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?
"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!
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.
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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.
@Imtiaz
Sir I have about 4 million PKR, can you please advise where to invest in ISB/RWP real estate?
Thanks
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
@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.
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.
…However for local Pakistanis this is not an issue since foreign currency does not have impact for local people.
- @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
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- @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.
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https://tradingeconomics.com/pakistan/imports
https://tradingeconomics.com/pakistan/exports
@Imtiaz
Thanks for your detailed reply.
I was just wondering why you have listed I-16 at top, I visited it few days back, still the condition of access road is very bad and very few houses are build there. Also what about I-14 as its very near to GT road as compared to I-16. Also whats your thoughts on DHA-III
@Imtiaz,
Good input like always
This currency devaluation vis a vis property valuation issues is not easy to conclude, I have also been pondering on this issue from few months, we have a property whose worth was 1 cr 80 lac when usd was 120, so now usd at 133, should the demand be raised ? I say logically yes but in reality buying power and number of buyers are reducing day by day as peoples’s incomeS are not rising,
So how should one draw relation between usd and property price , or it shouldn’t be done at all
@Ajmal,
Since this is a discussion on Currency Devaluation and Real Estate in Pakistan, therefore, my listing was in no particular order of preference as I had to start from some name. However, since you have asked for I-16 so here are my views:
I-series CDA sectors are more affordable than the others with an exception of I-18.
I-14 vs I-16
I-14 is nearer to GT road and is getting populated. For end buyer its good but the prices have jumped significantly so from the investment point of view, I believe I-16 can yield better results. Here is why...
- Sector Layout
If you look through google maps, I-16 is a perfect squared shape sector that has been the layout of the proper CDA sectors. Whereas I-14 is irregular. Squared shape sectors somehow evenly divide 4 sub-sectors with Markaz in centre and better management and maintenance of the sector compared to irregular ones. 16/2 is getting populated at a decent pace.
- Civic Amenities
Gas and Electricity are already available with good underground water as of now, whereas CDA has already started working on the water supply or probably already done by CDA. Not sure if I-14 has Gas connections, as of now.
- Neighborhood
I-16 is connected to 3 fast developing societies at 3 - 5 minutes drive that include FOECS, CBR-2 and Upcountry. For example, Upcountry has signed MoUs with Nayatel, and best school systems in ISB. These education, health and other services, if I-16 cannot have, I-16 will still be able to have them based in nearby fast developing societies.
- Link from I-14 to I-16
CDA has floated the tender earlier this year for the rehabilitation of link road from I-14 to I-16. There is already a proper road but that needs maintenance and upgrade. CDA ensures such up-gradation but only once sector is largely populated to avoid wear and tear of roads during house construction. Upgraded link is also needed to boost I-15 which is between 14 and 16 and CDA is planning to develop it sooner.
- Access from Mainstream City
CBR-2 that is adjacent to I-16 is in process of getting a direct connection from Thalian Interchange. Whenever that happens, I-16 will be just a few km drives from the Thalian Interchange, New Airport and the proposed Rawalpindi Ring Road. Moreover, there were talks between CDA and NHA to given access to I-16/15/14 from Kashmir Highway through H-16 sector that has been reserved for the Central Jail. In worst scenario it already has the access from Motorway to I-14 to I-16 and takes about 25 minutes from Zero-point to I-16.
- I-17 as a Medical City
I-17 has been approved by the CDA to be a medical city with teaching hospital and university run by NUMS (military based institute) that will boost I-16.
- PHA flats
PHA flats in 16/3 will boost I-16 as they are being constructed by PHA (ministry of housing) so they will only become attractive once infrastructure, facilities, access and quality of life is improved.
@YC,
I believe Foreign Currency Account (foreign cash reserves) vs Real-estate (Immovable Asset) are two distinct portfolios of savings/investment/ Some times they can be complementary and at times they can be contradictory. Like hard to draw a conclusion between the Parliamentary vs Presidential system of governance.
For time being USD is doing well as far as a currency compared to lets say GBP, EUR, Lira, INR. Similarly, some projects may be doing well than the others (lets say better than BT etc.)
Its a matter of choice, understanding, and social perspective. One can buy a Mehran and save the cash in account or invest it to grow, while the other would prefer a Corolla by investing more cash in the vehicle that depreciates each passing day - for the sake of social perception.
If you have constructed units, even if their price appreciation is slow, monthly rental can balance that off with a more frequent revenue.
As of now among the two (Foreign Cash Reserves vs Real Estate Investment), the first one sound more attractive as PKR is bound to crash more in coming months but a direct comparison may not be easy unless some economist can share technical insights to elaborate it better.
@Imtiaz
Thanks for such a detailed review on I-16 really impressed. Can you please guide me where to invest I-16 or Gulberg residencia or B-17.
Also in which sub-sectors or series (will really help me). If you can also mention price range that will be a big help.
Thanks
All three are quite good
- I-16 as proper CDA sector of I-series
- Gulberg Residencia at one of the most prime locations of ISB and one of the best designed society. However, some parts/blocks have been underdeveloped and will take long time.
- B-17 has been an all season winner but to me a bit far and outskirts of the ISB.
I would personally go for Gulberg Residencia if I have to construct my house for living and for long term excellent growth and may be living I 1-6.
Imtiaz sb, Great sir. Keep up the positive work. We all are learning from you. Thanks.
@Imtiaz
Thanks really appreciated.
Great work Imtiaz Sahab.
Always educating us with comprehensive knowledge of property matters.
Hi everyone,i am an overseas pakistani and i need help in buying a plot in isb or rwp,my budget is 4 million rupees.I want to buy a plot to build a house immediatle.Ideal size of plot would be 10 marla.
Can you please recommended me where should i buy a plot to build my house.I dont know much about pakistan property and i want my investment to be safe and i want a society which is safe and livable.