Dollar V/s Sheikh Rasheed V/s Real Estate

Buying Property Investors Advice
#24

The question is will real estate prices decline, remain stagnant or increase?

I think the answer to that can be determined by asking ourselves whether generally property prices in Pakistan are pushed up MORE because of investor pressure or MORE because of demographic pressure (demand for housing because of population growth in cities). I think it is a combination of both these pressures.

With a strong rupee, there will be no immediate upward pressure because there is no panic buying like we saw in B-17 last year when rupee was dropping. So chances of big sudden boom are less.

Now please consider two Points:

(1) Even in a period when rupee is strong, there will still be some investor pressure. Why? Because many smart investors buy when the market is not booming. They see that as the ideal time for buying; and

(2) If the economy gains strength, demographic pressures will increase. More people will shift to the cities, more people will be able to afford a plot or a house, more overseas Pakistanis will feel comfortable with a decision to move back to Pakistan and so a need for a plot/house.

On this basis, I see every reason for a steady robust growth in the real estate sector because of the any strengthening of the economy.

However, bear in mind that only a stable or rising rupee is not a sign of a good economy in the future. Good monetary policies are one thing and good long term economic planning is totally different. For strong long term economic performance, the government needs to improve balance of trade by increasing exports. For this you need to solve the energy shortage and you need need to improve law and order. Bring peace to Karachi and all other cities!

So the moral of the story is that whichever way things go, real estate will stay strong!

#25

Dear PK1...

For your point no.1 my feeling is that there will be few who will think in this way... Because of so much heavy fluctuations b/w rupee and dollars...as we all can feel and expect, now many investors (after sometimes) will again rush in to buy dollars as there is a general perception that this hype perhaps has no firm footings; you also said in your post in last, and $$ is expected to rise again beyond upto 110... So that again satta baazi will start and people esp in pakistan will see this opportunity as lucrative to make profits quickly by just exchanging currencies.

#26

Please bear in mind that heavy fluctuations like these alone whether up or down are not a good sign for any economy,,, instead a steady gradual growth is an indicator and guarantee of genuine stable rise.

So do you think that shifting of a portion of investors towards this dollar-rupee game will not effect on real-estate at all ?

#27

Agreed with shoaib

#28

I think real estate will get a boost in coming 2-3 months if Government maintain dollar at 98-100 rupee for another 06 months. People will convert thier dollars into rupee and invest in real estate.Specially the people who lives abroad will invest in property if dollar remains in same position for another 06 months.

#29

@Zafar Ullah

Interesting analysis, but I guess no one invests in Pakistani real estate because rupee loses or gains, simply because that change would be 5% to 10% max, but the local "funkaar" translate this change into 100% appreciation in real estate price. This is what sends panic signal to everyone and people start throwing in their money as if there will be no tomorrow.

#30

Good news for investors dollar is rising again

dollar zindabad. Right now dollar is 101.25 rupees. Welcome back dollar.

#31

Think beyond your limited horizon..pray for your homeland first which is the future of your next generation,this dollar hike has suppressed the lower and poor class,

at the end we have one mouth to feed our self , no matter how many mansions or lands we have,we are good for nothing for this country at least we can pray for prosperous times where everyone's child gets their basic necessities of life,and they don't feel a sense of deprivation ,in short come out of your limited vision and think for every countrymen,thirst and greed has no limits,

#32

Very good discussion going on in this forum between economists and well informed personnel especially pearls of wisdom by dear Mr. Zafar Ullah

“common sense suggests that a country's currency strengthens with growth, employment, new businesses , construction etc and not overnight with 1.5 billlions Khairat.” In international relations there are no free lunches.

As a common citizen with no back ground in economics I might add pakistans economy grew well and for sustained periods of time only during periods of martial laws. Thinking about what the martial law periods have and civilians cannot have I can come with the only answer that it’s the control over military or its facilities. Historically that’s what Pakistan has been doing all over its existence. As a result of financial strength of one institution we see real estate growth in different parts of country – a trickle down effect.

Pakistan economy is not knowledge based like Europe, america , and far east. We do not have an industrial base like that of china, india or brazil. Further there are no huge oil reseves. The only thing remaining to sell is manpower and most of it is unskilled or semi skilled. Cheaper labor is available from india bangladesh with no questions asked.

