KARACHI, April 9: The rates of plots continue to face a plunge in the city’s most posh locality – Defence Housing Authority (DHA) - suffering a decline of 20-25 per cent during the last two weeks as investors are still finding hard to cover up their positions from the massive fall of stock prices on the Karachi Stock Exchange (KSE).

Following the crisis on KSE the prices of plots in DHA especially in the Phase VIII fell promptly by 10-15 per cent. Even the buying and selling of bungalows in DHA and Clifton is still facing quite a status quo situation due to thin presence of both sellers and buyers.

“There is hardly any seller in entire DHA market particularly in the Phase VIII, while buyers of plots are looking for more bargains,” said Abdul Wahab Parekh, chief executive of Parekh Estate. “Sale and purchase of plots are currently facing a dull situation.”

He said that plot prices in Phase VIII have come down by 20-25 per cent since the bad luck has hit the bourse, leaving the scrips to fall like ninepins.

Prior to KSE debacle, the DHA office, which had been witnessing transfer of plot documents in the range of 100-125 a day, had now plunged to 50-60 a day mostly comprising of old transactions that were being settled between buyers and sellers, he said adding that the transfer of plots at DHA office had not been affected when plot prices had fallen by 10-15 per cent two weeks back.

The 50 per cent decline in daily transfer of files means that the rates of plots have declined in entire DHA which shows that stock market crisis has affected the rates of plots in other phases of DHA as well. It also shows that genuine sale and purchase of bungalows has also partially affected as a market sentiment but it does not mean that prices of bungalows have fallen.

He forecast an uncertain situation both in rates of plots and in the stock exchange, saying that “now scrip prices and plot rates now move together”. He said the KSE-100 share index may fall further in the next 15 days as investors are not re-investing in stock business. “Currently the investors are on the sidelines as they are not clear about the future direction of the market,” Parekh said.

Prices of bungalows are very tight these days as a few bungalows are being put on sale compared to abundant availability of plots. He said still a brand new double storey bungalow of 500 yards carries price tag of Rs20.5-30 million, while old bungalow is priced between Rs20-20.5 million in Phase VI of DHA.

The KSE 100 share index, which recorded a peak level of 10,355 points three weeks back, has suffered a fall of over 2,700 points to date. Uncertainty pertaining to the implementation of risk management measures, news of imposition of excise levy on houses and investigation against unscrupulous brokers overshadowed the performance of the Karachi Stock Exchange, an analyst at Capital One Research says adding the stock market movement is expected to remain unpredictable unless the issues pertaining to the stock exchange is not resolved.

Chief Executive of Pak Estate, Khan Zubair Shaheen said that plot prices especially in DHA Phase VIII have declined by 20 per cent. A plot of 500 yards, previously available at Rs10 million now can be purchased at Rs8 million.

He said that around 35 plots documents were being transferred daily at the DHA office.

“The plot market will remain lethargic as long as the stock crisis persists,” he said adding that dealing in bungalows has also slowed down to some extent.

“The DHA market lacks sellers in the plots’ trading, while buyers of plots are waiting for further declines,” Khan said.

Meanwhile, the real estate market in other areas of the city remains unaffected from the stock market crisis. After DHA, Gulistan-e-Jauhar is considered as an investors’ paradise but it seems that Gulistan-e-Jauhar has some other kind of investors and not those investors who play both in stocks and real estate.

Prices of plots and bungalows in Gulistan-e-Jauhar continue to fly high while in other areas like Gulshan-e-Iqbal, North Nazimabad, F.B. Area, PECHS, etc., prices of both plot and houses have yet to feel any adverse impact of the stock exchange

crisis.

The housing and construction sector are showing a rapid growth, thus reflecting an increased economic activity and pushing up growth in allied industries such as cement, paints and varnishes, glass sheets, woods etc., says the second

quarterly report of the State Bank of Pakistan for the year 2004-2005.

Housing finance has been showing rising trend from the first quarter of 2003-2004. During July-December 2004-2005, banks and DFIs disbursed Rs8.6 billion under housing finance. The State Bank on March 19 has removed the per party limit of Rs10 million for housing finance, allowing banks to lend as much as money to a single borrower for construction of houses and apartments as they find feasible.