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5 Reasons of Pakistan Real Estate Market Crash

Top 5 Reasons of Pakistan Real Estate Market Crash

Real estate sector is generally considered as the safe heaven to park black money worldwide. It was same in Pakistan few years back. But things started changing when new real estate laws were introduced in Budget 2016-17. New laws increased the taxes on property transactions, property rates were revised and black money flow into reality sector was blocked. This blog outlines the top 5 reasons of Pakistan real estate market crash.

1-Crackdown on Black Money

The first major reason of property price fall in Pakistan is the ruthless accountability. There is zero tolerance for black money. People who have bought properties with black money are acquired about the source of income. Many politicians have been disqualified because they couldn’t show the money trail. As people with black money are afraid to buy property so investment is low in real estate sector. This has caused the property price fall nationwide.

2-Non-Filer property buying restriction

The government has maintained the property buying restrictions for the non filers in Mini Budget 2018-19. This has collapsed the luxury property market as its very hard to find the filer buyers. Secondly Overseas Pakistanis have to produce a certificate from the banks to prove that money was sent from abroad just 60 days prior to property registration. These 2 laws have decreased the investment in reality sector and prices are falling nationwide.

3-Naya Pakistan Housing Scheme

Pakistan needs 12 million new homes to solve the housing crisis whereas we are just building 200,000 housing units. The government’s plan to build 5 million affordable homes is hailed by every Pakistani. These houses are available on installments. People who were willing to buy properties in private housing schemes are now booking affordable homes. This development has reduced the volume of investment in private housing societies and real estate projects. Therefore we can see real estate price decline across Pakistan.

4-Increase in Interest Rate

The rise in interest rate leads to property price decline and vice versa. By observing the two real estate booms in Pakistan (first boom 2003-2006 & second boom 2013-2016) we can see the major impact of interest rates on property prices. The first property boom started with the decrease of interest rate to 7%. Property prices crashed when interest rate was increased to 9%. During the second property boom prices peaked in 2016 when interest rate was historic low at 5.75% and started declining with the rise of interest rate. Now interest rate stands at 8.5%. Another crash is just on the corner as people are depositing money in banks to earn profits instead of investing in real estate sector.

5-Illegal Housing Schemes

One of the reasons of Pakistan real estate market crash is the crackdown of NAB against illegal housing schemes. Many Pakistanis have lost their life savings due to property scams. But things have changed as new government has started to demolish the illegal constructions. At the same time many housing schemes have been sealed by NAB in recent pass. According to NAB there are 6,000 illegal housing schemes or societies in Pakistan. This has also reduced the investment in reality sector as people are afraid to buy properties in housing schemes. The ultimate result is property price crash.

Property Price Forecast

Pakistan property prices are 35% down from peak of 2016. Still another 30-40% price crash is expected as prices are still out of reach of most people. Many people think that such a massive price crash is impossible. They should know what has happened in Dubai. Property prices in Dubai are now AED 600 per sq ft whereas they were AED 2200 per sq ft in 2008. Property prices in Dubai are just 25% of what they were in 2008 because of new international laws that have blocked the black money investment. We will see similar property price trends in Pakistan.

Recommended:
House Price to Income Ratio in Pakistan

60 Comments

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    Reply
  2. Real estate advertisements in classified section of Sunday’s Daily Dawn newspaper have shrunk considerably over the last few weeks. Also, I have personally noticed some real estate agency shops closing in commercial areas of DHA – Karachi. Add to that the numerous recently completed (in last 3-4 years) high-value apartment blocks dotting the Clifton landscape – that simply refuse to show signs of life even after lapse of so much post-completion time, and the large houses in all phases of DHA-Karachi that are not selling even though they have been on market from periods ranging from 10 months to 1.5 years & beyond.

    Brokers have been calling people begging them to check out this property or that but to little or no avail.

    The entire structure that supported unreasonably high values, is collapsing.

