KARACHI: Increasing property prices in 2015 cast gloom over the hopes of potential middle class buyers with limited incomes looking to own property.
Meanwhile, increased interest of investors and the elite has been instrumental in shooting up real estate prices.
Though the month of December has remained relatively calm so far, the past 11 months of 2015 were volatile, witnessing an increasing price trend.
Owner of Parekh Estate at Clifton, Abdul Wahab Parekh said that since 2012 property prices have persistently been climbing up in residential, commercial and industrial areas of Karachi.
He said investors, especially overseas Pakistanis, who were holding on to their money from 2008 to 2011 followed by the Dubai property debacle, entered the real estate market, pushing up property prices beyond the reach of many Pakistanis.
In 2012, the average price of 500 yards plot in DHA was Rs30,000 per sq.ft which rose to Rs70,000-75,000 in January 2015. By November 2015 it swelled to Rs90,000-100,000 per sq. ft.
“Owing to lucrative gains, people have put their money in real estate, pulling back their investments in stocks, currency, gold, saving certificates. Also, the imposition of 0.03 per cent withholding tax on filers and 0.06pc on non-filers on banking transaction has forced people to pull out their money from banks and put it in other business avenues including property,” he said.
“Of the total amount circulating in the sector, 70-80pc is black money,” he added.
He said property prices in December are on a hold owing to uncertainty over the Rangers’ future in Sindh and its implications on the law and order situation.
“The results of local bodies election bode well for property prices in 2016,” he said, anticipating further jump in prices in case the Rangers’ issue is resolved.
Owner of Nazimabad Estate in North Nazimabad, Mohammad Najeeb said property prices have seen positive growth especially in developed areas.
He said the average price of 400 yards bungalow is now quoted at Rs35 million as compared to Rs25m in January 2015 while a 240 yards house is now priced at Rs22.25m as compared to Rs17.5m earlier this year.
He said investors had purchased old 200-240 yards houses at plot values and reconstructed three storied homes, each a separate portions. This was another main reason for causing price spiral of 200-240 yards houses.
Najeeb said the starting price of a brand new two bed room apartment with 850-900 sq.ft area is Rs5m while three bedroom and four bedroom flats are available at Rs9m to Rs10m million and Rs11.5m to Rs 12.5 million.
CEO of Pakistan’s largest property portal, Zameen.com, Zeeshan Ali Khan said, “Needless to say, 2015 has been an exhilarating year. The roaring ascent witnessed in Karachi can, in no way, be termed ‘modest’”.
Not too long ago, the property markets of Islamabad and Lahore were performing better than Karachi’s. However, after the Rangers-led operation significantly improved law and order there, Karachi property prices have touched one peak after another.
“Much like 2015, 2016 will be another stable year for the sector. Karachi will continue to see demand-driven spikes while Lahore will welcome many new high-rise projects,” he added.
According to Zameen.com’s data, the average price of 500 sq yards plot in DHA Karachi has risen by 13.5pc to Rs39.9m from Rs35.1m in January 2015.
In Gulshan-e-Iqbal, the rate has risen by 8pc to Rs26.9m from Rs24.9m.
The data also shows that 500 sq yards house price in DHA Karachi rose by 18.25pc to Rs66.2m as against Rs56m in January 2015.
In Gulshan-e-Iqbal, the current price of 500 sq yards house currently stands at Rs41m as compared to Rs37.7m in January 2015, up by 8.7pc. In Gulistan-e-Jauhar, a 500 sq yards house costs Rs31.1m as against Rs27.8m in January 2015, up by 11.7pc.
In Lahore, a 500 sq yards bungalow in DHA can be purchased at Rs43.7m which is 17pc higher than the price prevailing in January 2015.
Price of 500 sq yards bungalow in Johar Town increased by 12pc to Rs34.9m from Rs31m in January 2015. The same size bungalow in Wapda Town saw a jump of 8pc to Rs32.6m from Rs30.1m in January 2015.
The rate of 500 sq yards plot in F-11 and DHA Islamabad has gone up by 15pc and 9.24pc to Rs56.5m and Rs12.9m from Rs49.2m and Rs11.8m in January 2015.
The price of 500 sq yards house in F-11 area went up to Rs73.5m after witnessing 7pc jump while G-11 area price rose by 8pc to Rs61.8 from Rs57m in January 2015 while 500 sq yards house in DHA Islamabad now costs 9pc more as compared to its January’s price of Rs32.1m.
Published in Dawn, December 20th, 2015