Why most Pakistani real estate is a dead investment

Why this conversation exists

The episode opens with Muzamil framing the room. He has spent the last few weeks publishing a series on Pakistani real estate, arguing that most of what passes for the industry in this country is an unproductive pump-and-dump — files traded on horizontal land, prices marked up by sentiment, capital that never touches anything productive. The reaction, predictably, was loud. Real estate operators told him he had attacked the one engine carrying the country. People on the other side told him he was being too nuanced, that he had earlier called it a pump-and-dump and should not now be carving out exceptions.

The exception, he says, is real. “Within real estate certain developmental real estate options exist,” Muzamil tells the audience, “and many of them are ones where Pakistanis can both protect and save their money.” Tourism-led real estate is the cleanest example. To pressure-test that view he has invited Fahad Lone, who is building a vertical resort in Nathiagali — a developer who, by his own admission, is not from the conventional file-shuffling crowd.

How Fahad ended up in the Galyat

Fahad’s path into real estate was not planned. His education is in accounting and economics, and his family business is in a completely different sector. The decision to set up a new business locally came in 2018, and at that moment the only sector in Pakistan still showing real momentum was real estate. “For the last ten years,” he says, “only real estate has been running in Pakistan.” He started with a small horizontal farmhouse project — the kind of small scale that, he is careful to point out, could not be a pump-and-dump even if he had wanted it to be.

The horizontal experience taught him what he did not want to do. With a basic understanding of how economies work, he had a feeling about where the cycle would end. “If something has no real demand and its supply keeps growing in an unchecked, uncontrolled way,” he says, “at some point — no matter how much you dump and pump — you will not find enough buyers, and you will not be able to take the price up artificially.” He watched productive businesses get starved of capital while horizontal land kept absorbing it. He wanted out.

Vertical was the answer. And inside vertical, he made a second choice that defines the project: he went to the mountains. Apartments in Lahore did not appeal because, as a first-time developer, he could not get to the scale where the offsets, the basement, the lifts and the parking actually pencil out. Lahoris also do not want to live vertically. They will drive sixty kilometres for a plot they can own from soil to roof. The Galyat let him chase a different desire entirely — the desire he had heard in every drawing room of people who could afford it. “I want a property in the mountains.”

Building for snow, not for sentiment

Most of the conversation’s middle is engineering. This is the section that separates Fahad’s project from what Muzamil calls the “paint the walls and call it a hotel” model that has spread through the north.

The Galyat works as a year-round destination only if you build for it. The altitude guarantees that summers stay cold and that snowfall happens every winter. Both are commercial assets — if, and only if, the building does not betray its guests. “In first-world countries, if your heating system goes out, they consider it an existential emergency. They come and fix it.” In Pakistan, almost no facility in the north is sealed properly. Air leaks in around the windows; the heating cannot keep up; the snow outside becomes the enemy rather than the attraction. Murray showed exactly this. Cars stuck on the road were one failure mode. The deeper failure was that nothing inside any building was actually built to be warm.

Fahad walks Muzamil through the choices he made. Split inverters were out — dry, nauseating, useless for sustained heat. He went to water-based radiators, with a dedicated electric-and-LPG boiler in every unit rather than a central system, because central water heating in a large building loses energy in transit and creates disputes between units. Each balcony has a ventilated LPG-fed boiler. The LPG itself is piped from a single secure storage room, the way natural gas is delivered to homes in Punjab and Sindh, so that no guest ever sees a cylinder and no cylinder is ever moved by hand in winter. The pipe network was extended into the flooring so that “bare feet putting your feet on ceramic tiles in the morning” — the most hated experience of every northern hotel — never happens. The envelope is sealed with UPVC double-glazed windows, now made locally; standard aluminium windows would defeat the entire system. His original window budget was sixteen million rupees. The final order came in at thirty-two.

The economic argument behind the engineering is straightforward. The relatively better hotel near his site can charge the same rates in winter as in summer, because it has built enough of a standard that people come all year. “It will not then effectively remain a seasonal thing,” he says. “That is something people need to understand.”