    From a government clerk to high corridors of bureaucratic & political circles that thrived on daily intake of black money running into billions, business owners small, medium & large that cheated on taxes, and a variety of other negative forces in society – all had contributed over the years in giving unnatural boosts to property market.

    It is that structure which is caving in now.

    And unfortunately, it has also coincided with the periodic down cycle of the market.

    Hence, what we have are sky high property values with their supporting (negative) pillars yanked out from underneath. Consequently, investors now have tons of money trapped. Almost the entire community of potential buyers is either on bail, or run away abroad, or desperately trying to liquidate hard assets before FBR / NAB gets them, or trying level best to remain below radar (which means not buying high value properties anymore).

    Under ordinary circumstances, investors could hope to hold on to properties during market down swings to wait for upswings. But this time it’s the corruption-riddled structure that’s disintegrating. It means even when property up cycle commences after a few years, it would likely not benefit investors who hold out.

    Let’s look at average values of a 1000 square yards house in DHA – Karachi, over the last 20 years:

    1998 Rs. 80 lacs (old) Rs. 1 crore (new)
    2008 Rs. 3 crore (old) Rs. 4 crore (new)
    2013 Rs. 6 crore (old) Rs. 7 crore (new)
    2018 Rs. 12 crore (old) Rs. 22 crore (new)

    Of what I know of white money and the relative percentages of rich, middle class, and poor segments of society and the legitimate demands they could assert with legal resources, the above values as they exist in 2018 … are simply not sustainable. As it is, for the vast majority property is always expensive given available resources. Still, one could say that the above values made some kind of sense (albeit an expensive one) up until 2008. Beyond that, the values are doubling & trebling in shorter periods of time. Of course some black money has always been present in property market but the exponential upward trend over last 10 years implies rather heavily that black money really came into its own during this period.

    Now as the universe re-asserts its balance, property values would have to be aligned (read fall) in accordance with legitimate demand.

    Well, it would be naïve to imagine that an investor trying to sell his property for Rs.22-25 crores would sell out at a level that existed 10 years ago. But that might be where the real economy stands. Therefore, he would likely be unable to sell for a long time.

    Could he sell at a level that existed 5 years ago? This too, would be too steep a loss for him.

    Here’s what my personal view of the situation of a stuck investor of a brand new 1000 square yards DHA – Karachi house, who’s asking price is from Rs.22-25 crores:

    Reduce price by 10% to Rs.19.8 – 22.5 crores
    Highly unlikely any buyers would take the bait

    Reduce price by 20% to Rs.17.6 – 20 crores
    Perhaps 1% probability of deal in next 12 months

    Reduce price by 30% to Rs.15.4 – 17.5 crores
    Perhaps 10% probability of deal in next 12 months

    Reduce price by 40% to Rs.13.2 – 15 crores
    Perhaps 20% probability of deal in next 12 months

    Reduce price by 50% to Rs. 11 – 12.5 crores
    Perhaps 40% probability of deal in next 12 months

    Reduce price by 60% to Rs. 8.8 – 10 crores Perhaps 80% probability of deal in next 12 months

    Reduce price by 70% to Rs. 6.6 – 7.5 crores
    High probability of deal in next 12 months

    In other words, it means if an investor-seller really wishes to make a deal over next 12 months, he’ll have to lower price to levels that existed 10 years ago (or 70% discount). Did we not say earlier that this would be naïve thinking? So most likely, he’ll keep playing with a 30-40% price reduction and hope for best; however that would mean it could take him 3-5 years to close a deal … which due to time value of money would amount to same loss as immediately going significantly lower.

    Let’s assume such a drastic price reduction (to levels that existed in 2008) would not come about. What then? Would he take a hit by selling at levels that existed 5 years ago? In an ideal world from his point of view, he wouldn’t even think about it.

    But unfortunately for him, this is not his type of ideal world anymore and he might just be forced to ultimately sell at levels that existed back in 2012-13 …. in combination of direct nominal terms and by virtue of time value of money . That’s still a massive loss to him. I mean it still sounds crazy that a seller with a property that he had been trying to sell for say, Rs. 22 crores, sells it for around Rs.7 crores (or 70% lower)!

