarek Hamdy voiced substantial concerns about the unregulated expansion of unauthorized housing societies across Pakistan, calling it a serious threat to the real estate sector’s reputation and stability. He explained how these organizations operate without proper approvals or supervision, taking advantage of legal loopholes and a lack of coordinated regulatory enforcement. Many people, particularly Pakistanis living abroad, have become victims of complex frauds, investing their money in initiatives that either do not exist or never materialize.

Hamdy also proposed the development of a centralized digital registry containing all housing societies in Pakistan, which he believes is critical for restoring trust and transparency in the real estate sector. He believes that this registry should serve as a resource where investors, especially Pakistanis living abroad, can verify the legal standing, No-Objection Certificates (NOCs), development status, and regulatory clearances of any housing project before investing.