The financial model — buying into a business, not an apartment

Muzamil pushes Fahad on the part of the pitch that does not survive transplant from Lahore. A new-blue-area apartment in Islamabad has a clear story: capital gains, busy area, liquid resale. A mountain apartment used only by tourists looks, on the surface, like it should have neither. So what is the model actually selling?

Fahad’s answer reframes the asset. He is not selling residential real estate. He is using a residential-sized ticket — the same price band, he says, as an unfurnished Lahore or Karachi apartment — to make the buyer eligible for a share of an operating business. Every revenue stream inside the facility — room nights, parking, food, weddings, corporate events — goes into a single pool. Costs come out of the pool. Sixty percent of the resulting profit is passed back to apartment owners.

Two structural details matter. Comparable models in the market either share a fixed percentage or hand back a portion of room rent only; everything else stays with the operator. Fahad’s all-inclusive split takes the standard hotel-industry curve — where profits do not move much until occupancy crosses fifty percent and then climb sharply — and exposes the buyer to the upper half of that curve with no upper cap. The conservative number he quotes to investors is roughly one and a half to two lakh of monthly profit on a two-crore apartment at 45 percent occupancy. Muzamil runs the arithmetic on screen: at the upper end that is roughly nine percent cash yield, before capital gains, with the yield itself indexed to whatever room rates do over time. “Capital gains are on top of that,” he says, “and the cash yield will inflation-adjust by definition, because the room rate inflates with the rupee.”

The downside case is where Fahad makes his strongest argument. “Worst scenario,” he says, “is that no profit comes at all. Even then you can get your entire capex back. Your capex is always insured.” Because every input to construction — cement, steel, tile, scrap — is import-linked, the rupee value of the physical asset rises mechanically with the currency. “In your worst scenario, you still end up making something. That does not happen in any other business.”

Scarcity, not story

To anchor the long-term value claim, Fahad goes back to first principles. A commodity’s long-term value, he says, is determined by exactly two things: scarcity of supply and ability to generate revenue. He then walks Muzamil through why both are protected here. The site sits on the Abbottabad approach, the only Galyat route that does not get jammed in summer. Land in the area is leased from local government rather than titled — “you can build a hotel on it but you cannot sell it further” — which means a competing operator cannot easily replicate the structure he is selling. Assembling thirty kanals in contiguous Galyat land is, in his words, almost impossible to do twice. Supply is, for practical purposes, capped.

Demand, meanwhile, is uncapped in the other direction. Fahad’s own data points are anecdotal but vivid. The hotel where he first stayed when scouting land charged him seven or eight thousand rupees a night; the same room, in the same facility, now goes for thirty-five to forty thousand and is hard to get even at that price. A pre-booking he had made for a friend was bumped because the hotel had been able to resell the room to a higher bidder. On a midweek Wednesday — not Eid, not 14 August — he had to call a friend mid-drive and tell him to turn around because there was not a single room available anywhere in Nathiagali. “That is how crazy the demand is.”

Trust, tokenisation, and the audit clause

Muzamil keeps returning to the trust problem. In a country where developmental real estate is largely crowd-funded — every apartment owner is, in effect, a tranche of the construction loan — what stops the developer from walking away? Fahad’s answer is that the early investor is bought with price, not promise: rates start low enough that the first buyer is taking a calculated bet, and the developer’s job is then to build credibility transaction by transaction. He started a YouTube channel for exactly this reason. The entire build, through the worst of the post-2022 construction slump, is time-stamped on video.

Beyond that, he has done two things structurally. The first apartment block was listed on DupRap Tech, the local tokenisation platform, with the longer-term plan of putting the whole building on-chain so that a buyer can see, at any moment, which areas of the facility are sold and which are not. The second is a standard audit clause in every contract: any apartment owner can request audited reports of the project accounts at any time, from a reputable firm. “Globally, that is the standard,” he says. “I think that is fine.”

