Karakoram Highway Relocation Gets PKR 5 Billion Allocation

The federal government has allocated PKR 5 billion under the Public Sector Development Programme 2026-27 for the relocation of a major section of the Karakoram Highway between Thakot and Raikot.

The current phase covers approximately 102 kilometres of the N-35 corridor and forms part of a wider effort to maintain road connectivity in areas affected by major dam development along the Indus River.

The Karakoram Highway relocation is particularly important because the route provides a critical connection between northern Khyber Pakhtunkhwa, Gilgit-Baltistan and the rest of Pakistan.

Why Is the Karakoram Highway Being Relocated?

Sections of the existing Karakoram Highway are expected to be affected by reservoirs created through major hydropower and dam projects along the Indus River.

As water levels and the surrounding landscape change, parts of the existing highway corridor may no longer remain suitable for continued road operations.

The relocation project is therefore designed to create alternative road alignments that can preserve long-term connectivity between Thakot, Raikot and northern Pakistan.

102KM Section Included in Current Development Plan

The latest allocation focuses on a 102-kilometre section between Thakot and Raikot.

The planned works are expected to include road realignments along with the construction of bridges and tunnels where required by the mountainous terrain.

Developing alternative sections before existing routes become affected is important for maintaining uninterrupted passenger, freight and tourism movement across the region.

Overall Project Cost Reported at PKR 502.6 Billion

The broader Karakoram Highway relocation project is reported to carry an estimated cost of approximately PKR 502.6 billion.

Because of the scale of the project, financing and construction are expected to take place over multiple financial years rather than through a single annual allocation.

The PKR 5 billion provided under PSDP 2026-27 therefore represents part of the wider funding requirement for the project.

Why the Karakoram Highway Matters

The Karakoram Highway is one of Pakistan’s most strategically important road corridors.

It links Gilgit-Baltistan and northern Khyber Pakhtunkhwa with the country’s major urban and economic centres while also providing an important connection towards China.

The highway supports passenger transport, commercial freight, tourism, fuel and essential supplies, as well as access for communities located across northern Pakistan.

Any major disruption to the route could therefore affect both local mobility and broader regional economic activity.

Impact on Tourism in Northern Pakistan

Road accessibility is one of the most important factors affecting tourism in Gilgit-Baltistan and other northern destinations.

The Karakoram Highway provides access to areas including Chilas, Gilgit, Hunza and surrounding tourism regions.

Maintaining a reliable road corridor can help support hotels, restaurants, transport services, tour operators and other businesses dependent on visitor movement.

Improved and more resilient road infrastructure may also make travel more predictable for tourists, particularly when combined with better safety and emergency-response measures.

What It Could Mean for Real Estate Investment

Major road infrastructure can influence real estate and hospitality activity in areas that become easier to access.

Improved connectivity can increase interest in hotels, serviced apartments, resorts, commercial properties and other tourism-related developments.

For investors looking at northern Pakistan, however, infrastructure announcements should be considered alongside other important factors such as project approvals, construction progress, seasonal accessibility, local regulations, utilities and genuine tourism demand.

Road development can improve the investment environment, but it should not be treated as a guarantee of property appreciation or rental performance.

Strategic Importance for Regional Connectivity

The Karakoram Highway relocation also carries importance beyond tourism.

The route supports trade and regional connectivity and remains an important component of Pakistan’s transport network linking the north with the rest of the country.

Maintaining the corridor while major dam projects reshape parts of the Indus Valley is therefore important for long-term economic and strategic connectivity.

The government has also connected infrastructure development in the region with wider national development and connectivity objectives.

Project Will Require Multi-Year Funding

Given the estimated overall cost of the Karakoram Highway relocation, the project is expected to require funding across multiple years.

The current PKR 5 billion allocation should therefore be viewed as one stage within a much larger infrastructure programme.

Future progress will depend on continued funding, engineering work, construction timelines and implementation across the affected highway sections.

Conclusion

The PKR 5 billion allocation for the Karakoram Highway relocation marks another step towards protecting one of Pakistan’s most important northern transport corridors.

The current plan focuses on approximately 102 kilometres between Thakot and Raikot and is intended to maintain connectivity as major dam projects alter sections of the existing N-35 route.

For northern Pakistan, the project has implications for transport, tourism, trade and regional development.

For property investors, improved road access may create new opportunities over time, but investment decisions should still be based on proper due diligence, sustainable demand and the actual progress of infrastructure development.

 

Shahnawaz Yaqub Bhatti
Investment Consultant and CEO at Imlaak

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