Property prices are at a standstill in almost every area. Not just Islamabad but even in Lahore, Peshawar, Faisalabad, Multan etc.
When you speak to people in the market, they say sale purchase transactions are few and far between. I spoke to dealers in all these areas, and there is no boom any where. Some people think purchasing power is missing, some people are moving their money, but the fact is people who invested in Dubai in 2006-2008 lost a lot of their money in declining prices. Now Dubai is going up again, slowly the bubble will get inflated until it reaches the bursting point. So it is not a good option purely for investment. If you have a permanent job in Dubai or a running business, then Dubai is a very good place to by apartment because you save rent and you get residential status assured even if you lose the job at any stage. So is the money going to UAE?
I think property prices in Pakistan are based on solid demand for housing by permanent residents of Pakistan so it will not burst like a bubble. It can slow down, come to a standstill but it will not collapse one fine morning. Only if you inflate prices of files by speculation, this can lead to collapse as in Enclave or CDA E-12 where prices are raised artificially by false newspaper statements and advertisements when there is no plot on ground.
As soon there is the right mix of conditions (political with some encouraging signs in the economy), prices will start going up and then reach a peak then become stable after some correction but the level will still be higher than before the upward swing.
One more thing.
Currently, Ishaq Dar is managing to hold the rupee stable vis-a-vis the US dollar. So that is another major factor.
When the rupee is sliding down against the dollar, people hurry to take their rupees out of other investments to buy foreign currency (if their rupee saving is a small amount) or real estate if it is a substantial sum. This creates a copycat or snow ball effect. There is panic buying and a mad rush which jack up the real estate prices much more than the decrease in rupee-value. It was the rupee decline which triggered the mad rush of property buying (for example increase in one kanal at B-17 block-c from 36 lacs to 80 lacs and now after correction it is still at 70) but the real estate price increase surpasses the rupee decline.
In some ways, this is good for the country because it keeps the money inside the country and boosts at least one sector: real estate development (which also generates some jobs if not too many).
I think this is better than panic investment in dollars because that will put the rupee in a total free-fall which will destroy the credibility of our currency and do big damage to the economy. So real estate is doing a good job for the economy in these conditions when other business avenues are hit by load shedding and law and order problems.
When we are nearing any IMF repayment date, rupee starts to decline because the Govt is in dollar buying mode. In 2013-2014, Pakistan has to repay three billion dollars to the IMF so you can imagine the number of times rupee is likely to decline against dollar in the next few months. And each time, investors will come to the safe haven of property. The question is will there be a snowball/copy-cat effect each time there is a substantial decline in rupee.
For Pakistan, we hope the rupee does not slide and Ishaq Dar can meet his promise of bringing the rupee back to its 10-year old position, but the signs are that this will not be possible. Sheikh Rasheed has offered to resign his assembly seat if rupee goes to 98 against the dollar. But may be sheikh sahab just want to resign any way?
Very Good analysis, you are very much rite about the market stability, prices are stagnant at most of the places, depreciating at some places plus their are very less potential buyers currently available in the market.
B-17, G-13,G-14, DHA valley, Jammu Kashmir, Bahria 1-8, DHA 1, DHA 2, DHA valley, Multi Orchards are to name a few, i checked all these by myself.
Plus, Bahria Karachi is another thing where most of the people are involved, may be that can be another reason.
I personally believe that this will continue for at least June till the next budget and then again, it will start appreciating.
Good Analysis PK1,
Nasir sb not only BT karachi but remember 40-50 days back enclave 2 story, lot of investment was moved there and it will take some time for genuine buyers / investors to realize to pull out their money (I think it might be too late for them now as they have to wait for atleast 6 months ).
So ur guess of budget time (june - july) is quite close when we will see "This Silence will be broken by a Tornada hitting again in property".
Regards,