Fahad is also unusually clear about what he will not sell. The project’s commercial spaces — shops, retail floors — are not for sale. Selling them would have given him an easier short-term capital stack and destroyed the long-term upside that lets him share revenue back to apartment owners. “If we are able to pull this off successfully, scaling it would not then be a problem.” The long-term vision is a network of similar facilities across Pakistan where a buyer in one resort can use their free nights interchangeably across the others.

The internet bottleneck — and the long-stay demand layer

Later in the discussion, Muzamil opens a door Fahad has clearly thought about. Energy, heating, cooling and quality of stay can all be solved privately. The one bottleneck that cannot be solved without external infrastructure is the internet. And the moment that bottleneck breaks — Muzamil’s view is that Starlink will be live in Pakistan before the end of 2025 — the demand profile for the Galyat changes shape entirely.

The new layer is long-stay. Pakistan’s IT industry is growing thirty percent year on year. Freelancers are increasingly earning in dollars. A meaningful slice of them would happily book a Galyat apartment for a month at a time if they could plug in a Starlink terminal and work. “Davos hosts the richest people in the world,” Fahad notes, “and geographically there is barely a nineteen-or-twenty difference between Davos and Nathiagali.”

The project is structurally ready for this — each apartment already has a workdesk, a separate lounge, a bed, and a kitchen or kitchenette — but Fahad is honest that the financial model is built around per-night stays. Long-stay would need bulk-discount mechanics and a holistic road, traffic and signal revamp that no private developer can deliver alone. Starlink resolves the biggest piece. The rest, he says, is a governmental conversation.

The wider housing problem

The last third of the conversation steps off the project and onto the wider Pakistani real estate question, and this is where Muzamil’s frustration shows. The country is not housing its young people. The middle class that the IT industry is building, the freelancers earning in dollars, the families looking for a thousand-dollar monthly mortgage on a finished home — that demand exists, and no one is meeting it. Instead, Pakistanis are buying three-marla units in Dubai for one and a half million dirhams. “Why are townhouses not being built in this country?” he asks. “Why are condos not being built?”

Fahad’s answer is that the choke is regulatory, not commercial. In a vertical project, land cost is a small fraction of total project cost — the structure pays for itself if the bylaws let it. They do not. Lahore Development Authority offset requirements, fire-truck clearances, parking minimums and floor-area caps are written for a horizontal city, and they make affordable high-rise residential financially impossible. Recent attempts to liberalise — allowing five or six floors on a single canal — have, by his reading, been quietly walked back. “If I could give someone an apartment for sixty or seventy lakh,” he says, “they would live in it. It is not rocket science.”

Muzamil adds a second layer to the diagnosis. Electricity prices in Pakistan are now higher per unit than in New York. A building that was designed twenty years ago around central HVAC — one of the more progressive corporate buildings in Lahore — is now sitting empty because the HVAC running cost has outrun the commercial rent the building can charge. The developer did nothing wrong; policy did. “It is a holistic revamp,” Fahad concludes. “Not just building regulations. Utilities, public transport, all of it.”

Where the optimism actually comes from

By the end of the conversation, Muzamil asks the question he says he had quietly stopped asking guests for the last year and a half, because the answers had grown too dark to publish. How do you see Pakistan in 2050?

Fahad’s answer is grounded in policy mechanics rather than vibes. The single most consequential thing the government has done recently, in his reading, is to make non-utility real estate prohibitively expensive to hold — the transaction cost, the filer-versus-non-filer differential, the layered taxation. “Effectively,” he says, “policy has made it incapable to use real estate as a dead investment.” That is the first half of the puzzle. The second half — directing where productive capital should go — is the work still ahead. He points at the enormous land holdings sitting collectively idle as one obvious next lever.

Muzamil closes by naming his own position out loud. He thinks 2025 is the year sentiment reverses. He thinks people who put time, effort, energy and money into Pakistan during this window will reap the rewards of the next cycle, and that “putting money in during a bull run is not a fanne-khan move.” He thanks Fahad for what he calls one of the longest and most insightful conversations the show has had in recent times, notes — with a smile — that the buy-in for the project is steep enough that he half-wanted to put five lakh in himself just to demonstrate publicly how the tokenisation actually works, and wishes him luck taking the project to the full resort phase.