(Newswire.net — August 17, 2015) — Earlier this month, Standard and Poor’s (S&P) gave a positive review to the average real GDP growth potential of Pakistan. The self-same Pakistan you might have seen in the news otherwise as having been a victim of something unfortunate, which is how the news works for the most part now.
On May 5, S&P revised Pakistan’s B-minus credit rating from ‘stable’ to ‘positive’. It also projected that Pakistan’s real GDP would grow by 4.6% during 2015 to 2017, instead of the 3.8% it had projected earlier, citing Pakistan’s “significant progress in stabilising its economic, fiscal, and external performance”.
One of the key points S&P mentioned in its statement was “strong capital inflows and remittances”, which it said had strengthened Pakistan’s economy along with lower oil prices, “which support business confidence and investment spending”.
Remittances are extremely valuable for Pakistan, and fiscal year 2014-2015 could see them rise to a possible record high of $19 billion, according to a recent report. A huge Pakistani diaspora lives and works abroad in the Middle East, the UK, US and Canada, and the funds these people send back to their families at home have a huge role to play in the country’s economy.
Many of them choose to invest this money in Pakistani real estate, which is seen in the country as one of the most stable and profitable investment mediums.
“Property is the safest investment in Pakistan because it steadily gains in value over time,” said Syed Anas Munir, a Pakistani software engineer who has been working in Mountain View, CA for the last 5 years.
“Commodities and stocks can fluctuate and there are always risks involved, so real estate is the best option I have to secure my savings,” Munir said, adding that he had been saving up to buy a home for his family in Lahore, Pakistan’s second-largest city and his hometown.
“A lot of the foreign remittance goes into property, and for good reason. Since the start of this decade in particular, the real estate market of Pakistan has progressed in great strides,” said Zeeshan Ali Khan, the CEO of top Pakistani real estate website Zameen.com.
“With a high urbanization rate of 3% and a slew of new projects by local and international developers, the major cities of the country are now all host to thriving real estate markets with plenty of investment opportunities offering good returns,” Khan said.
“Some 78% of the respondents in a survey we conducted recently selected real estate as the best investment option in Pakistan, so it makes sense for a lot of Pakistanis working abroad to park their savings in real estate back home, especially since many of them want to eventually return and settle in Pakistan,” he added.
The success of larger real estate developers such as the Defense Housing Authority (DHA) and Bahria Town has spurred mid-market developers to provide increasingly competitive projects laden with facilities on par with their bigger rivals. This is one of the main reasons why real estate investment is such a profitable proposition for Pakistanis within the country and without.
As happening as the real estate market of Pakistan is, it is not the only positive in the country. Pakistan’s tech sector has also seen an explosion of entrepreneurship followed by investment from local and international financers.
One example is homegrown automotive portal PakWheels, which recently secured a $3.5 million investment from Malaysia-based VC firm Frontier Digital Ventures. The portal is highly popular among car-lovers in Pakistan, and can be seen as a snapshot of the generally increasing internet penetration and awareness in this country of nearly 200 million people.
More than 30 million people are internet users in Pakistan, and mobile phone usage stands at close to 135 million according to the Pakistan Telecommunication Authority (PTA).
These figures – and indeed many more like them – outline a country that seems to be poised for rapid and exponential growth, and S&P’s recognition of this potential may only be the first of many indicators that Pakistan is firmly on its way to leaving behind the Third World tag.
SOURCES
S&P Report: http://www.standardandpoors.com/en_AP/web/guest/article/-/view/type/HTML/id/1397100
Foreign Remittance: http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/opinionanalysis/2015/May/opinionanalysis_May32.xml§ion=opinionanalysis
PTA Stats: http://www.pta.gov.pk/index.php?option=com_content&task=view&id=269&Itemid=658