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Pakistan property market facing bloodbath

Pakistan property market facing bloodbath

Property prices started rising after the introduction of Property Tax Amnesty Scheme in November 2016. In many areas prices were increased by 25%. Speculation was once again very high due to the massive inflow of black money. Almost every investor was able to earn high returns in short period of time. But this property boom has come to an end now.

Pakistan property market after Panama Case Decision

Panama Case Decision has collapsed the property bubble in Pakistan. SC has started ruthless crackdown on black money. Property prices are decreasing in every city and town of Pakistan. Currently property prices are 20-25% down from its peak in early 2017. But this is not the end of the story as Pakistan property market facing bloodbath.

Property market’s present trends

Real estate transactions are record low as there are no buyers in the market but just the sellers. Genuine buyers are waiting for the price to be bottomed out so that they can buy affordable properties. Launch of new real estate projects is also record low. Developers are unable to attract the investors even after reducing the prices.

Property market’s future trends

Genuine buyers have low affordability as compared to the people with black money. This is why property prices are falling. Property prices will keep falling to the level where genuine buyers with white money can afford properties. We should be ready for more price fall. When property prices will bottom out, we will see 35-50% price decline followed by long stagnation.

Death of high end luxury property market

Pakistan real estate sector has changed forever. Small size / cheap properties have good demand but high end luxury real estate is unable to attract buyers. This is because that honest tax payer in Pakistan has low purchasing power and cannot buy expensive property. This present real estate property price crash has destroyed the luxury property market in Pakistan.

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Effects of Panama Case Decision on Real Estate

(22) Comments

  1. Is Bahria Karachi a safe place to invest ? Has the value of property fallen
    Also has the property prices fallen in DHA Khi phase 567and 8 how much should one pay for a 500 square yards house ? When is the right time to buy
    Pls advise

    Reply
    • ALI
      DHA Karachi is already in dangerous territory due to center of black money investment. Property prices are falling in DHA Karachi as its hard to find buyer with white money. NAB & FBR are chasing the people with black money as simple question is the source of income or assets beyond means. 500 SQ YARDS Houses which were once sold for 11-12 crore, are not sold even at 9-10. Lot of houses are on the market but no buyer. DHA Karachi is Pakistan’s top luxury market and so is worst hit this time due to very abnormal prices. People have lost millions. Estate agents are yelling of record low transactions.
      TIME TO BUY
      Its always hard to predict the best time to buy property in crashing market as normally crash takes many months to complete. prices are still falling and hopefully prices will be bottomed out in couple of months. HIT is that when NAB / FBR will complete the cases about China Cutting, property scams we will see record low prices.
      Hopefully the second quarter of 2018 will be best time to buy properties at much low prices.

      Reply
      • i would humbly disagree with above analysis, its given on assumption. on ground things are different there is no property crash as such, although, there was some correction due to political instability in the country. but things are quite normal i.e Dha multan came down from 47-48 to 43 but again prices reached upto 52 now. BWP came down from 29-30 to 26 and now back on 29. similarly in Peshawar and DHA Phase 9 town where prices increased. same in gawader. due to CPEC passing trhough out the conuntry, coming week opeing of ring road ada plot lahore side, approval of yellow train from supereme court, properties around new airport islambad like mumtaz city , top city all will gain . so it can not be said there is crash or crack down going on. its was only due to political reasons and now settling down.
        i am not property dealer working overseas and only investor in different properties from last 15 years feel that it is the best time to invest in DHA Multan, Dha BWP, prism, top city, mumtaz city, prism, sangar, GEIDA, New town in gawadr to get almost double profit in coming 3 yrs. its simple not a rocket science to understan i.e multan installment files launched at 68 and cas file is around 50 today means after completion of installment in 3 yrs both will meet at minimum 68 so margin of minimum18 lac in 3 yrs is there. same for BWP today installment file is at 39/40 lacs and cash at 29 so and installemnts are going to be completed at end of next year means minimum maring is 12-13 lacs, am sure due to inflation installment file today at 39 will be at 50 so and both DHAs will have ballot during this period also which is plul point. same for peshawar ballot is on 25 Dec. so please give clear picture of the market with facts. thanks

        Reply
        • Malik
          Answer to you point the economic condition was artificial. Here rupee devalued by 2.6% in a single day.

          http://nation.com.pk/09-Dec-2017/rupee-devalues-by-2-6pc-against-dollar-in-single-day

          CRACKDOWN ON BLACK MONEY
          So SC cases against Mian Muhammad Nawaz Sharif & Imran Khan are for fun? ASSETS BEYOND MEANS.
          NAB investigating 100’s of illegal housing schemes and property scams is a fun too?
          FBR is collecting details of all who invested in property sector from 2014-17.

          https://www.express.com.pk/epaper/PoPupwindow.aspx?newsID=1104761578&Issue=NP_KHI&Date=20171124

          Everything is real. Crackdown is happening. Economy is down. 60% youth of unemployed but property prices are rising.
          One of my friend is builder. He has 1 Kanal house in DHA Phase 6 Lahore. Since January he is trying to sell. Price was initially 4 crore, now he is willing to sell at 3.3 crore. Still no buyer.
          PAKISTAN is moving in the right direction. Days of property buying with illegal money are long gone. Its the dawn of new era where only honest tax payers will buy property and that too on low prices.