    As weird as it sounds, but it is also not unheard of.

    Nowadays, we even have our bloated, untaxed, unethically rich people discarding / abandoning their SUVs and sports cars … in an effort to keep themselves concealed from FBR / NAB. Real estate is a bit more difficult to conceal than a sports car. Hence, many of our esteemed so-called ‘investors’ would ultimately even sell off their properties at steep losses … if it means either that or total loss (read jail or confiscation of illegal wealth).

    So a 50% price reduction, or even a 70-80% reduction (price levels of 2012-13) is not an impossible thing in our changing universe (which is changing for the better after decades).

    Like it or not, Mr. Investor shall have to take massive hits.

    Reply
    • Good read Hasan… How soon do you see these pillars collapsing so property prices fall dramatically which i believe will be the best time to buy property for someone with legitimate hard earned money?… I wish that happens tomorrow but this mafia has been able to get away all the time bcz of their deep pockets and high influence. Market is very unpredictable, dealers are still not giving up and still trying to fool people that no property crash is coming ahead!!!

      Reply
      • As we know, property market is usually riddled with ambiguities to begin with and then on top of it, it is generally ‘fixed’ by vested interests. It means market does not behave in accordance with dictates of real demand and supply. Both demand and supply sides are manipulated.

        At least that was the story until recently.

        Now, the various Mr. Fixers are in trouble because our country is unbelievably morphing into a better state. Events (good, positive things) considered impossible for decades have happened over last 3 – 4 years. And the pace is picking up, further shrinking the space for negative elements in society.

        Anyway, what it all means for property market is that it has come under tremendous pressure.

        So shouldn’t people be able to buy plots and houses at much cheaper rates, within their legitimately available resources?

        Yes and No.

        First of all, the property values had artificially risen to such astronomical levels over last decade that it is psychologically very difficult for sellers to suddenly go 50% or 70% lower. Most sellers become mentally ‘anchored’ to the highest possible value of their property ever attained and find it difficult to sell at levels more than 5 – 10% lower from that point.

        So it takes a while. Sometimes months, sometimes years; and happens at different paces for different properties & for different types of sellers.

        Hence, even when market is under a great deal of pressure, there would be cheap deals at one place, while other places would keep holding on to former glorious price levels (that may not exist anywhere in real world now, but have still left an anchoring effect on sellers’ minds).

        Then what should a potential buyer do?

        Well, I would recommend the following approach; could modify it as per your preference. However you do it, but note that the third point in list below is of paramount value.

        1/ Do not get fixated with a specific property. That particular piece may not be available at a significant discount even in a down market. Think broadly. For example, in DHA – Karachi there are tens of thousands of houses & plots. Do not pick one house; instead pick 5 houses (or even 10) you like reasonably well and make appropriate offers to respective sellers. It might unfold as follows:

        – A third of the sellers would scoff at your low offer, tell you to take a hike & and won’t bother talking to you again. No worries, leave it. There are many more out there.

        – The next one-third would want you to increase your offer; that is they’ll continue negotiating. In the end, a desirable result may or may not materialize.

        – The final one-third would even offer you lunch and most respectfully ask whether you could slightly raise the offer so that they may discuss with their family before a final decision.

        You can divide above into more sub-categories.

        So one particular seller may not agree to your offer. Doesn’t matter; keep moving. DHA is very large. The next seller might be more amenable to your offer. And so on. Ultimately, you’ll get to property you like fair enough, where after you have placed your serious offer on the table, the seller would be willing to settle.

        More specifically, sellers of brand new properties would find it difficult to come down too much. However, people selling older properties (e.g. 10, 15, or 20 year old houses) might be more inclined to see world from your lens. They might have bought / constructed e.g. their 20-year old DHA house for about Rs. 80 lacs to 1 crore. Now, they or their children might be willing to sell it for Rs. 8 crores or so. For them it’s a psychological ‘gain’.

