Dear friends.
First of all Eid Mubarak to all. Hope everyone enjoyed a warm and joyful Eid with their family and friends and second I pray for those that Allah shower his mercy upon them and end their ordeal like for the Muslim brothers and sisters in Palestine and other affected areas.
Now I want to learn how the real estate mechanism works. If we consider property using the product life cycle model which has 4 phases i.e. Inception, growth, maturity and decline.
The decline, however, does not seem to work as once a sector has reached its maturity in real estate, it remains stable rather than decline.
The growth stage is the hot stage where most of the activity occurs and any major price appreciation is due.
Considering the real estate of Islamabad, I would like to take the opportunity to put in few sectors in these blocks and would need the experts' guidance over how appropriate the analysis is.
1= Inception stage:
This is the initial stage where work has just started. Land would be acquired, NOC and master map will be issued, balloting would be done etc.
In terms of price rise, if everything goes fine, it would see a decent price increase but not something major. It will, however, have a better price appreciation than the maturity phase.
I think mostly files would fall in this category like ft, DHA 2 Ext, Commoners Sky Garden, BE 2, G-16 etc.
This is also the most risky phase (even in terms of product) as it also inhibits the decline stage where prices may come down and whether a society may be successful or not in the future is also determined in this stage.
2= Growth stage.
This is the best stage in terms of growth, development work and price appreciation. Here both near possession and ready possession sectors should fall. Construction is mainly due in this area with all the basic utilities of life to be provided for better living. I think the sectors that may fall under this phase would be I-12, G-14/1-3 CDECHS, B-17, DHA 2 Ex-Comm, BE1 etc.
Well I don't know about G-13, G-14/4 and G-15 where they actually fall because there is room for growth in both making them in the growth stage but considering the many other options available in the market and their development work, these seem matured to me. But again in a matured sector growth in terms of prices is very low, but recently as seen in G-13, it experienced a recent boom and same is expected for G-14/4 and G-15 and who knows there maybe any more in the future?
3= Maturity stage.
Well all the central CDA sectors, DHA 1, BT 1-6 etc. Would fall in here. But I think in terms of any price appreciation, if any, it would be G-11. It is almost wholly complete, however, some parks and schools are not yet built. Well do parks and schools or markaz increase property prices if constructed in a sector?
Well this is what my limited knowledge has analyzed. Any comments would be highly appreciated.
Here is my comment
Please appreciate it now :)
@Arshad: It's a good analysis. I think if this analysis is augmented to cover all sectors, and a graphical representation of the analysis is produced, then it could turn out to be a useful work:) especially when its validity is ensured through experts opinion of this forum. The finalized analysis would be of help to people who want to invest (short or long term), who want to construct their houses etc etc. It can be the case that the admin of zameen.com might take this line to produce a suggestive software at the site that would help to all those who visit the site to seek help in buying and selling properties.
By the way, Syed Amjad sb is away from the forum. He, being an economist, used to present his useful and critical posts.
Good attempt Arshad sb,
However i won't agree on one thing , i.e MATURITY,
I personally think its a relative term,
the 4 stages are nice examples of human life cycle ,but not property,
you know humans get old and die,
BUT property never matures, property dealers or agents who use this term only see it through short shortsightedness scope , while in real sense they know ,that they are wrong,
EXAMPLE,
land measurement is fixed ,while population increases ,while demand for such land increases with time due to more human numbers,
just 3 years back , i went to dha phase 1 main office , the gentle for receptive client dealings ,told me that dha phase 1 is now mature sir ,go for phase 2,
BUT ,
when i see it now ,it has doubled since then,
and property only decline ,when it is destroyed intentionally,
Good Analysis Arshad Sb… Keep up the good work.
Thank you IB, Dk and Junaid Sb.
Indeed DK Saab you are right property does not mature. It is something similar to product life cycle i.e. When it enters the maturity and eventually decline stage they reintroduce it into the market with amendments so called Extension Phase.
By maturity i meant little scope for development and price increment like CDA sectors I-8 to I-10, G-7 to G-11. In the past three years prices have increased dramatically in developing sectors including DHA 1 but the least in these areas.
One may argue that in the past prices in these CDA sectors have increased but you it was mainly due to people demolishing old constructed houses and building new ones with insane demands and others to follow this footstep.
The old houses in these sectors are still low priced compared against newly built ones.
I appreciate IB saab comments if we can have, though the model is just an example, but a elaboration of different, if not all, but a majority of sectors that may fall in the different blocks, it would be easy to judge or make personal decisions regarding investment.
I, however, do not have any insight or knowledge in the real estate sector. It in itself is a complete research and study and you need it give it time to gain some knowledge over how the market works.
If you have a research oriented mind and can spend countless hours over viewing each and every forum on this website and highlighting the main points while noting them down somewhere. Plus have a few friends in the market who may provide updates every now and then.
Then its the best bet but unfortunately not everyone can do that.
Now coming back to the main topic an elaboration can be extended, for example,
G-13: If it is in the Growth stage, we can split the growth stage into 3. 1st, 2nd and 3rd. And one can rate it in say in 2nd stage. It would mean that in terms of growth it is half completed and half yet needs to be completed. So this would make it feasible for both investment and living. Growth can be houses, population, roads, street lights, mosques, markets, parks, schools etc.
In the same manner if we consider I-10 it can be rated in the maturity phase. Meaning no room for further development, only for living, no further price increment in property and if any only nominal.
Say DHA 2 Ex-Comm we can rate it in the 1st stage of Growth stage. It would mean it is investment oriented and not currently for living. Has far more room for growth.
Commoners Sky Garden for instance we can rate it in the Inception Phase i.e. No NOC, no land acquired, no map. Very very risky investment. Potential for both gains and losses while gains are not solid gains.
These analysis would not cover any increment in current expected prices but an outlook of a specific sector. Again in terms of price appreciation a sector falling in 1st stage of Growth phase would see more gain against another sector which would fall in say the 2nd or 3rd stage of Growth phase.