After passing through a correction phase of nearly five months, the real estate market in Lahore is once again on the path of growth. However, there are a number of reasons why the extent of the growth may not meet investors’ expectations.
For the past few years, developers, after failing to find a suitable place in Lahore, have tended to focus on neglected but other populous cities of Punjab including Multan, Faisalabad, Gujranwala and Sialkot.
Hashu Group is one of them, Bahria town, city housing schemes (once a part of Bahria town) are the others. The latest name is the Defence Housing Authority (DHA). Since DHA is the most trusted name for any investor – in Pakistan and overseas – people find a reasonable alternate to invest.
Gujranwala, Multan and Bahawalpur are three cities where DHA has planned to establish housing societies, among which the sale and purchase for DHA Gujranwala has already kicked off. Such developments are observed as a positive for the long-term growth of the real estate sector.
“This spread out is good for the market in general,” said Mian Talat, chief executive officer at Talat Enterprisers, a real estate firm. “People now have more choices to invest and live according to their convenience.
The correction in the Karachi Stock Exchange is also a factor behind the recovery of the real estate market recovery.
Common investors of both markets believe that the KSE may crash any time. Given the situation, investors tend to switch to the real estate market. When stock index starts declining, many investors switch over to the real estate market and this is what is happening exactly now”, Talat added.
Few years back, Lahore, Karachi and Islamabad/Rawalpindi were the only places where investors found some room to put their money in for some profits. However, these cities are now pushing their limits — Lahore’s boundaries are now merging with some of its districts due to various factors.
Property prices in Lahore, despite almost a 20% correction in these five months, are quite abnormal. It is hard to find a piece of one kanal of land in a decent housing scheme below Rs10 million. If the same amount of land is located in a prime location inside a housing schemes then the price exceeds Rs20 million.
“Since Lahore is one of the major beneficiaries of the real estate boom, it is unlikely that real estate activities are stalled in the future. This is due to developments of housing schemes in other cities”, said Waseem Tariq, Chief Executive Officer of F-1 Properties. “The price fluctuation mechanism for real estate, as per our expectations, will be solid now.”
Published in The Express Tribune, February 23rd, 2014.