        Some older houses are much more nicely constructed than brand new ones.

        However, a seller with a brand new DHA house asking Rs.22 – 25 crores would not wish to sell at even Rs. 12 crore, as to him it would be a huge loss. Well, he’ll hold on to the hope of a better price for longer periods of time. But as I have written earlier, things are getting quite ugly for many of our esteemed ‘investor-sellers’. A vast majority of them (not all but perhaps 80% of them) have reached their exalted status in society via various unscrupulous means. Unfortunately for them times have changed …. and the Courts, FBR, NAB et al understand that well enough. Since this sounds rather vicious & mean, so we’ll bid the unscrupulous lot plenty of good luck in holding on to their lofty asking prices for the vast numbers of invisible & steadily disappearing buyers.

        2/ Ignore the brokers. And I mean almost completely ignore them. They will keep telling you market is as robust as ever even right before Doomsday; and perhaps after that as well. So take their indication of market health & prices with not just a pinch of salt but with a mountain worth of that fine white stuff.

        Instead believe with determination in your own first hand observation, analytical skills & good judgement.

        3/ Finally (the paramount value point), a home is a very important deal in a society specially for people with legitimate, hard earned incomes. Go with a pure heart in the market and the Lord shall surely help. You’ll be surprised what a nice property you finally end up with that had seemed impossible given your resources, yet somehow it shall be made available to you. How that happens, leave that part to Him.

        Genuine buyers should not despair. Be patient. Good times are here; in patches here & there but shall be becoming more & more pronounced & widespread over time. This time the mafia cannot turn the tide or ‘fix’ it.

        Reply
        • Hasan
          Pakistan Mini Budget 2018-19 was passed on 3rd of October 2018. Within 2 months DHA Dealers now accept for first time that prices have decreased by 20 LAC in all phase; Price of 1 KANAL OR 500 SQ YARDS PLOT. This is 10 LAC decrease per month. This is just the start of the large process that will take many months to complete.
          Price fall is written on the wall because without black-money investment the abnormal prices are unsustainable.
          Many dealers now openly discuss that their future is bleak. Now they claim that after the new laws transactions have reduced significantly and they will close their offices if the same trends are observed in the month of December.
          2019 will be the worst year for real estate sector. Now market is correcting itself to the new reality; the purchasing power of the filers.
          PAKISTAN REAL ESTATE SECTOR FUTURE IS NOT DIFFERENT FROM THAT OF DUBAI REALITY MARKET. WE WILL SEE 60-75% PROPERTY PRICE FALL IN PAKISTAN AS HAPPENED IN DUBAI.

          Reply
        • Farooq Lari

          on   said 

          Thank you Hasan sb. Your article really made my day as I cling to the blessings and hope with Allah. I am facing similar situation in Lake ity Lahore where I want to buy 5 marla plot but the dealers seem to increase prices every now and then i.e. Rs. 35 lacs (May 2018) now to Rs. 48 lacs (Nov 2018). I am really sad at this situation and do not know how to handle this issue to buy plot for home construction. I seem out of place now with my budget of Rs. 37 lacs for the plot.

          Reply
          • Lake city is good project but dealers and management is very smart, you will see new plots launch every now and then for an ever-increasing price while those who previously invested in the same category are ready to sell their files in minus but no buyers. Even lake city won’t buy that back from investors. Lake city has taken its due time to develop however they are capitalizing the new approach they got after LRR. This so called boom is less likely stay for long there.

    • Hasan
      Excellent and very detailed insight.
      People are unable to understand the crisis caused by new laws;
      1- NON filers buying restriction OF 5M
      2- Foreign Pakistanis have to send money in last 60 days
      PLUS
      Crackdown on black money
      All the developments have reduced the investment in real estate sector due to which property prices are falling.
      Pakistan real estate market only thrived in black money. Without black money we can see the price fall across Pakistan.
      50-70% correction is normal as we have example of Dubai real estate prices that are 75% down from peak of 2008.
      INFACT
      In my area builder wanted to see 4 MARLA / 100 SQ YARDS house at 145 LAC. The latest offer now he gets is 90 LAC.
      Things are moving for better. Speculation has ended in real estate. Now market will be real and mature.

