How Does Real Estate Affect The Economy

We all dream about benefitting our beloved country in a way or another, right? Well, you may have never thought about it, but investing in real estate can actually benefit your country’s economic situation. If you are wondering how then think no more; just come along as we walk through every point that enables this positive change to happen.

Real estate can work as a foundation of a country’s economic condition. Similar is the case of the Pakistani economy, where real estate serves as a backbone. A prime example of real estate’s impact on the economy is the fact that around 70 per cent of the economy of the United States is dependent on it.

Real Estate and GDP

The real estate market in Pakistan is estimated to be around 300 billion dollars to 400 billion dollars. Construction production accounts for 2 per cent of the total GDP of Pakistan, as per reporting of the Pakistan Bureau of Statistics, with housing properties accounting for less than 50% of that. Real estate plays a role as the second-largest sector for employers.

Housing makes a significant contribution to GDP in two ways: investments regarding residential properties that encompass the building of new single as well as multi-family dwellings, residential renovation, prefabricated home manufacturing, and fees of agents.

Associated Businesses

With more than 250 sectors relying on it, real estate serves as a core factor that has a huge impact on the economic conditions of a country. There is a wide range of businesses that are associated with the real estate sector in one way or another.

Let’s illustrate this by an example. Where would you need to go for the building of your home’s bathroom? Contacting a sanitary shop will be the correct option, right? Similarly, concrete, wood, tiles, etc., are some of the businesses linked to the real estate industry.

Flow of Cash

Real estate might also impact the flow of cash for a household. Possessing one’s own house helps people to accumulate assets with time. This may enable them to withdraw cash for the payment of other purposes or investments.

Refinancing your house mortgage with a greater one seems to be one good option. The difference between the cost due on the property and the new loan’s worth is revenue that the family can utilize as they need.

Many families may opt to refinance during such periods when the interest rate is quite low, which can give a slight boost to the economy of a country.

Job Opportunities

Variations in the real estate market have a definite impact on employment. Aside from the agencies and brokers who are closely engaged in real estate deals, the sector provides employment to thousands of individuals in several ways. Renovation, building, decorating, gardening, and relocation services are just a few examples.

Real estate appears to be a superior investment when property values are growing. This may encourage people and companies to develop or renovate their properties, resulting in an increase in development and associated services. Moreover, this entire process is likely to benefit furnishings, interior decorating, poolside setup, and other related works as well.

Association with Labor

Furthermore, because of the fact that housing prices influence where people reside, real estate has a strong impact on labour allocation. Labour with low wages may be in limited supply in areas where prices have been steadily rising since these workers may be recruited out.

CPEC

Real estate is mostly about turning a profit, whether it is low or high. When we think of property investment in Pakistan, Gwadar is the prime location that pops into mind. Experts believe that in the near future, Gawadar will be the centre for the commercial, industrial, and housing sectors of Pakistan. Pakistan now has another rationale to support this argument which is the China-Pakistan Economic Corridor, abbreviated as CPEC. The China-Pakistan Economic Corridor (CPEC) is a road network that will interconnect China and Pakistan.

The repercussions of CPEC will bring the following changes that will boost the economic condition of Pakistan:

  • New industries will get planted at Gawadar, retrieving higher job opportunities for the people.
  • The increase in the industrial sector will also help Pakistan in exporting goods. In this way, the economy of Pakistan will get a direct benefit.
  • Pakistan’s development rate would improve by 5.07 per cent as a result of the CPEC project.
  • It would improve the economy, and the market for additional housing and land in Pakistan will increase.
  • Once the CPEC project gets completed, we will witness a significant impact on both commercial as well as residential properties.

The Bottom Line

The real estate sector of Pakistan is increasing with every passing day. The positive outcomes that this sector is able to draw on the economy are an important discussion. From offering multiple job opportunities to maintaining cash flow, the real estate sector is of significant importance to every country’s economy.

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