Zameen.com Market Report – Market begins slowdown in anticipation of budget, Ramadan

OVERVIEW

As the second quarter of 2015 gets underway, most of the major real estate markets of Pakistan are showing signs of an early start to the hibernation that precedes and marks the entire duration of the holy month of Ramadan. This, however, is not the only reason for a slowdown in the market.

The announcement of the Annual Budget is also at hand, just a couple of weeks before Ramadan begins. The usual seasonal effects of this holy month might be compounded as real estate stakeholders collectively hold their breath to see what sort of taxes they are going to be looking at in the next fiscal year.

Over the course of April 2015, the major localities of Lahore and Islamabad exhibited reduced activity and a resultant drop in prices across the board, with Sector F-11 the only neighbourhood to exhibit a tangible rise in prices according to Zameen.com’s statistics. The real estate market of Karachi, however, has shown no inclination to slow down. All major localities in the city exhibited decent gains month-on-month with the exception of DHA City Karachi, where a controlled drop was seen in the prices of 1-kanal (500 yard²) plots.

Zameen.com’s search trends tables show that things have remained somewhat constant in terms of popularity. At the start of Q2 2015, DHA was still the leading player in all three cities followed by Bahria Town. Relatively new entrant Gulberg Islamabad retained its position as the fourth-most popular locality for plots in the Federal Capital.

Lahore

Lahore’s property market was probably the slowest among the country’s top three over the course of April 2015. None of the four most prominent localities showed any noticeable vigour, with prices remaining stable at best and exhibiting controlled drops at worst. DHA Lahore saw the highest price gain at 0.55%, which is a negligible rise.

Islamabad

Islamabad’s property market exhibited a similarly depressed trend overall, with Sector F-11 the only noticeable locality to notch a minor increase in the prices of 1-kanal plots. Prices remained stable in Sector E-11 and dropped in a controlled manner in Bahria Town and DHA Islamabad.

Karachi

As we pointed out in the Overview, there was an altogether different ballgame in Karachi as compared to the rest of the country in April 2015. The market showed no signs of slowing down and most of the city’s top localities fared well. Gulistan-e-Jauhar topped the list with a solid 4.54% gain in prices, while DHA Karachi and Gulshan-e-Iqbal were not far behind.

Final Analysis

Though there were no sharp drops in Lahore and Islamabad, the real estate markets of these two key cities still seem to be easing into a general slowdown that was expected to come a little later in the quarter. The increased taxes levied in last year’s budget had a detrimental effect on market activity in general, coupled with the political instability in the second half of 2014. It is perhaps unsurprising, therefore, that the prospect of the new budget has had an effect this early in Q2 2015.

Karachi’s market seems to be resisting this urge to wind things down at the moment, but numbers from the coming months will likely indicate a similar trend in Pakistan’s largest city as well.

“There are no shocking drops anywhere across the board, and this gradual decline in prices in Islamabad and Lahore is a sign of the seasonality that governs Pakistan’s real estate sector,” said Mr Zeeshan Ali Khan, the CEO of Zameen.com.

“I would be somewhat surprised if Karachi’s market did not follow suit, because the Annual Budget 2015-16 is something all stakeholders are going to watch closely before making any decisions. Last year’s tax hikes proved to be quite challenging and if the government decides to retain these taxes – or worse increase them – there is unlikely to be much momentum going forward,” he added. “If some of these taxes are rolled back or decreased, however, there could be a flurry of activity after Ramadan.”

This Market Report was originally published in the June 2015 issue of Zameen.com Magazine. Please click here to subscribe to the magazine today!