Pakistan’s investment landscape witnessed a notable shift in 2025, as a majority of investors showed a preference for parking their capital in gold and the stock market, attracted by comparatively higher and safer returns. In contrast, heavy taxation and stricter regulatory measures reduced their interest in real estate and foreign exchange markets.
Experts believe the prevailing investment trend is likely to persist in 2026, potentially producing positive or negative effects on the broader investment climate and the economy.
Syed Muhammad Farrukh, an economic expert and director academics at Preston University, said the significant shift from the foreign exchange market, particularly the US dollar, to the stock market reflected a positive change in investor behavior in Pakistan. According to him, this indicates a growing inclination toward regulated sectors that not only offer returns but also contribute positively to the economy.
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He said the rising number of local investors entering equity markets through brokerage firms and mutual funds highlighted improving financial literacy among the public.
“This progress has been driven by facilitative digital initiatives introduced by the regulator. However, he stressed that authorities must ensure stock price manipulation is curtailed to protect individual and institutional investors from losses during bearish market phases.”
The benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) reached an all-time high in 2025 at 174,472 points, with average stock gains nearing 50%, according to data compiled by Topline Securities.
However, Farrukh described, the surge in investment in precious metals was unusual and largely driven by short-term profit motives. He noted that soaring gold prices had made it increasingly unaffordable for the general public to buy jewelry for weddings or use gold as collateral for loans from microfinance banks and institutions.
He further pointed out that gold trading does not generate tax revenue for the government and largely remains unregulated and undocumented, despite being easily transferable, which raises concerns from an economic standpoint.
Gold prices in Pakistan surged sharply in line with global trends. In January 2025, gold was priced at Rs282,300 per tola, rising to Rs468,500 per tola by the end of December, reflecting an increase of approximately 65 percent.
In contrast, the US dollar remained relatively stable against the Pakistani rupee, trading between Rs278 and Rs280 throughout 2025. This stability was largely due to strict oversight of the foreign exchange market by the banking regulator, resulting in subdued investor interest in the greenback.
“A significant section of local and overseas Pakistanis refrained from investing in commercial and residential real estate during 2025,” said Ibrahim Amin, Chairman of TriStar International Consultants, a real estate valuation and engineering firm.
He stated that investors increasingly chose safer investment avenues over real estate after abrupt legal changes affecting housing societies severely undermined their confidence.
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Amin added that only a small segment of buyers with strong purchasing power invested in houses and plots in major cities, which adversely affected the construction industry and slowed economic activity in related sectors.
He noted that neither were people investing in property nor was the government generating meaningful tax revenue from the real estate and construction sectors.
“Builders and developers have received a weak response from buyers despite the country’s significant housing shortage.”
Amin suggested that the government should carefully assess the investment trends and encourage investors in productive sectors through long-term policies and targeted incentives mainly in real estate.
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