          Reply
          • Dear no one is supporting illegal properties and there is no future ivesting in illegal schemes, their future is dark either there is crack down or not and there must be action against them, but it does not mean that when any fraud is caught that will crash property. its on going process,good schemes are still moving in positive direction. we should only guide public where to invest and what time to invest. property was down from last one year due to political reasons which are improving now.
            all current conditions in middle east and europe suppport pakistan bussiness especially property bkz most of overseas are coming back due to job loss and other reasons lie VAT has started in dubai and KSA conditions are already down these all support pakistan real estate as overseas mostly like to invest in real estate. your friend house nt sold ds not mean whole property is crashed,there could be other factors like more schemes and more options.

          • Malik
            There are 200 illegal housing schemes in Lahore. So please tell the readers where to buy?
            Europe is down so is Middle East. OK
            Rupee devaluation. You expert analysis. 2.6% fall against dollar in 1 day. 60% unemployed. So Unemployed must be buying properties this is why property prices are rising? DHA LAHORE transactions are 10% of what were in 2016.
            If you want to join the sinking ship no one can stop you.

          • dear unemploymnet is not new thing it is there from last 15 years so why prices were rising from 2013 and onward? who were buying at that time. i already mentioned above the schemes above which can pay good due to certain reasons. Dha Multa, BWP, Prism, Phase 9 town. i only trust DHA so can give feeback about that only.
            private schemes are mostly fraud and you must guide public about good ones not only saying crack down story. there must be balance way of approach as people trust the info your providing. things were down due to political reasons and are slowly coming back as gave examples above , you have some good info in your blog which i also appreciate thats why i am here.

          • Malik
            Try to understand, FBR is collecting the details of all investors/buyers who bought properties from 2014-17. REASON = Source of income.
            Most properties bought during last 4 years were with black money. Due to black money prices have artificially increased. So leave other factor. This news is enough to show the reality of Pakistan reality sector which is alcoholic of black money. Now NAB/FBR is chasing the black money so prices are falling. No one wants to invest in reality sector with black money as the will be caught red handed. Low investment in reality sector is low property price.
            Property prices will keep falling to the point where honest tax payers with white money can afford to buy again.
            Plots worth less than 50 LAC will see only price stagnation. Houses up to 1 crore will see price stagnation instead of price fall as demand is good. But luxury property is hit hard as its only the market of black money and no honest tax payer can afford to buy high end properties.

  2. What is your take on Bahria Karachi is it safe to invest and has property fallen there also what about DHA Karachi phase 567and 8 what should the value of a 500 square yard house cost
    When should be the right time to invest
    Pls advise

    Reply
    • Ali
      Bahria Town Karachi has stable market at the moment as prices are very reasonable. But speculation is high these days which is always considered as dangerous. But much prices fall will not be observed in BTK due to affordable prices. But we will see price stagnation for long time period.

      Reply
  3. how much Bahria Phase 8 Rwp will suffer in times to come
    as there are some zones/projects in Phase 8 which have no noc of RDA like dominion mall … but i dont know about rest of the zones/sectors which have no NOC

    Reply
    • Zarak
      There are hundreds of illegal housing schemes in Pakistan without valid NOC’s. NAB is investigating the illegal housing schemes and property scams nationwide. Prices are falling across the country. Some areas are hit hard while others are observing little fall. Bahria Town Phase 8 has normal prices. So price fall will be less observed. Prices will be stagnant for long time period.

      Reply
  4. Hafeez Sohail

    on   said 

    Sir, Yes sale of properties are reducing but the price per marla in canal bank harbanspura to jallo linked housing schemes are same like: 650000 to 1000000 per marla. Please inform us the future rate 2018-2019 prices of same area.

    Reply
    • Hafeez Sohail
      Its the start of the long process of property price fall. Things are changing for the better.
      Society prices will take a hit soon as NAB is investigating 200 illegal housing schemes in LAHORE. Will you buy plot in a society if you know that society is illegal or has no valid NOC?
      From 2018-2019
      Properties worth less than 50 LAC will see price stagnation as honest tax payers can afford to buy it but properties worth 1 crore or above will find it hard to attract buyer with white money.
      So property prices are falling already. Price fall is just slow in some areas but fast in the others.
      Always stay away from high speculation areas as chances of price fall in those areas in high and you might lose your investment.

