28 March 2004	Sunday	06 Safar 1425

KARACHI, March 27: Property rates in Karachi are heating up. Heavy influx of investors has triggered the prices to go up by 30-50 per cent in almost every area of the megacity in the last six months to one year, which in real terms has shattered the hopes of genuine buyers , but proving to be a party time for the sellers.

Property dealers predict 2004 as a year full of business for them in case political and economic stability persists followed by tremendous liquidity in the market.

In August 2003, open plot prices had plunged by 10-30 per cent followed by decline in bungalow prices by 10-12 per cent after reaching a saturation point in the wake of September 11 incidents, increase in home remittances and tough immigration rules introduced by the United States.

Investors have again tightened their positions especially for the city's most prestigious areas Defence and Clifton, where 75 per cent of the investments take place as compared to 25 per cent share, being enjoyed by the rest of the localities including KDA Scheme, Tariq Road, Gulistan-e-Jauhar, PECHS, Gulshan-e-Iqbal, North Nazimabad etc. These investors have also shifted their interest towards other localities of the city where buyers of small houses (now on search) are now facing a daunting task to manage extra capital to get the costly shelter.

Property dealers are linking multiple reasons for meteoric rise in prices like frequent arrival of foreign remittances through official channels and also through Hundi, withdrawal of money invested by the people in the banks and National Saving Schemes due to lowering interest rates, slight share of banks' housing financing facilities at low mark-up rates etc. Many dealers relate the boom in property prices to India-Pakistan cordial political relations, saying that property prices are also on the rise in some cities of India. Besides, the rising cost of production as a result of increase in construction material prices recently have also made a multiplier effect on prices.

The property market in the entire city now currently

witnesses both buyers and sellers which is in quite sharp contrast to the market sentiments prevailed earlier years when only sellers used to enjoy the boom in property markets by demanding prices to the buyers on their own.

No body is ready to reveal the actual reasons of sudden price boom in property. Many property dealers link the phenomenal jump in prices to a stereotype stance of heavy investors' presence in the markets besides attributing other reasons.

City's most posh area Defence Housing Authority (DHA), often dubbed as a sheer bonanza for investors, is now witnessing a daily transfer processing of 75-85 plot documents a day as compared to 20-30 documents six months back, showing the interest of investors and buying and selling euphoria pattern of general consumers who are out again to bring the rates at a saturation point.

A random market survey reveals that a 500 yards plot in DHA phase V, VI and VII now carries price tag of Rs7 million to Rs10 million as compared to price of Rs4 to Rs7 million in December 2003 and Rs3 to Rs6 million in December 2002.

Similarly, the price of a 1,000 yards plot in Phase V, VI and VII now ranges between Rs14,000-18,000 per square yard as compared to Rs 14,000-17,000 per square yard about six to eight months back.

In first, second and third belts of Phase VIII, where construction of bungalows is allowed, the rates are prevailing at Rs12,000-18,000 per square yard as compared to Rs8,000-11,000 per square yard earlier. In many cases, the 500-yard plot, depending on the location, in the same phase, carries price of Rs8 million.

In fourth, fifth and sixth belt of Phase VIII, where housing construction is not allowed yet, the rates have shot up to Rs7,000-10,000 per square yard as compared to Rs4,000-6,000 per square yard eight months back.

Bungalow prices in all Defence phases have also touched the peak. For instance, a 300-yard new bungalow at Phase IV is being sold at Rs9 to Rs11 million as compared to Rs8.5 million in December 2003 and Rs6.0-6.5 million in December 2002. An old bungalow in same phase is now priced between Rs7 to Rs8 million as compared to Rs6 million in December 2003 and Rs4.5-5.0 million in December 2002.

Imagine the price of a 500-yard double storey new bungalow in Phase V, VI and VII which is now being quoted at Rs14-17 million as compared to Rs10-12 million in December 2003 and Rs9 to Rs9.5 million in December 2002. An old bungalow in same phases are now priced at Rs9.0-12 million as compared to Rs8.5 million in December 2003 and Rs7 million in December 2002.

A 1000-yard new double storey bungalow in Phase V, VI and VII (developed areas) are hovering between Rs27.5-32 million as compared to Rs20-22 million in December 2003 and Rs18-19 million in December 2002. An old 1,000-yard bungalow in same phases are priced at Rs19-22 million as compared to Rs15-18 million in December 2003 and Rs12-14 million in December 2002.

"Prices of plots and new bungalows are now rising by Rs10,000 per hour in Defence area," a dealer, on condition on anonymity, said.

Clifton area has also witnessed a price surge in what is being attributed to a filter down effect of price flare up in DHA area despite the fact that demand is higher as against the very low supply as hardly any plot is available in the Clifton. Only flats are being constructed while many old bungalows are being renovated to fetch higher prices in future.

