LAHORE, Jan 6: The real estate business in the provincial capital is expected to continue flourishing through the year 2003 as the land rates keep rising in most localities, particularly in southern Lahore.

The real estate prices have increased between 100-200 per cent in the housing schemes in southern Lahore during the last one-and-a-half year after around a decade-long recession in the real estate business.

According to real estate dealers, the property prices in Wapda Town, Valencia, NFC Housing Scheme and smaller, adjoining housing schemes have increased enormously during 2002.

Same is the case with some colonies located along Multan Road, several kilometres away from Thokar Niaz Beg. Those include Izmir and EME Society.

The property rates in well-established localities like Defence Housing Authority (DHA) are stated to be “static” for quite a few months because of “overheating”.

In fact, the dealers claim, “the prices in the phases V and VI of the DHA have come down by around 10-20 per cent. “But, they believe, the rates will again go up in the next few months. “It is a sort of correction that had to take place after so much activity by investors, speculators or genuine buyers (intending to construct a house).”

A similar price trend is reported in Jauhar Town and some not-so-well-maintained smaller schemes in and around it.

The main factor said to be responsible for the rising property rates is the greater inflow of “home remittances” through banking channels after the imposition of curbs on the hundi and hawala transfers by the US and the Arab countries since the fateful events of 9/11.

The remittances rose to $2.389 billion during the year 2001-02 from $1.086 billion the previous year. The remittances during the first five months of 2002-03 stand at a staggering $1.784 billion compared to $789 million during the same period in 2001-02. Their total size is estimated to grow to $3-4 billion by the end of the current year on June 30. “A big chunk of this money has found its way into property and stocks,” says a dealer. “People prefer to invest their savings in property or stocks for higher returns rather than depositing with banks that offer extremely low profit rates these days. Even the national saving schemes have lost their attraction owing to the lowering of interest on them.”

Another factor behind the increased land rates is the entry of the investors in the market in a big way. “Most investors bought plots at a higher than the market rate, overheating the market, long before the genuine buyers came in. For many months, the land transactions took place only between investors which considerably pushed up the prices. Even today, a majority of plots available for sale are being held by the investors,” a dealer working in Wapda Town said.

In addition to general improvement in remittances and economic conditions of the country, other factors have also contributed to the increase in the land prices, especially in southern Lahore.

“The prices started registering increase in the middle of 2002 in Wapda Town, Valencia and some other adjoining localities due to their location and reputation (of being maintained better than the others). Later, the general boom in the property business further pushed up their prices after 9/11. However, the launching of the government infrastructure projects to build roads to put in place what they call as the missing links brought many genuine buyers to this side of the city,” said a dealer.

He said the construction activity had increased manifold in the recent months in these localities due to the commencement of work on roads in these area. The construction of the long-awaited Ring Road is expected to further push up the demand and prices of land in this part of the city because it is where the development is taking place.

“Moreover, these are the localities where the rates of land, despite having been doubled or tripled over the last couple of years, are still within the reach of the middle classes and the families of the overseas Pakistanis,” he added.