      FBR IS COLLECTING THE RECORD/DETAILS OF INVESTMENT IN REALITY SECTOR 2014-17
      https://www.ghar47.com/2017/11/24/fbr-is-collecting-property-investment-details-2014-17/

      You can understand that black money will be soon out from real estate sector. This will have huge impact on property price as people with white money have low purchasing power. Due to which property prices will crash.

      Reply
  5. Muhammad Azeem uddin

    on   said 

    Dear sir,

    i just meet with one income tax lawyer and he told that what ever property any person buy or sell he must have to show in the RETURN OF INCOME TAX.

    if someone have not show in the income tax and it has been traced by FBR then it would 100% plenty , the money will be considered total income. at this moment if a tax payer have show income then according to law 35% tax will be deducted .

    so my question is that :

    1) The investor is investing very large heatedly , should not they know this law ?

    2) why not FBR are being started investigating in real estate sector now i mean end 2017 why nor from 2015- or 2016.

    3) why FBR have waste time two years ?

    4) honest tax payer are paying 35% taxes from their income and Black money holder are just paying 3% taxes to whiten money , is not their is 2 laws at the same time ?

    5) if someone goes in supreme court then how it will be justified ?

    6) Black money holder are large heatedly investing and making money where as honest tax payer are being using the laws and paying all taxes as per rules.

    7) it means those who is following rules are getting losses and this invite more people not to follow the rules.

    8) Supreme court is taking china cutting in karachi after 10 years why not SC have take action once it has been started.

    9) mafia have sold out plot to innocent people and run away from country,, now innocent people have lost their whole life income. who is responsible ? police ? or government authorities?

    Reply
    • Muhammad Azeem Uddin
      Pakistan is moving in the right direction. Its late but not too late. FBR has started to collect data about all investments in reality sector from 2014-2017. These measures are to discourage the black money holders. It will achieve two tasks;
      1- Blocking black money investment in reality sector
      2- Bringing the undocumented or shadow economy into real economy
      3- Increasing the tax network
      What I see in future, real estate sector will not be charming for people with black money as government will easily arrest such people. China Cutting cases by SC will stop the people from property scams as scammers will be nailed.
      In future houses are only for living not for speculation like STOCKS.
      Honest tax payers will be rewarded as they will be able to buy cheap properties.
      PRICE FALL IS WRITTEN ON THE WALL.

      Reply
  6. I haven’t seen fall in property, its been like 6 months you have been talking about fall in property, I am not sure where you have seen fall in property. Does any of the society have reduce their prices ? Dream Garden Lahore, far far away from central lahore but 10 marla plot price 1 crore same goes for etihad garden 10 marla plot 1crore, royal garden 8 marla 75.

    Please recommend me some options or get me in touch with some dealer I am looking for some investment options.

    Thanks

    Reply
    • Fahad
      Prices are falling day by day due to the ruthless crackdown on black money. 5 Marla commercial plot in Bahria Town Lahore was sold out at price 4.5 crore in 2015 but now no customer of same plot at even 2 crore. The prices you have quoted are at what society wants to sell. This is why these societies have not completed the booking even after many years of project launch. One state of the art apartment project in Lahore was launched in early 2016. Even the developer has reduced the prices but still prices are 35-30% down.
      Price of 10 Marla plot in Bahria Orchard Lahore was 55-60 Lac but now selling at 40 or even less. The prices you have quoted are as per the society not according to the open market. Developers can ask the prices as they wish but market properties are sold out after negotiation.
      Sty tune, more price fall is on the way as investor are fleeing.
      FBR has called the tax department to provide the details of all investments in property sector from 2014 to 2017. FBR is also collecting the details of investors to make sure they have bought properties with white money.
      Without black money property prices are falling.

      Reply
  7. Fareeha Jamil

    on   said 

    Sir
    Thanks for upgrades.
    There are news that NAB is investigating housing scams and SC has ordered the destruction of illegal developments in Karachi. Every agent is saying that property prices are falling, but why?

    Reply
    • Fareeha Jamil
      Yes NEWS are real.
      PAKISTAN REAL ESTATE MARKET DECLINE / FALLING PROPERTY PRICE
      Property prices in Pakistan are falling due to low investments in reality sector due to;
      1- Political unstability
      2- Economic decline
      3- Low remittances from Pakistani expatriates
      4- Crackdown of SC/NAB against illegal money as NAB is collecting the data of all investments in reality sector from 2014 tpo 2017. Simple question from NAB is what is the source of income or ASSETS BEYOND MEANS.

      https://www.ghar47.com/2017/11/24/fbr-is-collecting-property-investment-details-2014-17/

      NOW NO ONE CAN HOARD MONEY VIA PROPERTIES AS NAB WILL ASK THE SOURCE OF INCOME
      CRACKDOWN ON ILLEGAL / BLACK MONEY

      So without black money, property prices will keep falling to the point where honest tax payers with white money can afford to buy properties.
      End of SATTA culture in Pakistan reality sector.

      Reply

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