Thank you admin, I can finally post this reply to Arshad sahab:
My contention was precisely that things cannot possibly get worse, except for overseas Pakistanis who are already invested and currently holding their capital in real estate.
The main problem is that the rupee has fallen (some estimate that it will fall even more). This is the primary reason why it's so bad for the overseas Pakistanis invested in real estate. As the rupees continues falling they keep on losing money. The same money that, invested elsewhere, would have been gaining value. Period. We can all agree that they will want it to stop falling. Honestly, we all would.
But it doesn't seem likely any time soon. The government has made promises to IMF. They will let market dictate the value of Pakistani Rupee. I am no economist but, as far as I understand, it has two downsides: one is inflation, the other is what I already mentioned above, overseas Pakistanis losing the value of investments.
At the same time, it has its upside too. Pakistani Rupee surely has some stable market value? Eventually, the rupee will fall to that and stabilize, as Isloo1 pointed out somewhere else today too. Particularly if the government can push through with its agenda of economic reform -- I honestly hope they are brave enough for it and don't take a u-turn under political pressure. Because that, in fact, will be death of economy in my opinion.
Once all that reform and devaluation has come to pass, Pakistani rupee need not necessarily strengthen. We fear it because it raises our debt, makes import of oil expensive, etc, etc. But, at the end of the day, if Pakistani economy is aligned around these factors, it shouldn't be of much concern even if dollar is at 200, as long as it settles there.
Though at the same time, Pakistani economy needs to strengthen. Because the previous governments feared all this so much, the losses now have been so huge. But eventually, once the bitter pill of losses and reform have been swallowed for a time, afterwards the same need not happen.
Both these things that is, inflation and strengthening dollar raise price along with other factors: increased duties and taxes, and rising FBR rates. Still additionally, and at the same time, the value of real estate is falling for overseas Pakistanis, which will likely give them incentive to buy property, even if, initially, it is only for personal use.
Based on all these factors, the prices of real estate (as against Pakistani Rupee) should not be falling anymore. If anything they will rise. The only question is when? 2 years is a fair estimation.
At the end of the day, though, Arshad sahab may be quite close to the truth. However, I agree when Asad Umar says that the inflation rates (and hence the interest rates) will begin lowering within a year. Bank may not really be that great an option after that. At that point gold, long-term real estate, construction and development (construction sounds like a decent option even at present) may the good options.
I may be wrong, but that is how I see things. If I am, I would love to hear a counter-argument. I joined here after being impressed by the knowledge and understanding you all have after all. And, by God, I really hope the government understands all the weird stuff it is pulling at the moment. Because all my thoughts and idea depend on that, lol
47 days ago