Economic situation not great. Alot of debts and imf. I think pakistani real estate will collapse very hard in next few years. PTI introducing alot of restrictions, taxes and regulations and its an economic studied fact if we introduce too much regulations then investor loses confidence.
@ Ali Nouman sahib,
A Kafir Uncle Ji, Steve Bolton says,
The only bad time to buy property is LATER.....
@ Ilyas . Very well said .Come what may Property is and will be the best and safest investment option. And ideal for Overseas Pakistanis as it does not require physical presence .
The only caution required and check is needed in selecting the portfolio of the builder and developer.
Thanks guys for it! Your answers are helpful
Pakistani property market has been stagnant for past 3-4 years, owing to revised taxes and restriction on sale/purchase by non-tax-filers. The recent massive devaluation of Pak Rupees has further stopped foreign inflows in property market.
Before that, this was the easiest market to make money even for the casual investors resulting into over-inflated prices. Now it is settling down to its actual levels. Only genuine property which is used for house building is undergoing gradual price increase. This is natural and organic as opposed to overly-hyped speculative growth as earlier.
In short, I think in next 2-3 years, the property market will take more corrective course and will be established on more robust footing based on genuine demand-supply principles.
So my advise would be to go for solid projects with 10-15% price growth per annum.
Right, but the million dollar question to be answerd that in such a context when market is slow and uncertain, how to identify projects that can yield 10% - 15% per annum…?
I will go with the @isloo1. All the things happening right now are painful and the business has got a lot hit. But the positivity i see is that there are hundreds of dealers in the market. Once the market will squeeze only the professionals will be here to entertain customers. Plus all the regulations will always favour the buyer.
The more the clarity the more the buyers will be safe.
Unless regulated problmes will keep evolving… No matter how Geniune demand and supply can be. For the time being govt. See real estate as some sort of money minting machine. Unless serious efforts have been made the true potential will keep hitting deadlocks whenever the Rosy times gets harder
I think it will take more then 2-3 years to stabilise the economy and once the economy is under control property prices should rise significantly. Pakistan has a massive population increasing by the minute and they are not making any more land!.
Imtiaz, gone are days when real estate was a money minting venture. With heavy taxes in place fast property flipping is not viable at all. So the best approach is to go slow.
You can definitely find a property with 10% annual price growth in CDA, DHA, (to some extent) Bahria and similar well-known brands where genuine buyers are purchasing to construct houses.
@Isloo1, anywhere else in the world 10%-15% capital appreciation per annum would be considered a very good rate of return on your capital but so in Pakistan. Is this because of the high inflation and currency depreciation?.
As far as first hand experience with CDA & BT, prices are almost at an absolute stand still since last Jun. That doesn't mean negative or worst ahead but for time being 10% growth per annum is attractive but never guaranteed. From Jan 1 to Jun of 2018 was quite good and profits did grew way beyond 10%. Unfortunately it is not happening now and also not predictable in a forseeable future unless may be some exceptions which can't be generalised.
Some smaller projects are doing good. For example, with an investment of 1 million, 10% growth is more realistic compared to an investment of 10 million in a single entity. Smaller investments require a diversified portfolio of real estate and that involves more work to manage.
Even exchange transactions are slow which kept things going whenever there were downturns, previously.
Transfer fees + taxes + commission usually adds up to 10% of property value, therefore, selling at 10% profit within 1 year hardly fetches the cost.
Actually there is greater supply of plots than the amount of money people can pay or are willing to pay.
There was a shortage of housing land so anyone and everyone poured their savings into plots to multiply their money.
This became more attractive than other businesses. So even industrialists and many other business-owners switched their investments to housing schemes for example Lake City Lahore to make easy return on investment.
Then eventually there was more supply of plots compared to number of genuine buyers who could afford to buy in high standard developments.
Also DHA and Bahria introduced massive new schemes in many cities such as Bahawalpur, Multan, Gujranwala, Peshawar etc. Now there is Naya Pakistan Housing Program which will increase the supply even more.
So naturally prices will not increase in real terms especially if you compare the increase with the devaluation of rupee against the dollar. Even if rupee price increases, the investors in plots will end up getting less number of dollars if they had simply held on to foreign exchange.
So in fact prices dropped. On top of that there are new and increased taxes on property transactions plus people are being questioned about source of their funds.
All of the above has resulted in a situation where even if you just hold dollars, you will end up in a better position than buying property. And remember, even dollar is always depreciating in value based on inflation in the USA i.e. US consumer price index. So if your investment in pakistan property is not even keeping up with dollar, and the dollar itself is dropping in its buying power, then imagine how much loss you are really making!
The strength of the USD has been and is based on the fact that it is the de-facto currency for international transactions with a few minor and almost negligible exceptions. Its the standard and the benchmark for other currencies. Its demand, as of now in international markets always grows so printing more does not impact as other currencies. The closest contenders are the GBP and EUR that too had roller coaster times in the lats 2 - 3 years, particularly the GBP.
USD depreciating against whom? Its more like the products offering more features while getting more expensive. USD is the same but for example the newer generation of iPhones keep getting expensive or lets say Electric Cars getting expensive due to additional features being offered and innovative components being attached.
NPHP is more like a political slogan, the number don't add up on a scale of five years tenure for the total houses promised to be built. Whatever and whenever it gets materialised will be a plus.
In a Pakistani market/society, real numbers for the housing statistics are not confirmed, neither authentic. There are many who own multiple units and there are many that own none.
Another devaluation coming soon https://www.thenews.com.pk/print/421869-fitch-says-sbp-likely-to-devalue-rupee-in-coming-months
Devaluation have already hurt property business and now with more devaluation it will hurt more. If pakistani real estate goes down then its economy will go down and if pakistani economy goes down then so will be real estate. We have gone into very bad economic cycle.
It is sad and immoral when Pakistani cities real estate is more expensive than a modern city like Istanbul.
On one hand, we have people without roof and youth who can't start any business because of high cost of rents and property values. While on the other hand we have greedy land mafia and lazy investors who are more worried about marking a buck out of this sector.
A nation can't be anymore dead, dumb and immoral than this.
In the era of increasing interest rates, in my opinion, real market is not supposed to grow double digit. However, since the inflation is always on the rise, the real estate value will continue to rise, but only to counter the affect of inflation. In reality, buyers are not seeing any real value, and that is the problem.