      Reply
  3. شہزاداحمد

    on   said 

    محترم ملک صاحب
    میری راے آپ سے 100 فی صد مطابقت رکھتی ہے کی پراپررٹی کو زوال آگیا ہے.
    بہت لوگوں سے ماضی میں پراپرٹی میں خسارے کی بات ہوتی تھی تو وہ کہتے تھے کہ زمین خریدنے میں کبھی نقصان نہیں ہوتا. پلاٹوں کی قیمتیں کبھی نیچے نہیں آتی رک جاتی ہیں. اگر گاہک نہیں تو پراپرٹی ہولڈ کر لیں جب
    قیمت مستحکم ہو تب بیچ دیں یہ ماءنڈ سیٹ کب بدلے گا.
    نان فاءلر پلاٹ نہیں خرید سکتے. لیکن جو نان فاءلر کروڑوں کے پلاٹوں کو بیچیں گےوہ اس کی رقم کا کیا کریں گے

    Reply
    • Sehzad Ahmad
      MARKET SITUATION:
      1- Record low transactions
      2- No buyers in the market
      3- Non filers are in panic as FBR is sending the letter for taxes
      4- NAB is after the illegal money to know the source of income
      5- People are forced to sell property to invest in other sectors
      6- People are depositing money in banks due to the rising interest rates and profits
      CHANGING TRENDS:
      Things have changed considerably as people know understand that property market was booming on black money. Without black money we can see the price fall. People who want to hold property have to wait for 4-5 years to see any property price rise. With the passage of time people will understand that real estate sector is not as profitable as once it was.
      The old property boom will never happen in Pakistan. No market will be more stable and only for the genuine buyers are old days of speculation and day trading have gone.

      Reply
  4. Ahmad

    on   said 

    Malik Sb,

    I completely understand that in Bahria Town Karachi business (transaction) of real estate is almost zero because of SC hearing. My question from you is that do you have any idea how long it will take to announce final verdict about BTK. Is it before Jan when honorable SC chief justice will retire or it will prolong little bit more.
    Thanks

    Reply
    • Ahmad
      It might take lot of time. The real issue in not Malik Riaz or Bahria Town. Property mafia, politicians and media owners are involved in this big scam. Malik Riaz is just the front man. So the case will engulf many other people too this is why it will take some time.

      Reply
  5. nazish fatima

    on   said 

    Dear sir,

    nowadays there is in operation against illegal encroachment and due to this, i have seen that there are many shops at Karachi including Saddar have been demolished.

    kindly told me that

    1) houses which are been made in parks and given the well-known name china cutting would be also demolished. or this operation is only for shops

    similarly, can you answer why the govt has taken very fast action against these shops as well railway also removing encroachment though this encouragement is about 30-40 years old.so after 40 years why the govt becomes so quick?

    Reply
  6. muhamamd azeem uddin

    on   said 

    Dear Malik sahab,
    I meet one person who lives in lahore is working as a manager of a company having few investors are the owner.He told that they only invest to buy plots of coming/ launching housing societies on the bigger way like 200/ 300/ 400 files and just hold few months and later start to sales it again. In this way, they are making a lot of money. The owner is belonged very political influence and elected members.

    my question from you
    1) in coming income tax laws and property laws as the government want to stop black money from the property sector,, how this kind of investment government can be block or FRB can trace it.
    2) this kind of investment the person are not paying any taxes to the government because it is just a flying of files business.

    3) is this manager is making us fool and is it right and it is possible and already others people are doing like this.

