- Country’s real estate market presents potential long-term growth benefits
- Initiative for solar financing a sigh of relief for citizens
Interview with Ms. Natasha Haseeb — an analyst
PAGE: Tell me something about yourself, please:
Natasha Haseeb: I am an Anchor working at Pakistan Television News. I have done my MPhil in Political Science from the University of Karachi and about my professional life I am conducting a business show named ‘Baat Karobar Ki’, which includes different aspects of businesses, investments, economy, and stock market of the country as well as internationally, with different segments and making it interesting day by day because of the quality of content, participants we invite and the authenticity of news and information making my show famous popularity and rating in both means.
About my personal life, I am very friendly by nature, talkative and jolly with friends. My enthusiasm and strengths are my research, the way I ask the question and the angles of my analytical approach are spoken by my on screen performance. I have done a lot of interviews of different people, business community, industrialists, dignitaries, economists and experts from different sectors who are very competitive. I have hosted and organised conferences as well. About my leisure time, I enjoy spending time with my family, friends, listening to music, watching films, and dramas, reading, travelling and playing games.
PAGE: What is your take on consumer financing these days?
Natasha Haseeb: Credit to the private sector will gradually recover, primarily driven by improved demand in major industries such as wholesale and retail trade and manufacturing of food products. But due to high interest rates it’s now being stopped.
The evident appreciation seems in Pakistan’s banking sector outlook, which will benefit from accelerating economic growth and a recovery in credit appetite caused by IMF support and of policy rate cut in coming days and economic policies has remained mostly consistent, showing the signs and indications of economic recovery expecting growth will accelerate (GDP to 2.7% to 3.2% ) Pakistan have received around $1.1 billion, though IMF-mandated fiscal consolidation and tax base broadening will, in the short-term, curb loan demand from businesses and households, the inflow of funds should have a long-term positive impact on the banking sector by enhancing investor confidence. And it would also help to further boost credit demand from the private sector.
I think that the economy will further strengthen throughout the year, which should lead to a gradual recovery in consumer financing growth.
If I talk about liability side, I forecast the high deposit growth driven by improved economic performances and increased banking access and transparency deposit growth will jump in 2024, and it will remain strong.
While the banking sector can face some pressures from significant tax increases in upcoming budget, enhancements in credit and risk profiles will boost its robustness.
Banks’ profitability, liquidity and capital adequacy are consistently improving and we expect this positive trend will be continued in coming years as well benefiting from an increase in net interest income and tough requirements for risk management.
However, bank’s capital, profitability and liquidity ratios are improving.
PAGE: How would you comment on auto financing over the period of preceding one year?
Natasha Haseeb: Expensive auto financing at 22 per cent interest rates appears highly impossible for consumers who are already under pressure due to shrinking purchasing power caused by high food prices and unaffordable utility bills. Usually only a single-digit interest rate can boost the auto sales. But it is not possible in these two years 2024 and 2025. The current year looks highly tough for the auto sector.
Regarding government policies, the government should involve business stakeholders and economists in formulating a five-year industrial policy to enhance production and exports in various sectors.
Auto sector remained in trouble as car sales fell to 46,417 units in the first eight months of FY24 from 78,575 units in the same period last fiscal. In contrast, car sales in February inched up to 7,953 units from 7,802 units in January 2024. However, the February 2024 sales were significantly higher than the 3,642 units sold in February 2023.
Many consumers stayed away from the auto market in the last 10 months due to high interest rates of 22 per cent, along with SBP’s curbs on auto financing by imposing an upper limit of Rs3 million and a substantial drop in the loan repayment period.
The high prices of vehicles also remained a major hurdle in boosting sales. While some assemblers offered discount packages on registration and other expenses, as well as price discounts, these efforts failed to attract a sizable number of buyers.
PAGE: What must be done to encourage consumer financing in solar energy?
Natasha Haseeb: Solar panels in Pakistan nowadays are available in discounted prices. Solar financing in Pakistan is an initiative by the State Bank of Pakistan to encourage the adoption of renewable energy sources. All commercial banks, offers the opportunity to install a solar system on installments. Eligible individuals can get solar panels on installments in Pakistan ranging from 1 kW to 1 MW under the latest solar financing scheme. The monthly installment amount is fixed and paid to the bank over a specified period, based on the chosen option. The State Bank of Pakistan has made it easy to obtain a loan for solar system in Pakistan through its solar financing scheme.
This initiative aims to promote renewable energy across various sectors, including industrial, commercial, domestic, and agricultural. By harnessing solar energy, you can generate your own electricity for at least 25 years and potentially reduce your electricity bill to zero or even have a negative bill in some cases.
Each bank has its own specific rules and regulations concerning solar panel installations on an installment basis in Pakistan. Therefore, it is important to understand the scope and eligibility criteria of leading banks. However, let’s first discuss the general scope and eligibility criteria provided by the State Bank of Pakistan for solar system on installments in Pakistan.
The scope of solar system on installments in Pakistan is to facilitate the adoption of renewable energy sources in domestic, commercial, industrial, and agricultural applications. This transition will result in numerous benefits for the country, including reduced reliance on imported fuel for electricity production. Solar financing initiatives in Pakistan will also enable individuals to access uninterrupted electricity at lower prices and even have the opportunity to sell excess generated electricity back to the grid.
Electricity bills are too high to pay, and the upfront cost of installing a solar system is very feasible for everyone. In such circumstances, the solar financing can be a sigh of relief for citizens who can avail this opportunity by approaching their relevant banks.
PAGE: Real estate sector seems to be in crisis in the wake of exorbitant discount rate. What is your standpoint?
Natasha Haseeb: In 2024, the real estate market is filled with great chances for investors. If you’re keen on making wise investments, but in longer run there will be real estate investment opportunities in Pakistan. So, whether you’re a seasoned investor or just buying the house there are a lot of benefits of investing in real estate sector in Pakistan.
Investing in real estate in Pakistan comes with a bundle of benefits that can boost your financial growth. Firstly, you have more control over your investments, meaning your property value won’t just vanish overnight. It’s a safe bet for steady returns. Plus, you get rapid returns on your investment, with almost no taxes to worry about. Whether you’re into residential or commercial properties, you’ll enjoy a steady income stream. So, invest smartly and can grow wealth steadily over time.
Pakistan’s real estate market is the prime industry in the country. It is significant in the Pakistani economy, playing a vital role in driving economic growth, employment generation, and infrastructure development. It includes various types of properties, residential, commercial, industrial, and agricultural land.
According to the State Bank of Pakistan, the contribution of the real estate industry to GDP is 2%. Pakistan’s real estate market worth in 2024 is 5.2 trillion in Pakistani rupees and it’s equal to US$32 billion.
Here, is a list of some external and internal factors cause challenges in Pakistan’s real estate market in 2024.
Economic instability can significantly impact the real estate market. Economic factors such as inflation, currency devaluation, exchange rates, and changes in interest rates can affect property prices, demand, and investment in Pakistan. Another challenge is regulatory changes or uncertainties related to land acquisition, zoning laws, and taxation policies can create challenges for developers, investors, and buyers. Lack of clarity or consistency in regulations may deter investment and hinder market growth.
Challenges related to infrastructure development and maintenance may affect property values and hinder the growth of certain areas.
These are some of the potential challenges that the Pakistani real estate market could face in 2024. Addressing these challenges would require concerted efforts from government authorities, policymakers, industry stakeholders, and investors to create a stable environment for sustainable growth and development in the real estate sector. It requires a stable real estate policy for long-term growth. No doubt Pakistan real estate adds 2% to GDP.