Following chaos, real estate markets largely stay stable
Real estate markets in Pakistan largely remained quiet in the first half of calendar year 2017 following chaos in the second half of previous year in the wake of revision in property tax rates and new property valuations.
The changing economic and political scenario this year, like the widening trade and current account deficits, growing debt of the country and the Panama Papers case, left markets in a struggling position as land prices increased in only a few areas.
Among major cities of the country, market activity was largely dominated by genuine buyers in Islamabad in the first half of 2017 with little price fluctuations.
The areas that performed well were Bahria Town and Sector B-17. In Bahria Town, prices for one-kanal (605-square-yard) plots rose 5.84% and those for 10-marla (302-square-yard) plots increased 4.52%.
In Sector B-17, prices for one-kanal plots increased 14.26% while rates for 10-marla plots swelled 18.05%. Growth in the sector came primarily as a result of construction of a new airport.
There was little activity in the city and overall the real estate market remained stable in the first half. Following a positive trend at the start of the year, it was expected that activity in Bahria Town would resume. However, this did not happen because of issues in the Lahore Ring Road and in Sector-F.
High population density resulted in stability in property prices in the Wapda Town. However, LDA Avenue-1 experienced a slight drop of 2.79% in prices for one-kanal plots and 5.98% for 10-marla plots. The price dip was primarily because of litigation issues, lack of security and low level of development.
However, some areas in the city performed relatively better. DHA Lahore’s Phases I-VI recorded a growth of 3.79% in prices for one-kanal plots and 1.72% for 10-marla plots.
As these areas had a high population density, this hindered the prospects for engaging more buyers and investors. Much of the activity took place in Phases V and VI.
In Phases VII-IX, prices increased moderately by 3.29% for one-kanal and 4.2% for 10-marla plots.
A long-standing political uncertainty over the Panama Papers case has had its impact on real estate prices in some areas.
The worst-hit was Bahria Orchard where prices dropped 3.2% for one-kanal and 7.78% for 10-marla plots as many investors were attracted towards Bahria Town Karachi.
Investor and buyer activity in Master City, Citi Housing and DC Colony remained stable while DHA Gujranwala recorded hefty price movements.
In DHA Gujranwala, one-kanal plots registered a price increase of 21.88% whereas prices for 10-marla plots rose 15.44%. Prices are expected to rise again as various other DHA projects slow down.
In Master City, plot prices edged up 1.44% for one kanal and 4.93% for 10 marla. Citi Housing saw price increase of 4.08% for one-kanal plots and 3.35% for 10-marla plots. Many investors in this project were attracted away by Palm City, resulting in less activity in Citi Housing.
Bahria Town Karachi was one of the most attractive investment avenues. It was able to attract investors away from Gwadar because of its development at a rapid pace.
Prices for 500-square-yard plots jumped 35.94% while rates for 250-square-yard land pieces swelled 43.96%. For genuine buyers, Gulshan-e-Iqbal remained the top choice.
Buyer activity in DHA Karachi and DHA City Karachi was rather sluggish. DHA City had fared well in the first quarter, but investors were then attracted towards the fast-developing Gwadar city.