ISLAMABAD: The Association of Builders and Developers of Pakistan (ABAD) has formally called on the federal government to introduce tax relief measures for the real estate sector in the upcoming Budget 2026-27, warning that the current tax burden is deterring domestic and foreign investment. The federal budget is scheduled to be announced on June 10.
ABAD Chairman Muhammad Hassan Bakshi stated that the construction and real estate sector, with an estimated market value of $1 trillion, currently contributes only 2.2 to 2.5 percent to Pakistan’s GDP. He argued that policy reforms aligned with regional benchmarks could raise that contribution to 15 percent.
A central concern raised by ABAD is the high cost of property transfers. For tax filers, the transfer cost currently stands at 10 to 12 percent, while non-filers face rates as high as 30 to 32 percent. By comparison, the transfer cost in Dubai is four percent. Bakshi urged policymakers to bring Pakistan’s rates in line with Dubai or lower, to make the market competitive and attract capital held abroad.
ABAD has also requested that builders be taxed on a per-square-foot basis, a measure it says would simplify compliance and reduce disputes with tax authorities. Relief for first-time homebuyers was also among the association’s demands.
Beyond taxation, ABAD called for the digitalisation of land records and approval processes nationwide to reduce corruption and improve investor confidence. The association also emphasised the need for a long-term, legislation-backed policy developed in consultation with industry stakeholders.
The construction sector is the second-largest employer in Pakistan after agriculture, with 72 industries linked to it. Lower tax rates, ABAD maintains, would ultimately increase government revenue by encouraging greater compliance rather than avoidance.
Muhammad Waqas Ghani, Head of Research at JS Global Capital Limited, described potential real estate incentives in Budget FY27 as a positive development, noting that investment flows into the sector are likely to continue in the coming months.
Pakistan is currently operating under a $7 billion International Monetary Fund (IMF) loan program. The IMF has called on the country, which has a tax-to-GDP ratio of approximately 10 percent, to broaden its tax base by bringing sectors such as real estate, agriculture, and retail more fully into the tax net. The government is also targeting approximately Rs860 billion ($3.1 billion) in new tax revenue in the coming fiscal year.
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