As far as first hand experience with CDA & BT, prices are almost at an absolute stand still since last Jun. That doesn't mean negative or worst ahead but for time being 10% growth per annum is attractive but never guaranteed. From Jan 1 to Jun of 2018 was quite good and profits did grew way beyond 10%. Unfortunately it is not happening now and also not predictable in a forseeable future unless may be some exceptions which can't be generalised.
Some smaller projects are doing good. For example, with an investment of 1 million, 10% growth is more realistic compared to an investment of 10 million in a single entity. Smaller investments require a diversified portfolio of real estate and that involves more work to manage.
Even exchange transactions are slow which kept things going whenever there were downturns, previously.
Transfer fees + taxes + commission usually adds up to 10% of property value, therefore, selling at 10% profit within 1 year hardly fetches the cost.
Actually there is greater supply of plots than the amount of money people can pay or are willing to pay.
There was a shortage of housing land so anyone and everyone poured their savings into plots to multiply their money.
This became more attractive than other businesses. So even industrialists and many other business-owners switched their investments to housing schemes for example Lake City Lahore to make easy return on investment.
Then eventually there was more supply of plots compared to number of genuine buyers who could afford to buy in high standard developments.
Also DHA and Bahria introduced massive new schemes in many cities such as Bahawalpur, Multan, Gujranwala, Peshawar etc. Now there is Naya Pakistan Housing Program which will increase the supply even more.
So naturally prices will not increase in real terms especially if you compare the increase with the devaluation of rupee against the dollar. Even if rupee price increases, the investors in plots will end up getting less number of dollars if they had simply held on to foreign exchange.
So in fact prices dropped. On top of that there are new and increased taxes on property transactions plus people are being questioned about source of their funds.
All of the above has resulted in a situation where even if you just hold dollars, you will end up in a better position than buying property. And remember, even dollar is always depreciating in value based on inflation in the USA i.e. US consumer price index. So if your investment in pakistan property is not even keeping up with dollar, and the dollar itself is dropping in its buying power, then imagine how much loss you are really making!
The strength of the USD has been and is based on the fact that it is the de-facto currency for international transactions with a few minor and almost negligible exceptions. Its the standard and the benchmark for other currencies. Its demand, as of now in international markets always grows so printing more does not impact as other currencies. The closest contenders are the GBP and EUR that too had roller coaster times in the lats 2 - 3 years, particularly the GBP.
USD depreciating against whom? Its more like the products offering more features while getting more expensive. USD is the same but for example the newer generation of iPhones keep getting expensive or lets say Electric Cars getting expensive due to additional features being offered and innovative components being attached.
NPHP is more like a political slogan, the number don't add up on a scale of five years tenure for the total houses promised to be built. Whatever and whenever it gets materialised will be a plus.
In a Pakistani market/society, real numbers for the housing statistics are not confirmed, neither authentic. There are many who own multiple units and there are many that own none.
Another devaluation coming soon https://www.thenews.com.pk/print/421869-fitch-says-sbp-likely-to-devalue-rupee-in-coming-months
Devaluation have already hurt property business and now with more devaluation it will hurt more. If pakistani real estate goes down then its economy will go down and if pakistani economy goes down then so will be real estate. We have gone into very bad economic cycle.
It is sad and immoral when Pakistani cities real estate is more expensive than a modern city like Istanbul.
On one hand, we have people without roof and youth who can't start any business because of high cost of rents and property values. While on the other hand we have greedy land mafia and lazy investors who are more worried about marking a buck out of this sector.
A nation can't be anymore dead, dumb and immoral than this.
In the era of increasing interest rates, in my opinion, real market is not supposed to grow double digit. However, since the inflation is always on the rise, the real estate value will continue to rise, but only to counter the affect of inflation. In reality, buyers are not seeing any real value, and that is the problem.
In the era of increasing interest rates, in my opinion, real market is not supposed to grow double digit. However, since the inflation is always on the rise, the real estate value will continue to rise, but only to counter the affect of inflation. In reality, buyers are not seeing any real value, and that is the problem.
Its worst time for the real estate market of Pakistan. Government sholud reduce taxes and cumbersome regulations to revive the real estate sector as it is a major source of economic boom and revenue generation for the economy.
There are some exceptions even in these depressed times for the real estate sector. Prime example is Sector E-12 Islamabad where plot prices have jumped 40-60% in the last one year (depending on the plot size and location). The prices have increased just on positive developments w.r.t to the case filed by the allotees in IHC. The development is about to start and the prices will keep on rising in this sector depending on the progress and speed of development. This is a sister sector of D-12 and prices as of today are still double than that prevailing in E-12
Its not a collapse, its a stagnation.
