Investors In Panic

I am observing from last few days every body is looking in tension due to strengthening of Pakistani rupee and economic growth of Pakistan. No body here is happy that Pakistani economy is growing which is in stake of 20 crore poor people of Pakistan they are just thinking about themselves. Do you think if economy will improve property values will go down?

If yes then possible reasons.

When in panic mode, your eyes take in visual information at a higher rate, which is why everything may seem to be moving in slow motion.

I agreed with slayer.

Worlds doesn't start or ends with property,,,at least we should be happy that prices of daily commodities will fall down a bit,and we ll be able to better plan our budget..rest i think we are too impatient these days,want over nite results,,gradual growth is the real growth,,with the passage of time things definitely improve,just lock your plots files and forget about them,,even if it takes couple of years,as if its a real sign of growth in terms of rupee disparity it will shall give good results in real estate as the purchasing power improves

and if some one is a dealer who fully relies on estate business even they are never in a loss,as trading never stops,,,

The people who deal property business in pakistan, they never consider $/rate in mind when they deal any property.The reason all our transactions occur in rupee.

I dont see any reason that prices of property will drop due to dollar rate decreasing.

Adnan,You mentioned some good points. As a pakistani i am very happy that our economy will grow as pak rupee getting stronger.

I wish government should maintain this dollar rate for few years. I mean this drop should not be temparory.

Not correct. On another thread, the question of Rupee value and its impact on property prices was asked.

My response and the response of others was that stability and strength of the Rupee is good for the real estate sector because any growth you have in property when the Rupee is strong is real growth based on demographic factors and increased demand.

Also, in the long term property value will be higher if your plot or house is located in a place where the economy is robust and the society is affluent, as opposed to having a plot in a country where the socio-economic fabric is on the brink of collapse.

Many of us investors are overseas Pakistanis. When we measure the real appreciation in the value of our investments in Pakistan, we discount the rupee devaluation factor. In calculating the real increase in price, the Rupee devaluation element of price increase is subtracted. This is because we used foreign exchange to buy that property; if we kept our foreign exchange in the bank, its rupee worth would have increased (even without any investment) due to devaluation of the Rupee. Therefore, in any case we see only that part of price increase as our profit which is over and above the rupee devaluation factor.

When the Rupee is strong, any appreciation in value will be our gain. And a strong rupee automatically increases the real value of our plots and houses even when prices seem to be stagnant because we are measuring and comparing with foreign exchange sitting in our account.

Actually, this applies equally to local investors and overseas Pakistanis. But overseas Pakistanis always do the calculation of profit after putting a minus value on the amount of devaluation. Local investors look at the numerical increase only.

The local investor will say he got a profit of Rs 10 lakhs on a plot in one year while the overseas Pakistani will most likely convert the current rupee-price of his plot back to dollars then he will minus the amount of dollars he spent for buying it. Whatever is the result of this subtraction he will convert back to rupees. So he will see a profit of Rs 7 lakh not Rs 10 lakh.

But in reality both overseas and local investors got the same profit because they were both rewarded with the same increase in purchasing power!

Very nice detailed reply by PK1... I like the way you and MBS put you analysis :-)..

For Slayer...

Nobody is worried because of strengthening of our currency (whether its temporary or permanent)... We all pray for the betterment of our country's economy...

With better national conditions (economic, law and order, social stability, transparency etc etc) everything will be prosperred... Rise of economy will definitely speedup the process of true and required urbanization esp in larger cities... In turn the value of real-estate will proportionally increased... As its a general principle.

So lets pray not just only the gaining of pak rupee which currently seems non-permanent to me... But for the true measures which are deemed necessary for our stable economic growth.

Transparency is ONE of the most imp factor which has direct impact on REAL ESTATE.

Pakistan is the worst victim of transparency and for the long term for sure. This factor cannot be changed in short term, it will take some serious time when people can think of investing somewhere else confidently.

Law and order is the other main reason benefiting REAL ESTATE directly which i think is more concern for genuine buyers and the investors took the opportunity hiding behind the genuine buyers and taking benifit.

Cheers,

So how you see the overall conditions for Real estate market in say next 2 years ?

Just asking for your understading ...

REAL ESTATE will always be a safe heaven for heavy investors (specially guys with black money) and that pool is quite enough pushing the prices.

Their are good number of bureaucrats, Government Official, Even business community, small investors and last but not the least are the Genuine Buyers having their stakes in REAL ESTATE.

So i dont think there is any panic among investors right now.

Cheers,

THIS QUESTION seems to be of a school kid of fifth grade OR A TODDLER who does not know at wat pace the things are happening around him and seeing all things with open mouth and with pants down!!!!!

GOOD ANALYSIS BY PK1 and all other contributors. Keep it up guys

Slayer ! Please start taking tuitions from pk1 and Mbs otherwise you will ruin your father,s hard earned money by your novice approach towards the real art of investment in real estate.

Please try to learn fundamentals before jumping in the investment field

BETTER TO TAKE TUITION FROM ANYONE ON THIS FORUM AND LEARN THEORY FIRST.

FAKAT AAP KA APNA

CRORE PATTI

I agree with pk1...and that's also true that investors r in panic...but I wonder...don't the investors already know that there is cycle in property market of price increase and decrease.....so after bad times...good times will definitely come.......cheers

Crorepatti bhai thank you very much for agreeing with me.

But sir it is not a good idea to criticize Slayer like this. He does not need tuition from me. He may have more information and knowledge about some other matter, and may be we can all learn from his knowledge in that thing.

So let us avoid confrontation, we are all Pakistanis. Please let us respect each other and support each other. Thanks.

Please be respectful to each other on this forum... If we have any sort of disagreements, we should discuss each other humbly and gently....

OK

FAKAT AAP KA APNA

CRORE PATTI

Good Analysis by PK1. I know my close one converted their doller into rupee and think to invest in property

Crore patti sab, What goes around, comes around.

I can't convert mine... :( as i am sitting abroad currently and unable to access my account.

I think Slayer is right, one if the many reasons property prices swelled last year was sharply declining rupee that impacted prices on nominal terms. That is the real value remained the same when prices seemed to adjust with weaker rupee (I am repeating Pk1's analysis here).

But I would like the readers to consider the following factors. First of all increasing Rupee value does not mean healthier economy. Rupee is getting stronger only because their is temporary dollar inflow and declining inter-bank rate. This is not sustainable and can reverse when govt starts buying dollars to pay iMF installment or buy oil. Secondly, property prices in big cities are linked to population movement from security risk areas to safer cities like Islamabad and Lahore. If peace deal strikes between govt and terrorists then the affluent IDPs are likely to return to their natural places of living. Third, if power shortage situation gets better as it appears to be the case then all the money in real estate will move back to industry and stock market again. So I would not take the simplistic view of appreciating Rupeee having any impact on property prices in real terms. And the panic must be among speculators who want to make easy buck overnight, that is, our beloved and illiterate property dealers, who call themselves consultants and investors these days.

N.B. I am not an economist by any account and look forward to expert opinion.

I have moved here recently and im not sure what answer to give to your question but im glad to read your thoughts about this, thank you for this thread

Well sais Isloo