Many market analysts think that the increase in rent of houses and flats can now be considered as a real indicator of the real estate prices. Rentals would have not jumped by over 100 per cent if the real estates would have not moved up so wildly, they add.
The price of a 500-yard plot in DHA phase VIII, which was priced at Rs3 million in 2001, now hovers between Rs8-12 million and in Phase VII it ranges between Rs14.5-16.5 million as compared to Rs6 million in 2001. In Phase VI, the same size plot is being quoted between Rs15 to Rs17 million from Rs3.2 million in 2001.
A 300-yard bungalow can now be purchased at Rs18.5 million as compared to Rs5.8 million while a new 500-yard bungalow in Phase V, VI and VII are being quoted at Rs27 million as against Rs8 million in 2001.
A 1,000-yard new bungalow in Phase VI and VII is tagged at Rs50 million as compared to Rs17 million, while an old bungalow in the same phases is being quoted at Rs40 million as against Rs11.5 million.
The impact of sky rocketing property prices in the DHA has filtered down on other areas of the city. An old 240-yard double-storey bungalow in Gulshan-e-Iqbal carries price of Rs7-8m as compared to Rs4-5m in 2001.
Gulistan-e-Jauhar has turned out to be the most sought after investment heaven after the DHA. A new 240-yard double-storey bungalow in block 15 is priced at Rs8-9m and even Rs10 million depending on the location as compared to Rs5-6 million in 2001. A plot of same size is available at Rs5.0-5.5m as against Rs2.5-3m in the same block.
It is hard to predict the future behaviour of property prices or to guess that the rates have reached a saturation point. Many investors have now plunged in middle income and upper middle income areas by purchasing the houses (in demolishing condition) at plot prices and renovating them to fetch handsome money.
Renovation of houses has geared up momentum in many localities of the city as it raises the future value of the house, besides clicking the mind of prospective buyers at first sight. The sustained growth in the construction and housing sector is now much evident from the 18 per cent rise in local cement dispatches during July-March 2004-05. Rising construction activities has also pushed the growth in allied industries such as paints and varnishes, glass sheet and woods as these items have also become costlier with rising demand.
As the prices of essential commodities have already squeezed the people particularly those who are looking for flats and houses on rent. They are now bound to sacrifice their innocent wishes by preferring to move lower category areas. For example, if a buyer wishes to move into a flat in Gulshan-e-Iqbal, he cannot dare because of sharp increase in rentals.
He has to move to Federal B. Area, North Nazimabad, Karimabad etc. He has two choices either to generate extra income or cut his monthly expenses to move to high priced area. The rent of a 240-yard portion in Gulshan-e-Iqbal ranges between Rs13,000-15,000 as compared to Rs7,000 to Rs8,000 in 2001.
In absence of any official control or regulatory body to keep a vigil on property prices, genuine buyers are now hard pressed to take the costly ride by paying unimaginable prices while investors are out to fully cash the situation.
Khan Zubair Shaheen, Chief Executive of Pak Estate, attributes the abnormal increase in property prices to huge arrival of remittances after 9/11 incident, cheaper financing from banks and leasing companies, and withdrawal of money from banks which made its way into stocks and real estate business where return is much higher.