KARACHI: Pakistanis bought property worth three billion United Arab Emirates (UAE) dirhams (around Rs85bn) in Dubai during the first half of this year, just behind Indians and Britons who plunked down 7bn and 4bn dirhams, respectively.

In the last two-and-a-half years, Pakistanis have invested over 18bn dirhams (Rs512bn) in Dubai realty market, according to reports based on Dubai Land Department appeared in the UAE media.

In 2015, Indian nationals ranked the highest value foreigners, making property transactions worth 20bn dirhams from 8,756 investors. Britons came in at second with a total of 10bn dirhams worth of property transactions from 4,889 investors while Pakistanis ranked third with 8bn dirhams from 6,106 investors.

In 2014, Pakistanis were at second position with 5,079 transactions with a total of 7.59-dirham investment. Indians topped the list with purchase of 18.1bn dirhams worth of property on 7,353 transactions, whereas Britons invested 9.32bn dirhams.

“Our politicians, bureaucrats and some genuine buyers have lifted properties in Dubai instead of local businessmen,” said Abdul Wahab Parekh, the owner of Parekh Estate in Clifton. “Businessmen have pulled out their money from banks after introduction of 0.3 to 0.6 per cent withholding tax on filers and non-filers on tax returns. They have basically parked their money abroad.”

However, property dealers in the local market paint an uncertain future after the introduction of new valuation rates, saying the real estate market has become inactive.

Mr Parekh believed that after new valuation rates for property, the local businessmen were unlikely to take the plunge and started buying property in Dubai as the prices on that market have been in decline for more than one year.

The new valuation rates look feasible for the Defence Housing Authority (DHA) and Clifton, but for other areas of Karachi the valuation rates seem overvalued, he said. “It’s surprising that the federal government has decided the valuation rates instead of provincial governments under the 18th Amendment.”

“The federal government cannot intervene where provincial governments are authorised to take decision,” he said.

However, he said the property market has been very quite in terms of sale and purchase deals since July 1 as only 15pc deals were struck which were mutually agreed before July, but the sellers get 10-15pc less price. However, many buyers and sellers postponed their transactions mutually.

He also claimed that about 80pc of black money found way into the real estate sector of Pakistan.

CEO of Citi Associates in Clifton, Mohammad Shafi Jakvani, said the volume of property transactions has shrunk and only 10-15pc deals have taken place in DHA and Karachi Development Authority compared to the volume before the introduction of latest finance bill.

Citing reasons for huge price difference in official and open market prices, he said the deputy commissioner valuation table was formed in 1986. Since then, the market price has risen drastically. The markets saw three bullish trend periods — first in 1993 to 1996, second in 2001 to 2005, and third in 2011 till 2016.

The sale/purchase had become negligible from July 2016 onwards as buyers and sellers had adopted wait-and-see approach, especially after new valuation rates, said Mohammad Najeeb, the owner of Nazimabad Estate in North Naziamabad. “The new valuation rates are overvalued which may keep property buyers and sellers in an uncertain situation for future deals.”

Published in Dawn, August 6th, 2016