The real estate market, particularly in the Defence Housing Authority (DHA), is booming again as worried citizens of Karachi and tax evaders are buying property in the city.
The price of a one-kanal plot in DHA has risen by up to Rs3 million in the last two months, real estate agents told The Express Tribune. They attributed the increase to two factors: one, people in Karachi, Peshawar and Quetta, concerned about deteriorating law and order, are moving to Lahore as it is perceived to be safer; and two, tax evaders trying to hide their assets from the Federal Board of Revenue’s increased scrutiny are shifting their money to the poorly regulated property market.
Lahore’s real estate market had been performing poorly since the end of the last boom in 2005. There had been price rises, but only artificial ones fuelled by speculators looking to make a quick profit on properties by selling them on after a few months. “Artificial rises are driven by investors who buy on small advance payments and then sell shortly after. Now we’re seeing a lot more regular transfers,” said one agent.
Mian Talat, president of the DHA Dealers Association, said that there had been major investment in the housing society from Karachi and other areas where the security situation was poor. “The law and order situation in Lahore is still better than other parts of the country. Eighty per cent of people who choose DHA do so because it is safer here and the infrastructure is good, especially after the Northern Loop of the Ring Road was finished. Other housing societies have not had as much interest,” he said.
Talat said that Lahore was undergoing the most significant investment in real estate since 2005 and it would continue until the elections. He said that the government should give the real estate sector the status of an industry, as more than 120 industries, like construction, depended on it. Mian Oneeb, another real estate agent, said that many tax evaders were also shifting their assets to real estate as the sector was badly regulated. “The investor can transfer their plots to a relative so it is not listed as their asset and they are not taxed on it,” he said.
He said the demand for rented accommodation had also increased as families from other parts of the country were shifting to Lahore, he said. “The city will see a huge increase in population in the coming years because of migration,” Oneeb added.
Nisar Ali Memon, who ran a successful wholesale shoe business in Karachi for several years, sat in a real estate agent’s office in DHA on Saturday. “It’s becoming harder and harder to survive in Karachi,” he said. “I decided to shift to Lahore because of pressure from my family. I have business links here so it shouldn’t be too difficult for me.” Memon said he had bought a plot in DHA Phase 6 on which he would build a house. He was now looking for some land on the outskirts of Lahore to set up a factory and for a rented house so his family could shift to Lahore immediately. “There are many other industrialists looking to move from Karachi,” he added.
Published in The Express Tribune, August 29th, 2011.