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Investor
( 161 posts )

[65 Replies]
Pakistani rupee value is doing a nose dive and currency value has depreciated 30% compared to british pounds since 2017.

I bought 2 plots back in 2015 in bahria town. Even though the price of plots have gone up by 10% each year, the value of currency however depreciated and the investment is completely worthless.

Anyone seeing anything positive coming out of pakistan's economy in the next few years?

    38 days ago In Where to Buy
    Post Answer
    Imtiaz
    (603 posts)
    "Anyone seeing anything positive coming out of pakistan's economy in the next few years?"

    No one knows, not even the best of the economist. Especially in a scenario, where we are inviting the world to invest in Pakistan and on the other hands a handful of agitators locking down the country, burning off public assets and the state (Govt. + Military + Court), not only the current but all of them from the recent decade came down to its knees to beg a way out from such handful of blackmailers.

    Regarding your question on Devaluation, I think the correlation between Foreign Currency (reserve) & Real estate cant be compared/measured that easily. I am not sure about the British Pounds stability in the last few years due to Brexit etc.

    "Pound slumps to 31-year low following Brexit vote"
    The Guardian | 24 Jun 2016

    "Results from across the country suggesting the Brexit camp were on the brink of declaring a referendum victory saw sterling down 10% against the dollar"

    https://www.theguardian.com/business/2016/jun/23/british-pound-given-boost-by-projected-remain-win-in-eu-referendum

    Lets talk about USD (somehow the universal benchmark)

    - Currency Devaluation
    It is not a bad thing, especially of you have good volume of exports. In-fact china devalues it currency to increase exports volume and ultimately the foreign reserves. PKR depreciation hurts us when our foreign debts in USD grow but we dont have the exports to balance that off. Why does USD takes a hit on the PKR? - the Supply & Demand and same applies to the real estate, when there is a real demand prices only go upwards.

    - Cash Reserves
    They may not be that stable as they sound, recent example of crashing currencies in developed and emerging economies include but not limited to British Pounds (Brexit Impact), Turkish Lira, Indian Rupee Chinese Yuan (Trade-war and Intl. Tariffs) Russian Ruble (slow GDP and trade deficit). I myself, in 2014 personally experienced depreciation of Danish Krone by 21% in approx 6 - 8 months time, while at the same time a plot of mine in ISB grew by 30% of price in 6 - 8 months.

    - Life/Investment Decisions...
    Sometimes its not a universal phenomenon but more a consequence of a personal choice. Decision B instead of Decision A could have lead to a different outcome. May be your investment in some other society (lets say Zone 2 of CDA could have brought upto 100% approx gain in last 4 - 5 years).

    Since 2016 to early 2018 British Pound "...fallen by 12% against the Euro and 5% against the US Dollar since May 2016."

    https://fullfact.org/economy/pound-fallen-since-brexit/

    It means that if I had saving in Euro not the GBP, since 2016 I would have gained even more against the PKR. Similarly, if I may had invested in Society X instead of Society Y I may had gained much more than 10% and in some cases may be up to 100%

    I think its an interesting topic and discussion, despite being a layman with minimal knowledge of the economics/monetary issues, I still believe the correlation between growth of Asset in Cash vs Real Estate is not that simple. If in a hypothetical scenario, you consider to invest the GBP in Northern English Property than BT, your views can be quite on the opposite end.


    "Northern England house prices to rise at faster rate than London" - The Guardian | Nov 2, 2018

    https://www.theguardian.com/business/2018/nov/02/northern-england-house-prices-to-rise-at-faster-rate-than-london


    But yes, Pakistani economy is a mystery - nothing less of a Vegas Casino in terms of jackpot or the bankruptcy... Alternative can be a USD bank account with reserves and good growth. I believe, some investments are worth the thrill that's with good personal decisions rather than seeing the boring trend of USD going up at a certain percentage each passing year. Because if its only about the currency than why not the Bitcoin, great risks but a Jackpot for sure if you are lucky!
      37 days ago 

      Sohail Khan
      (23 posts)
      Current situation is bad, restricting NRP to hold thier investments but Inshallah once the stability comes things will be on track pretty fast.

      The curency devaluation is not good at all for our country, our economy mainly depand upon raw material export and import of finish goods, in both cases it take jerk when curency devalue.

