Lahore Residential 2H/2023

MACROECONOMIC OVERVIEW

Soaring inflation, sharp currency devaluation, rising unemployment and low inbound-FDI led to a contractionary FY2023. However, Pakistan’s economy is rebounding, expecting to achieve 2.5% growth in FY2024, with unemployment projected at 8%, down from 8.5% in FY2023, and inflation projected at 23.6%, down from 29.2% in FY2023. Increasing interest rates were used to stem inflation, with the rate rising from 7% in July 2021 to 22% as of November 2023.

Foreign debt servicing remains one of Pakistan’s major issues with US$23 billion alone due in FY 2024. The IMF Stand By Arrangement (SBA) with Pakistan brings welcome respite and the opportunity to unlock foreign funding. The 9-month US$3 billion SBA was signed in July 2023. Of the US$3 billion, US$1.2 billion has been disbursed with another US$700 million expected for disbursement soon on account of Pakistan meeting its targets. This is critical funding needed to further stabilize the economy.

CITY PROFILE

Lahore has overtaken Karachi as the most populous city in Pakistan, with ~22 million people in its administrative division. According to the 2023 digital census, Lahore’s population growth rate was 2.72%, against the national 2.55%. This is due to Lahore’s strong urbanization with people from across the country moving to the city and bringing their wealth with them, which filters into residential real estate. As the capital of the Punjab province, Lahore’s human development index and literacy rates are above the national average, making it one of the most prosperous parts of the country. Lahore had a workforce of ~3.59 million as of 2021, which creates a growing demand for real estate as labor from across Pakistan moves to the city for employment opportunities. Lahore is also the cultural capital of Pakistan, making it a prime location for local and international tourism.