The rapid boom in real estate business in Peshawar from 2004 till 2006 has all but winded down. And with the rapid influx of refugees from militant-hit Khyber Agency and neighbouring Afghanistan, property prices have increased manifold.
Prices of residential property have witnessed an increase of up to Rs50,000 per marla (272 square feet) while prices of commercial property have soared to Rs100,000, say real estate agents from the provincial capital.
The cost of one marla of commercial land in densely populated parts of the city varies from Rs0.8 million to Rs1.5 million, while residential property can cost up to Rs0.4 million to Rs1.2 million, says Haji Ajmal Khan, a property dealer at Warsak Road.
People are hesitant to purchase property due to the high cost of land, but many people who have escaped fighting in militant-hit regions of Khyber-Pakhtunkhwa and the tribal areas are renting houses in the metropolitan.
Khan is optimistic that business will gain momentum again. He says the city’s increasing population is attracting investors, adding that people earlier pulled back their investments due to a near 400% hike in land prices from 2004 to 2006. This, he said, is when the real estate bubble burst.
In the last three months, price of land at the Overseas Pakistani Foundation (OPF) housing society in Doran Pur has gone up to Rs50,000 per marla, suggesting that people have started investing in real estate again, says a property dealer at Ring Road, Muhammad Arif Safi.
Since the price of land in posh areas of the city are not within the reach of all, families who have migrated from militancy-hit areas prefer to settle in the suburbs, where land prices vary between the more affordable rates of Rs70,000 and Rs100,000 per marla.
He says most of the property near areas outside Ring Road has been bought by people hailing from Khyber Agency who have established residential colonies.
Property is not the only expensive component of a house in Peshawar. People prefer to buy old houses due to the high cost of construction, says real estate investor Saleem Jan. He says the price of bricks has gone up from Rs3,000 per one thousand bricks in 2007 to Rs7,000 in 2012.
“I constructed a double storey, six bedroom house over five marlas which cost me Rs1.5 million in 2007. Constructing a similar house in 2012 has cost me Rs2.6 million.”
Prices of luxury houses are largely unchanged, but rental rates have witnessed a sharp increase of up to 40% since 2007. A one kanal (approximately 500 square metres) house can now fetch up to Rs40,000 to Rs50,000 a month, adds Jan.
A resident of Hayatabad, Adil Yousafzai says rental rates might come down once Afghan refugees return to their homeland. “Rental rates of one-kanal houses decreased significantly in 2002-2003, when a large number of immigrants who had rented houses in Peshawar returned to Afghanistan.”
Permanent residents of the city often find it difficult to find an affordable house to rent in Sethi Town, Hayatabad and Afghan Colony for the same reason.
“Afghan refugees are part of financially sound tribal families, and are willing to pay more rent than the permanent residents. This has jacked up prices considerably,” says Yousafzai, who is waiting for the day all refugees are repatriated back to their country.
The resentment is also apparent in a resident of Dinbhar Colony, who too blames “outsiders” for high rental rates. “Renting a six-bedroom house around the City area costs Rs20,000, but if the Afghan refugees are repatriated the same house will not cost more than Rs15,000. Renting out property has become a profitable business and many people have constructed more than one house for the same purpose.”
Published in The Express Tribune, December 6th, 2012.