      I bought a plot when curency took first dip in Nawaz time and thought its the final but then it took second dive in PTI time, so now onwards lets hope for improvement.

      The property market on the other hand is on pause, so look like it will take few months to be out of trauma.
        37 days ago 

        Imtiaz
        (603 posts)
        I think fundamental to understanding the issue is to know that the correlation between Cash (Foreign Currency) & Real Estate (Immovable Asset) is not that simple as assumed.



        USD climbing up against all foreign countries & the US have massive cash reserves, still the US faces lots of housing crisis.
          37 days ago 

          Ajmal H
          (4 posts)
          @Imtiaz



          Sir I have about 4 million PKR, can you please advise where to invest in ISB/RWP real estate?



          Thanks
            37 days ago 

            Imtiaz
            (603 posts)
            Sir it would depend on your preferences as to invest for pure revenue purposes or possibly to have the property for personal use.



            In 4 million bracket, I would recommend.



            I-16

            Gulberg Residencia

            Mumtaz City

            Phase 8 (RWP)

            MPCHS B-17

            Foreign Office Society

            CBR-2

            Park View City



            To me these are safe options with good development/returns in the future
              37 days ago 

              Isloo1
              (230 posts)
              This country is ruled by most incompetent lot, which is not just tabdeeli sarkar, but also those at the helm pulling the strings.

              The economy has nose dived since mid last year and the bottom is yet to come. So my dear Investor, it pains me to say that rupee is further going to sink as the tabdeeli sarkar is bringing back empty begging bowl from China. I would be happy if it stops at 150.
                37 days ago 

                Investor
                (161 posts)
                @Imtiaz Thank you for a very informative and detailed post. You are correct in stating that devaluation of currency can be good for exporting goods but it is quite harmful in long term. Pakistan is just getting into endless debt abyss.
                  36 days ago 

                  Investor
                  (161 posts)
                  Regarding the value of Pound it has rebounded well since the minor correction after Brexit news. I am concerned about Pakistani investors abroad who have invested quite a lot of money in Pakistan and since the currency value is dropping hard, all the appreciation in property value (plots) basically goes to waste. Like I mentioned earlier even though my plots have risen in valve by 10 percent every year this has been in vain since the currency value has dropped and I am at a loss now if i sell my plots and transfer money abroad.
                    36 days ago 

                    Investor
                    (161 posts)
                    ..However for local Pakistanis this is not an issue since foreign currency does not have impact for local people.
                      36 days ago 

                      Imtiaz
                      (603 posts)
                      - @Isloo, even more worrisome is the state being spineless in front of a few thousand religious/political/establishment pressure groups that is a quick poison to the state itself and the economy.

                      On a lighter note, as per information minister's policy of making state media as neutral, PTV acted fast to be honest...

                      "'Begging' instead of Beijing: State TV apologises for error during PM's address"

                      https://www.thenews.com.pk/latest/389811-begging-instead-of-beijing-state-tv-apologises-for

                      ------------

                      - @Investor, whenever you are in Pakistan may be switching your investment to some other emerging projects can make up for the lost revenues. BT/DHA are still among the best for living or end buyer, however, not as charming and cash machines as they use to be in the past. Recently, lots of litigation have dented the reputation of BT and DHA is no less of a mess but somehow strong enough to silence the media and judiciary.

                      Prime example is if in DHA or more specifically BT some concert or event organised successfully, media plays big tickers and breaking news by explicitly terming it as 'successful xyz at BT...". However, if something goes wrong (theft, killing), the same media simply refers to that as a 'Some bad event happened at a Private Society'

                      "...However for local Pakistanis this is not an issue since foreign currency does not have impact for local people."

                      Its the local residents that gets hit the most in-fact. May be not on buying land but in construction and every other imported items that range from daily life stuff used since morning to the night time (imported toothpaste to the post dinner green tea) is being paid for in the foreign currency equivalence of PKR.

                      Right now our exports are 220000 million approx PKR and exports at 550000 million approx PKR. For each 100 PKR spent on local products 250 PKR are spent on imported stuff leaving with a deficit of 330000 million PKR to be paid by Pakistanis to make up for the trade deficit and thus getting the max hit by PKR devaluation.

                      ---------------

                      https://tradingeconomics.com/pakistan/imports

                      https://tradingeconomics.com/pakistan/exports
                        36 days ago 

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