If Mian sahib government can make deal to sell pakistans trained manpower only then Pakistan economy can improve for a some period of time. For this he has to bring local and big international players on one page. That’s the only way I see sustained improvement in strength of economy and rupee over some period of time. I may be wrong but this is the only economical perspective in my opinion which can sustain a strong rupee for some period of time.

#33

I’m happy I purchase 10,000 dollars at 98.10 2 days back and now its almost 101.50, little gambler :slight_smile:

#34

Adnan, agreed with you.I can’t understand how a nation can be prosperous with limited mentality.People need to change their mental attitude to get success in life and take this country to list of respectable countries.Strong dollar is not good for import oriented country of 20 million people.We can’t change reality but hope for the best. UMMED PER DUNYA KAEEM HAI.No offence to anybody.

#35

AJ I do agree with you but no juice left in property for the time being so I decided to utilize some money here

#36

It’s ok Hassan, we can’t change reality and should act accordingly.You did right .I was just talking about overall countrymen’s mental approach.One should hope for the best atleast.

#38

Have a look on the link below

http://e.jang.com.pk/03-15-2014/pindi/pic.asp?picname=48.gif

#39

CURRENT DOLLAR FLUCTATUIONS I would say Pakistan of 2013 is solidly moving in the direction of democracy and the rule of law. There have been five major changes among the top leadership of the country this year: president, prime minister, speaker of national assembly, chief justice, and army chief. Obstacles in the democratic path are being removed. The establishment has lost control of the judiciary and media with a vibrant civil society in place. National assets and interests can no longer be violated by sellers and buyers as the owners are vigilant.

The PML-N, being a party of vested interests, is finding it very difficult to multiply personal wealth as it was able to do in the last two stints in power. Almost everyone who matters within this party has experienced a phenomenal growth in wealth after entering politics. Starting from the top and moving all the way down to the union council level, it has been a bonanza for the party members. The movement of resources and building of empires has been unprecedented. In the words of Bilawal Bhutto Zardari, PML-N democracy is for Mansha, by Mansha, with Mansha. While PPP still uses the slogan of roti, kapra, makan, it has repeatedly failed to deliver.

Pakistan needs real growth, not mere slogans, dollar fluctuation

#40

Despite change in $/Rupee parity, the real estate prices will keep growing due to a variety of factors such as rapid urbanization, investment into real estate of un-documented money made through businesses without paying taxes or through corrupt practices, involvement of “establishment” in real estate business, scarcity of other avenues of investment, a natural desire of owning a house in urban area, pessimism about sustainability of rupee appreciation, higher profits in real estate business etc.

#41

Aziz,

At least this government seems to be handling the major crises of Zardari and Mush times very well, and those are:

  1. Railway close-down

  2. Electricity shortage

  3. Textile industry closure

  4. Financial institutions mega frauds

  5. Shortage of wheat, sugar

  6. Inflation, price hike, depreciating rupee

  7. Terrorism

Now we can go on debating the extent to which PMLN has been successful, but we shall all agree that things are moving in positive direction.

Real growth depends upon on overcoming all of the above factors. And I am glad PMLN is moving in the right direction.

#42

Very very correct analysis by Isloo.. If you take a relative broader perspective of comparisons b/w this govt. With past two governments (incl the mush one) pml-n is much better in terms of their approach and policies towards economic development.

thanks,

#43

As far as comparison between this and last two gov. Is concern i would say musharaf gov. Was better,beside current critics against musharaf.As an example consider RWP/ISB metro bus project We don’t want Rs23.839 billion (DAM that is an amount) to be spend on a dum project to increase their own PR there are many other issues like subsidy on fuel will improve our over all economy, we need small multiple dams,most of our rural area(are in pathetic situation) are also within punjab they must spend this money to grow.Don’t want to into depth, would just say good analysis by Aziz thumbs up.

#44

Why dollar is not increasing as fast as it was increasing before why it is stuck on just 100 rupees. This is not good becos if dollar will not rise real estate will be crashed.This is not good for investors.

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