In block five, seven and eight of Clifton, the rates of bungalows have gone up to Rs25,000 per square yard from Rs12,000-15,000 six months back and Rs10,000 one and a half year back. In block two, three and four, the rate is being charged at Rs15,000 per square yard as against Rs6,000-7,000 six months back.

Depending on a good location, the price of a new four-bedroom apartment in Clifton and even in Defence ranges between Rs5 to Rs6 million as compared to Rs4 to Rs4.5 million six months back and Rs3.5-3.8 million a year back. Similarly, a three-bedroom flat price has surged to Rs4 to Rs5 million from Rs3 to Rs3.5 million six months back and Rs2.8 million a year back. A two-bedroom flat (well maintained) is now available at Rs2.5 to Rs3 million as against Rs2 million six months back and Rs1.5 million a year back.

Owner of Pak Estate at Clifton, Khan Zubair Shaheen said that 90 per cent buying of plots is being conducted in Phase VIII while 10 per cent transaction is being carried out in other phases.

"Heavy influx of investors as well as capital from abroad are the main reasons in playing havoc with the property prices," he said adding that people as well as investors have now enough liquidity in their hands to take a plunge in property.

Owner of Parekh Estate at Clifton, Abdul Wahab Parekh said that property prices have jumped by 30-50 per cent due to continued arrival of foreign remittances, stable political conditions and pullout of investment by the people from banks and national saving schemes due to low rate of return.

He said businessmen are also active in the property business. Currently, people, living abroad, are sending money to safeguard their lifetime earnings in real estate. Businessmen are not sending money from abroad at a fast level like workers and service people.

He projected a rise in property prices by 25-50 per cent in the current year in case political and economic stability prevails.

"The prices will crash by 30-35 per cent immediately in case political and economic conditions get any setback," he said.

OTHER AREAS: Prices of plots and houses in Gulshan-e-Iqbal and Gulistan-e-Jauhar are also touching all time high. Sellers are demanding Rs4.5-5.0 million for a 240-yard bungalow in Gulshan- e-Iqbal's various blocks as compared to Rs3.8-4.2 million a year back, while the new bungalow is available at Rs5.5-6.0 million depending on its construction. Even a single storey 240-yard is available at Rs3.5-4.0 million.

In block 6, a 120-yard double storey house is selling at Rs2.5-3.0 million as compared to Rs1.8-2.0 million a year back. In block five of Gulshan-e-Iqbal, sellers are demanding Rs6.5-7.5 million for a 400-yard double storey bungalow as compared to Rs5.5 million a year back.

Sales Executive of Civic Associates at Nipa Chowrangi, Abdal Magray said a 400-yard single storey bungalow in Gulistan-e- Jauhar is selling at Rs4 to 4.3 million as compared to Rs3.5 million while a double storey is available at Rs5.5-6.5 million as against Rs4.2-4.3 million.

The price of a 240-yard plot in Gulistan-e-Jauhar in block 15 is now being quoted at Rs3 million as compared to Rs2 to Rs2.5 million a year back. A one unit bungalow of 240-yard in same block has been put on sale for price of Rs3.5-4.0 as compared to Rs3 million a year back, he added.

"Not only the sellers - it is very strange that buyers are also in abundance in the market," he said.

In areas like Nazimabad, North Nazimabad and F.B. Area - property rates are also on the rise. Owner of Nazimabad Estate at Block H, North Nazimabad, Mohammad Najib said a 240-yard double storey old bungalow is carrying price of Rs4 million as compared to Rs3 million a year back, while the price further goes up if the house is renovated. An old double storey bungalow of 600-yard carries price of Rs6 to Rs7 million now as against Rs5 million a year back.

In Nazimabad, a 200-yard house is now being sold at Rs2.0-2.2 million as compared to Rs1.2-1.5 million.

A total of $4.2 billion has found way into Pakistan under home remittances in 2002-03 as compared to $2.8 billion in 2001-2002. Overseas Pakistan around the world sent $2.513 billion in July-February 2003-04 as compared to $2.720 billion in the same period of last fiscal.

After stock market, where the KSE share index broke the psychological level of 5,000 points last weekend - investors as well as businessmen are also very active in the real estate business these days. Investors and general public know that the property always pay that is why they heavily rely rather than heavily investing in gold and currency.

The Sindh government collected Rs2.373 billion in shape of stamp duty in 2002-03 as compared to Rs2 billion in 2001-02. Collection in registration fees was recorded at Rs331 million in 2002-03 as compared to Rs324 million in 2001-02. Board of Revenue officials are expecting a jump in earning through stamp duty and registration fee by three to five per cent in the current fiscal if compared with previous fiscal earnings.