- Collapse at national level happens When there is a genuine surplus in relation to the available buyers. In an Asian context, lets talk about Pakistan there is a serious shortage of housing. However, due to inflation, rising USD etc (though stable at the moment). Real Estate got the hit as people earning in local money have reduced purchasing power and overseas want to save cash.
- Collapse at individual project level happens when files were sold at high premium (Booked at 5 lac and asking premium on top is 3 lacs), such era of quick premium/own is over and in recent years people paying high premiums got disappointments.
1. Genuine possession property may see slow trends but rarely a negativity, unless there is a situation like BT-KHI but that was for an year and so, the one who held on are now getting the rewards.
Since USD, for now is stable, will encourage overseas to invest and you can see all societies doing one thing common, that is to Launch 'Overseas Block'
Look out for appreciations in particular I-15, E-12, C-14 etc. and also good progress by Gulberg, Enclave, I-16/14. BT has lost its shine over the years but its having a slow resurgence that is evident with developments and new projects.
CDA to Open Sectors C-14 and C-15 for Development
https://www.zameen.com/blog/sectors-c-14-c-15-islamabad-updates.html
Most affected Property prices on the declined mode are Islamabad. Although property brokers will try to sell their stuff on speculated price but all in vain because there are no genuine buyers. I hope real estate will bottom out the end of this year 2020.
Humbly disagree, solid stuff is still appreciating and does give return e.g. Gulberg
Here is the Collapse thing Demystified:
- Files: Sky rocket and dip with same acceleration
- Possession Property: Stagnates only. To liquidate it quick slight devaluation from seller purely at his/her own will (2% to 5%) when in need of quick cash. Otherwise holding power compensate for any potential lower than market offers.
** Slow Economic conditions makes Real Estate Asset at Point of Stagnation in regard to appreciation.
** Supply Demand makes Real Estate asset Collapse or Rise much more then economy. Evan If economy is skyrocketing but a project has more Inventory but less Investors, it will remain stagnant for a period, then devalue, and eventually collapse if no improvement.
-- Stagnation or Collapse could be recovered based on holding power of Seller.
-- Real damage for Real Estate in an import-driven economy like PAK occurs when currency devalues more and Real Estate Appreciates less. Typical Examples when PKR converted to a plot rather than USD from Jun 2018 to Jun 2019 that is where collapse thing (in relation to asset value) actually happened.
I have recently purchased a residential plot in DHA-2 Islamabad and can confirm that property values in DHA/Zaraj/PWD... Areas are not depreciation, but in fact appreciating, although a bit slow.
Before purchasing had done market search at my own for about six months, met various property dealers and talked with the owners by myself. At the end of six months I found that prices of available plots were increased few lakhs as compare to start of my market search.
@Asadullah, can you give a rough idea of price and the sector you purchased plot in DHA-2 Islamabad?
Now they are all likely appreciating slowly and will continue to do so naturally. Fall in DHA, Bahria other places came in 2016 following those taxes. Now it is just stagnant in most places.
Islamabad property prices are badly hit, it is on the decline mode Now you have to prove money trail if it’s genuine earning. Days are gone to inflate property on the broker’s speculation. PTI did a good job.
Sure sir, it's a good job ONLY IF money made by Govt. from real estate or else where had not been poured into likes of stock exchange that crashes almost each alternative week. Govt. is primarily interested in 2 factors:
- Tax on sale/purchase (filer/non-filer) as per DC valuation rates. You know how that rule is expolited on undervalued amount on stamp papers.
This is a good initiative to broaden tax net but Govt. while extracting the tax from real estate is unable to regularise the sector to protect the Tax Payers. I mean Govt. happily makes money but what it do to protect tax payers when for example one day all of a sudden:
- Fazaia Karachi goes default leaving hundreds and thousands having their money stuck.
- MR asking for extra money on all dues clear.
This is where the scheme starts to fail.
Worst yet:
- Foreign remittances to purchse real estate asset that were one of the best cash Pakistani economy was being injected with have declined.
- Transfer fees that were more frequent have gone down.
In the long run a good step that only knows to get extra money quick and easy backfires more than anything else.
Let me leave it here with interesting Term 'Hot Cash/Money'. Google that if you may like to. That is what Raza Baqir through state bank is trying to pursue and it backfires more than it could yield any significant value addition.