LAHORE: The highly lucrative realty markets of Pakistan still drew investor interest in calendar year 2016, though the federal government slapped heavy taxes and announced a reassessment of sharply lower land prices.
Following the first half (Jan-Jun) of the year, when real estate markets touched new peaks, the next six months were not too bad at least as far as the drop in land prices is concerned.
Slowly but surely real estate sector picking up
In that period, when it seemed that market activities had taken a severe dip, a few investors kept making profits in some areas whereas others waited for reversal of the new tax regime.
According to the annual statistics for 2016 released by property portal Zameen.com, the Defence Housing Authority (DHA) Gujranwala led the momentum with a surge of 42.23% in prices of 10 marla (250-square-yard) plots and increase of 38.96% in one-kanal (500-square-yard) plots.
No other DHA zone and other localities throughout the country came close to these levels. The primary reason behind the price jump in DHA Gujranwala was comparatively lower land prices there that stood below Rs4 million as the new tax structure did not apply to these pieces of land.
The overall performance of Lahore’s property market was not very impressive in 2016. Though prices of one-kanal and 10-marla plots in DHA Lahore Phases VII, VIII and IX rose 5.24% and 6.80% respectively, the modest growth could not be replicated in LDA Avenue-I, Bahria Town and Wapda Town.
Prices of one-kanal plots in LDA Avenue-I, in fact, dropped 1.43% over the course of the year.
On the other hand, the performance of Bahria Orchard was satisfactory as the average price of 10-marla plots in the locality increased 11.19%.
Real estate investors still wary of amnesty scheme
This number could have been more impressive, but after new taxes were imposed in July, the price growth slowed down for the remainder of the year.
The property market of the capital remained subdued with unimpressive numbers during 2016. DHA Islamabad was the only major residential project where average prices of one-kanal and 10-marla plots significantly increased by 7.43% and 9.10% respectively.
On the contrary, prices of one-kanal and 10-marla plots in Bahria Town dropped 9.49% and 6.82% respectively.
Real estate prices showed stability in Sector E-11 while in Sector B-17, a moderate 6.94% drop was recorded for the one-kanal category. Prices remained somewhat stable in Gulberg Residencia.
Karachi performed relatively better compared to Islamabad. Though DHA City registered a stellar performance, Bahria Town and DHA recorded moderate advances.
Average prices of 500-square-yard and 250-square-yard plots in DHA City rose 21.35% and 11.31% respectively in 2016 whereas Bahria Town registered a price increase of 7.69% in its 500-square-yard category.
Though DHA Gujranwala had not been launched officially, property prices there still showed a positive picture in 2016.
According to Zameen.com, average prices of one-kanal and 10-marla plots in the locality recorded a whopping 38.96% and 42.23% increase respectively, indicating heightened investor interest despite the new tax structure.
With development work progressing, Master City was also a highlight of Gujranwala’s property market. Average price of 10-marla plots in the locality spiked 13.42%.
“The property market has a lot of potential to add to the national exchequer and this sector needs to be regularised properly. The new tax regime could have been rolled out in a more gradual manner to ensure that the market does not plunge. But now that the new taxes are in place, we’re looking to 2017 for a gradual return to normality,” said Zameen.com CEO Zeeshan Ali Khan.
Published in The Express Tribune, January 26th, 2017.
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