Real estate market unfazed by economic shocks

Property prices remain static despite balance of payments woes

Shahram Haq December 08, 2018
Property prices remain static despite balance of payments woes. PHOTO: FILE

LAHORE: Pakistan's realty market has got matured substantially over the past decade as it has been able to absorb economic jolts, particularly in the past one and a half year and since the Pakistan Tehreek-e-Insaf (PTI) government came to power in August this year.

The current government, according to analysts, has not presented any firm economic policy so far, nor did it manage to secure any bailout package from the International Monetary Fund to avert a balance of payments crisis. Despite these, the realty sector, unlike other segments of the economy, is at a standstill and has not experienced a major dip which could eat up public investment.

Investments from overseas Pakistanis have always played a key role in the real estate market. However, they are waiting for an appropriate time to invest as they see the sector as the easiest way to make money in Pakistan. They are fearful that restrictions may be placed on property purchase by non-filers of tax returns.

"The market has not crashed, genuine buyers and sellers are still present, however, we cannot call this a great phase for the realty sector," remarked Lahore-based realtor Abdul Ghafoor.

Placing overseas investors under the Federal Board of Revenue's (FBR) radar coupled with ongoing money laundering probe and other similar government initiatives to investigate foreign property holders had sparked panic, he said. "No one wants the FBR or other law enforcement agencies to investigate their money trail."

The market is likely to remain on the same track in the near future., a real estate portal, in its report for October 2018 described the real estate sector as stable. Its data suggests a minor drop or rise in different real estate hubs in six major cities.

Property prices in the Defence Housing Authority in all major cities like Lahore, Karachi, Islamabad, Gujranwala and Multan fluctuated merely 1%. The only exception was DHA Gujranwala where one-kanal and 10-marla plot prices showed a modest growth of 2.12% and 3.25% respectively.

Similarly, ongoing Supreme Court proceedings against Malik Riaz of Bahria Town did not put much pressure on property prices in the Bahria Town in all major cities.

One-kanal plot prices in Bahria Town Lahore, Islamabad and Karachi edged up 0.16%, 0.29% and 0.35% respectively in October.

Experts suggested that the scope of the real estate sector had expanded manifold after investors also focused on Gwadar, Multan, Gujranwala and Faisalabad besides the three main metropolitan cities - Lahore, Karachi and Islamabad.

Real estate business adjusts after new regulations

"Overseas investors are the prime reason why this sector thrives," said real estate expert Waseem Tariq. "Relatives of many investors have become realtors but the requirement of showing the money trail prior to buying a property has put brakes on such investments."

Stakes remain high as a majority of Pakistanis are now investing in this sector either directly or indirectly.

"Pakistan's population has increased manifold and Pakistanis are facing a huge shortfall in housing units," Tariq pointed out. "The emergence of new housing societies by well-known, new and international developers coupled with prime minister's 5 million housing units' programme can further steer the wave of investment towards the real estate sector."

Published in The Express Tribune, December 8th, 2018.

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