Pakistani laborers work on the top of an under construction building in Islamabad. (Farooq Naeem / AFP / Getty Images)
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Pakistan property is booming.
Australia’s residential construction boom may have reached its peak, but it looks as if Pakistan is just getting started on something similar.
As a case in point, a $US2 billion housing construction project gets underway next month on the outskirts of Islamabad, Pakistan’s ninth-largest city.
According to a report by Bloomberg, the project will be run by the development company of Egyptian billionaire Naguib Sawiris, as developers look to cash in on a Pakistani housing boom.
The end-product will see the construction of more than 1,000 new houses, with prices starting at 30.5 million rupees (around $US275,000) for a three-bedroom home.
Pakistan’s economy has been on the rise in recent years, seeing annual GDP growth climb to 5% with a corresponding boom in real estate prices.
The growth trends have been driven by a material reduction in militant violence, and the flow-on effects from $US50 billion worth of Chinese investment in large infrastructure projects.
China has been actively strengthening ties with Pakistan, which it views as a key regional ally for its One Belt, One Road initiative.
Earlier this year, China stepped in to defend Pakistan after the US said it would cut aid to the country. Pakistan also conducts trade deals with China denominated in Chinese yuan.
Bloomberg cited the property website zameen.com, which said house prices in Pakistan have more than doubled since 2011 in the country of 200 million people.
Developers are flocking to the region attracted by the high margins still on offer for major real estate projects, with most developments attracting a return of between 10-40%.
And demand for housing is still strong, with steady stream of new projects in larger cities such as Karachi and Lahore.
The country’s housing shortage is most likely part of a longer-term trend, with Pakistan’s urban population expected to grow by around 30 million people by 2027.
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