The FATF’s Grey List & Repercussions on Pakistani Real Estate [2021]

Pakistani real estate


In today’s article, we’ll look at how being on the FATF grey list affects Pakistani real estate.

FATF stands for Financial Action Task Force. This intergovernmental organization establishes worldwide standards with the goal of preventing illicit actions in society. It focuses on the elimination of criminality, corruption, and terrorism. FATF has been monitoring global governments since 2000, and it is constantly revising its list of countries that have failed to comply with its criteria. That list is called the grey list.

FATF Pakistan history is quite a lengthy one, and it has been on and off the list for a long time. The last time it was placed on the grey list in 2018, and it is currently endeavoring to get off it. On the 25th of June 2021, FATF President Dr. Marcus Pleyer declared that Pakistan has completed the major 24 items but remained on the FATF grey list 2021 because it needed to accomplish three more points to be delisted.

Now let’s get to the meat of the matter. We’ll start with some of the downsides and then look at some of the positive aspects.

Foreign Direct Investments Will Be Dawdled

Pakistan’s high rate of interest encourages firms and people residing abroad to invest in the country. Second, it is also aided by the expanding and developing industries. Pakistani real estate has had the most rapid growth in recent years. A flurry of real estate firms, as well as real estate portals, have popped up. It has piqued the attention of individuals and businesses from across the world to invest in the country.

Several international developers have teamed up with local developers to form housing cooperatives. For example, for the conception and building of Blue World City, China’s Shan Jian Municipal Engineering Company partnered with Blue Group of Companies. Because of the risk of losing money, being on the FATF grey list will deter such developers from investing in Pakistani real estate.

Locals and Overseas Pakistanis Will Curb Investments

Because of the same concern, Pakistanis living abroad will not shy away from pooling their investments to Pakistan. They will invest their remittances in stocks, gold, or crypto-currency. Because real estate is highly illiquid, money can’t be taken out immediately if the industry begins to lose money. Several housing societies have set up separate blocks for overseas Pakistanis, like Lahore Smart City. So if there is a halt in real estate investments by people living abroad, Pakistani real estate growth will be stifled.

Should I Discontinue Investing in Pakistani Real Estate?

You might be wondering if one should cease investing in Pakistani real estate given the following circumstances. No! Why? Because to be removed from the FATF grey list, Pakistan has to work on three more points. Which the Pakistani government has promised will be completed in a short period, as it has touched most of those items. On the bright side, consider how investments in Pakistan will be more profitable than ever, if the country moves out of the grey list.

  • Real estate is a haven for money launderers, and Pakistan is working hard to track them out as soon as possible. When Pakistan would be delisted from the grey list, it would mean it is a money-laundering free country. It will give investors in Pakistani real estate hope that the market is secure, and they will continue to invest in it. The property rates in Pakistan’s real estate sector will rise as foreign investment increases. The increased rates would mean high profits to the investors through flipping the properties.
  • Complying with FATF rules will protect Pakistan against criminal operations such as abduction, human trafficking, and target killing. Consequently, investors will invest in Pakistani real estate with confidence in both their money and their lives.
  • It will also help Pakistan to enhance its ties with foreign countries. Several countries acknowledge their efforts to combat terrorism. Many more real estate collaborations will happen in the near future because of these peace-seeking objectives.
  • The elimination of corruption will result in the eradication of red-tapism. The legal formalities for purchasing and transferring a home would no longer take as long. Furthermore, it will restrict officials from receiving excessive compensation for performing their duties.

Finally, while being on the FATF grey list would cost Pakistani real estate, the advantages will be higher if Pakistan is no longer on this list. You might as well take advantage of the market’s high property rates. For that, visit Makeen Marketing at Plaza D1, Main PWD Road, Islamabad, or call our real estate agent at 0330-0625336 for more information.

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