KARACHI, Sept 18: Genuine buyers' sentiments are burning up with the overheating property rates in the mega city. They are literally either confused whether to wait for the decline in property rates or stay where they are.

Moving from lower class to middle class, from middle class to upper middle class and from upper middle class to upper class in a bid to improve the living standards has never been so expensive in city's history.

If a genuine buyer does not have any huge cash surplus in his hand then buying a property in any of the city area is the most daunting and difficult task these days.

Only those people who have been receiving remittances -- dollars, pounds, riyal and dirhams - from their family members living abroad are buying new houses and keep moving from one town to another.

Retired people, who had some money in saving schemes and banks, and working class citizens, even getting a respectable salary, have to think twice before buying a house or even an apartment whose prices have witnessed phenomenal boost during the last two to three years.

Banks and financial institutions came with a bang and were extending a helping hand to the genuine buyers through housing finance with attractive packages and incentives. But top bosses of banks now appear worried and openly admit that the speculation in property and estate business has started giving a jerk to their housing finance schemes.

National Bank of Pakistan President Syed Ali Raza on Thursday disclosed that housing scheme was not as successful as only Rs500 million were disbursed during the last financial year. The housing scheme could not pick up because of highly speculative land prices. He added around 6,000 applications were received but most of them had been withdrawn because of rapid increase in real estate prices. The NBP had alone been hit but other institutions offering such facility would have the same experience, he added.

The State Bank has further liberalized the credit regime for housing loans. Banks' exposure to housing finance has been enhanced to 10 per cent from five per cent of their net advances. The maximum per parity limit has been increased to Rs10 million from Rs5 million. Besides, the maximum debt equity for housing loans has been increased from 70:30 to 85:15. The maximum tenure for housing finance has been increased to 20 from 15 years. It seems that all these steps to facilitate buyers and provide a level-playing field to the stakeholders for the development of the housing sector have been torpedoed by the skyrocketing rates of lands and houses.

Currently renovation of houses and bungalows are being carried out by few people in almost all the localities of the city. May be a section of the society is taking some loans from banks and financial institutions. However, it is generally believed that these kinds of renovations are being done by those citizens who have some close family members staying abroad.

At a time when real estate prices are not ready to cool down in view of increased flow of remittances in the country, the UAE and Dubai have emerged as a new investment bonanza for the investors and even for the regular buyers who are willing to settle in these shining destinations. On-going advertisement campaign by a private TV channel for permanent residence in Dubai has sparked new hopes in the property market.

Has Dubai and other Arab states created a stir in the local property market? Have these new investment options really caused a fall in local real estate prices? What is the immediate impact in local property market?

Estate agents, when asked to answer these queries, do not appear overwhelmed or surprised. They say that the local property market is calm and quite and not hit by the new property investment avenues in UAE and Dubai. Even the prices of land, bungalows and houses have not fallen.

They said that prices have declined in DHA Phase VIII and VII Extension not because of Dubai factor but due to decision of Defence Housing Authority (DHA) of demanding development charges from October 1, 2004. On 500 yards plot, development charges come to Rs500,000 followed by Rs1 million on 1,000 yards and Rs2 million on 2,000 yards plot.

"Buying and selling activities in DHA area particularly in Phase VIII and VII Extension have slowed down by 10-15 per cent," said Abdul Wahab Parekh, Chief Executive of Parekh Estate in Clifton, linking slight plunge in activities to the DHA's decision. He did not accept that the prices in these two phases have plunged to some extent. Even in other estates prices are intact.

He said that that transfer of documents (buying and selling) at the DHA office has caved into 70-80 per day as compared to 100-125 per day for the two specific phases.

Pakistanis living in London and other areas were also making purchases in Dubai and other Arab countries. Even some Karachi investors were taking the plunge in these markets, he said adding that investors in Karachi were currently adopting a wait-and-see policy.

Khan Zubair Shaheen, owner of Pak Estate in Clifton, says that prices in Defence Phase VIII and VII Extention have dropped by five to seven per cent due to DHA's decision and but it has nothing to do with Dubai charm. He was of the view that investors in Karachi market were still very much active.

He agreed that a small number of people and investors were cashing their luck in Dubai. He said that a 450-square-yard flat in Dubai costs Rs4 million while a buyer can get 900-square-yard flat at price of Rs1.2-1.5 million in Karachi.

Proprietor of A-One Estate in Clifton, Mohammad Riasat said that the market rates had declined by 10 per cent in two specific phases but not because of Dubai fever. He also agreed that only those people were making investment in Dubai who want to get settled there permanently.

The property market is likely to remain robust in the current year following a political change and positive economic indicators. Besides, the flow of home remittance from abroad has again started picking up. It is hard to tell whether the current prices have reached the saturation point or there is still room for flare up.

Other areas: Rates of plots and houses in Gulshan-e-Iqbal and Gulistan-e-Jauhar are also flying high. Sellers are seen asking Rs4.5-5.0 million for a 240 yards bungalow in Gulshan's various blocks as compared to Rs3.8-4.2 million in January 2004, while a new bungalow is available at Rs5.5-6.0 depending on its construction. Even a single-storey 240 yards bungalow is available at Rs3.5-4.0 million.

In block 6, a 120-yard double-storey house is selling at Rs2.5-3.5 million as compared to Rs1.8-2.0 million early this year. In block five sellers are demanding Rs6.5-8.0 million for a 400-ard double-storey bungalow as compared to Rs5.5 million. Some owners are demanding Rs10 million depending on the construction work.

A 400-ard single-storey bungalow in Gulistan-e-Jauhar is selling at Rs4 to Rs5 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 Rs3.0-3.5 million as compared to Rs2 to Rs2.5 million a year back. A one-unit bungalow of 240 yards in same block has been put on sale for price of Rs3.5-4.0 as compared to Rs3 million.

In areas like Nazimabad, North Nazimabad and F.B. Area property rates are also on the rise. A 240-yard double-storey old bungalow is carrying price of Rs4 million as compared to Rs3 million. An old double-storey bungalow of 600 yards carries price of Rs6 to Rs7 million now as against Rs5 million.

In Nazimabad, a 200-yard house is now being sold at Rs2.0-2.5 million as compared to Rs1.2-1.5 million.