FBR Lowered Property Prices in Karachi
What if I told you that the Federal Board of Revenue (FBR) has reduced the property prices in Karachi by up to 50%?
To maintain Fair Market Value, FBR on 29th October 2024 announced the price valuations for immovable properties in Karachi under SRO No. 1724(I)/2024. However, the department shortly came up with an amendment on February 11, 2025, under SRO No. 144(l)/2025.
Before we dive into the amendment details, let’s first understand why precise property valuation is important for the market.
Property Valuations By FBR
Property valuation is the assessment of a real estate property’s fair market value, which is based on multiple factors, including location, condition, and size. Accurate property valuation is important in smooth real estate transactions, precise tax calculations, and informed decision making from both buyers and sellers.
In Pakistan, the Federal Board of Revenue (FBR) is responsible for accurate property valuations to maintain a transparent property taxation system. This effort from the FBR for accurate property valuation has many advantages.
True Tax Liability:
Property taxes are based on market value. Precise valuations ensure fair assessment, preventing overvaluation or undervaluation and ensuring that no one overpays or underpays property taxes.
Smooth Real Estate Operations:
Correct property tax calculations are helpful so that the property holder won’t challenge his tax, saving time and legal costs for both the owner and the authorities.
Economic Impact:
Precise property valuations help the government in an accurate projection of the tax revenue, this helps in avoiding any revenue gaps from the over or undervaluation of the properties.
For Businesses:
It is very helpful for businesses to maintain accurate balance sheets, affecting depreciation and tax deductions. It plays a key role in better ROI analysis with tax aligning as per true market value.
New FBR Property Valuations
For Houses:
The residential houses in Karachi aged 0-5 years will have no impact on the valuation. But for those aged 5-10 years, 10-15 years, and 15-25 years, their value will be depreciated by 5%, 7.5%, and 10%, respectively. Any house that was built 25 years ago or earlier will be treated as an open plot and will have the same value.
For Apartments:
All the residential apartments that are 5 years old or younger won’t face any reduction in their value. However, for those who are 5-10 years, 10-20 years, and 20-30 years old, their market value will see a depreciation of 10%, 20%, and 30%, respectively. Any apartment that has an age of more than 30 years will have its value drop down to 50%.
For Commercial Properties:
Commercial properties that are aged 0-10 years will have no impact on their market value. Whereas all the properties that are 10-15 years, 15-25 years, and more than 25 years old, their property price will be reduced to 5%, 8%, and 10%. On the flip side, prices of the commercial properties located in the Defence Housing Authority (DHA) facing any Khayaban will increase by 15%.
Impact On The Real Estate Market
The amendment will affect different sectors of the real estate market, from buyers and sellers to investors.
Impact on Buyers and Investors:
The lowering of the property rates by FBR has created a new investment opportunity in Karachi. This will be helpful for new home buyers to purchase their new home, local investors and real estate companies to make a fortune out of it, and foreign investors to make high returns in the market.
Distress for the Sellers:
This decision has greatly influenced the property sellers in the city. With the lower property prices, the sellers are now forced to either sell their properties at the effective prices or hold on to their properties till the prices go high. Either way, it is a distress to them. On top of that, if they retain their properties, they will have to pay the property tax as well.
Conclusion
The amendment came as great news for new home buyers and investors. It is high time for local and overseas Pakistanis to invest in their homeland. It will be beneficial for both country’s economy and their ROI.
Let’s talk about the investment history of our country. Pakistan stands at the top of the list of the most inexpensive and profitable investments in the world. Our country stands out in the world of the real estate sector by developing impressive and spacious properties.
All kinds of properties are available in Pakistan to cater to the needs and demands of every investor. The real estate sector is huge in Pakistan, with an all-time high demand for properties with reasonable prices attracting people from all around the world.
Properties in Pakistan
The properties in Pakistan are profitable and affordable if you compare their property rates with those of other countries. All properties in Pakistan are built with modern architecture and style that attract clients from all over the world.
The properties in Pakistan are easy to buy, and you can invest or give your property for rent purposes, which can be a great source of long-term income.
Modern Development in Pakistan
Yes, the properties in Pakistan are easy to buy and affordable, but that doesn't mean the real estate sector is not good or behind other countries. Apart from being pocket-friendly, there is a strong built quality through the use of premium materials in the construction of the properties.
With classical construction, the properties in Pakistan are designed to provide a luxurious lifestyle. Furthermore, properties are built to international standards, guaranteeing that discerning buyers receive the greatest real estate available.
Properties in Pakistan Provide a Great Rental Income
It’s a great decision if you are planning to buy a property in Pakistan. The people in our country mostly buy properties for a handsome amount of rental income, through which they become owners of the property and also enjoy a great amount of rent.
Benefits of Long-Term Investment
If you decide to invest in properties for a long-term investment, then it would be the most beneficial decision you have taken because property rates are increasing daily in Pakistan due to the fluctuation of dollar rates. So, the decision to invest in the property would also provide you with the best profit amount if you are planning to sell it.
Best Property Rates in Pakistan
You can find the most competitive property prices in various regions of Pakistan that are both accessible and affordable within the provinces of Sindh and Punjab. Numerous cost-effective and top-tier lands are available for purchase, complete with approvals from SBCA and IDAP.
Financing Options Available for Overseas Pakistanis for Real Estate Investment
There are several financing options available for overseas Pakistanis, including local banks. These banks offer great loan services with competitive interest rates. Overseas Pakistanis also have mortgage options provided by banks and financial institutions, but it is important to understand the terms and conditions associated with mortgages.