Real Estate Investment: Foreign Investor Advocates for Tax Breaks and Regulatory Reforms

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

During a discussion with a group of journalists on Friday, Tarek Hamdy, CEO of EIGHTEEN Housing, addressed the significant obstacles and potential benefits of Pakistan’s property market. The investor’s primary recommendations focused on improving regulatory structures, drawing in foreign investments, and simplifying administrative procedures to stimulate economic progress.

Tarek Hamdy emphasized the critical necessity of appointing technical experts to the proposed regulatory authority for real estate. He lauded the SIFC for its essential contribution to assisting international investors and refining investment processes throughout various sectors of Pakistan’s economy.

Based on his experiences, he noted that the SIFC’s creation was a beneficial move towards lessening bureaucratic obstacles, boosting investor trust, and cultivating a more business-oriented atmosphere. To further enhance the SIFC’s effectiveness, Hamdy proposed enlarging its framework to include experts from various fields, such as economics, law, and finance, ensuring well-rounded and informed decision-making.

A vital component of Hamdy’s suggestions involves creating a more appealing and predictable investment environment for global investors via ambitious and tactical fiscal incentives. He ardently promoted a ten-year tax holiday designed specifically for FDI in real estate, an industry he believes has untapped capacity to stimulate economic expansion and urban development. Furthermore, he highlighted the crucial importance of providing a transparent and secure mechanism for profit repatriation. This would demonstrate to global investors that Pakistan welcomes business under competitive and investor-friendly conditions.

The CEO of Eighteen questioned why international investors would place their capital in Pakistan without assurance of substantial returns or a clear exit plan. He questioned the logic of expecting foreign investment without the ability to repatriate profits, underscoring the necessity of Returns On Investment (ROI) as a fundamental aspect of global capital flow.

Tarek Hamdy also tackled the crucial matter of excessive taxation in the real estate sector, identifying it as a considerable hindrance to expansion and investor confidence. He asserted that overly high and often unpredictable taxation has become a distinct burden on the sector, directly impacting sales volumes and discouraging both domestic and foreign investment. He advocated for a more logical and balanced tax policy that promotes advancement rather than hindering it.

He voiced concerns over the actions of certain revenue authorities, claiming that some institutions have employed intimidation tactics rather than assisting legitimate projects. He highlighted how 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), where EIGHTEEN Housing was targeted. He stated that despite the attempts to undermine their credibility, the authorities could not substantiate any claims in court.

He depicted these actions as detrimental to Pakistan’s investment climate, not just as harassment. He commented that one cannot anticipate investment in a setting where regulatory bodies act as bullies instead of enablers.

Addressing bureaucratic inefficiencies, Hamdy noted the difficulties caused by conflicting regulations among government entities involved in approvals. He supported the adoption of a simplified, single-window operation, enabling organizations like the Board of Investment (BOI) to facilitate smoother procedures and reduce bureaucracy.

Tarek Hamdy voiced profound worries regarding the uncontrolled expansion of unlawful housing societies across Pakistan, labeling it as one of the most serious dangers to the credibility and stability of the real estate sector. He emphasized how these unregulated entities function without appropriate approvals or oversight, taking advantage of legal ambiguities and a lack of coordinated regulatory enforcement. Consequently, many people, particularly Pakistanis living abroad, have been victims of elaborate frauds, investing their money in initiatives that either do not exist or never come to fruition.

Hamdy also suggested establishing a centralized digital registry that includes all housing societies throughout Pakistan, which he believes is essential to restoring openness and investor trust in the real estate market. He proposed that this registry should act as a publicly accessible platform where investors, especially Pakistanis abroad, can confirm the legal standing, No-Objection Certificates (NOCs), development progress, and regulatory clearances of any housing project before committing funds.