    4) A labor whose earning is RS 15,000/ monthly is paying sales tax on buying every kind of consumer product like powder milk, soap, tea, cooking oil, etc and on other hand, people are making a lot of money and nothing paying to government??

    hope your valuable points will highly be appreciated .

    Reply
    • Muhammad Azim Ud Din
      The trend of past not now. Things have changed now.
      NOW
      Buy illegal property NAB is after you.
      Dodge the tax system ASAD UMAR is after you.
      Construct illegal building SHEHARYAR AFRIDI will not only demolish the building but will also break the legs of the mafia.
      WHAT IS HAPPENING TO THE BULK BUYERS:
      An estate agent who had invested 6 crore in a society on ferozepur Road Lahore his investment is reduced to 60 LAC due to price fall as society was declared illegal by NAB. He had recently revived the letter to pay huge taxes.
      EVERYONE SHOULD KNOW THAT GAME IS OVER FOR MAFIA.
      KHAN’s 100 DAYS RULE MESSAGE = Obey the law or we will make you an example for others. Mafia is in panic so low investments in reality sector. This is why prices are falling day by day.

      Reply
      • Shaukat

        on   said 

        Sir can you help me locate a society where prices have gone significantly down as I need to buy plot for construction of house? I have been following your thread and delaying my decision to purchase in anticipation that prices will shrink but nothing has happened. Prices are going up every day and I dont know how but people have been holding their property even if FBR is after them. No where in lahore DHA I see any property that have declined. Sorry but what we have at hand now is just a loss that we shall have to pay extra because we didnt buy in time.

        Reply
        • Shaukat
          DHA Phase 8 1 Kanal price now at 180 LAC from 255 LAC.
          Phase 7 is also down
          6 is also down.
          Massive crash in Bahria Town Lahore. Dealers are begging but no one want to buy property there.
          AL KABIR TOWN PHASE 2 Plots in minus.
          Prices in DHA Lahore has decreased by 20% in just last 2 months. Major reason is that its hard to find a buyer who has legal money and is filer.
          I WANT TO SEE A SINGLE BRAVE MAN IN PAKISTAN WHO CAN DARE TO BUY PROPERTY WITH BLACK MONEY IN DHA LAHORE!
          WHO IS GONNA ACCEPT THE CHALLENGE?

          Reply
          • Shaukat

            on   said 

            I saw a few plots in R block of Phase 7 of DHA Lahore 3-5 months ago which were all around the price of Rs. 140 lacs however all of these plots have gone up to 170 plus. Or at least thats what they are demanding now…. nothing available in R block less than 155 lacs.

          • Shaukat
            Call the dealers and tell them you want to sell plot then see their offer. No buyer in the DHA Market.
            Dealers are living hand to mouth many have been given legal notices to pay rent to leave the offices.
            State bank will increase 1% interest rate next week. So price crash is everywhere.
            If you can’t see then we can’t help.

  7. Rustam

    on   said 

    Malik Sb.
    Thanks for a very logical analysis of the current real estate market and convincing responses to the questions raised.
    Accordingly, I am keeping my fingers crossed until 2020, to wait for an appropriate opportunity, as I am intending to buy a plot for farm house in Karachi.
    BTW, I am interested to receive offers of sale of farm house plots.
    Thanks

    Reply
    • Rustam
      PAKISTAN REAL ESTATE MARKET BEHAVIOR:
      Pakistan real estate market is dead. This is because Pakistani reality sector never matured in 71 years history of Pakistan. Pakistani property market worked only one principle, ‘BLACK MONEY THE INTERNATIONAL HONEY’. Whereas property prices in Pakistan were always abnormal due to the presence of strong property mafia and huge influx of black money.
      First time in history of Pakistan black money is checked. By new laws made by former and new governments, non filers can’t buy property worth 5 million or more and everyone has to show the source of income. These two laws have broken the back of abnormal reality market.

      PEOPLE WHO WANT TO BUY PROPERTY SHOULD UNDERSTAND DUBAI REAL ESTATE:
      Dubai property always thrived on black money. But with the new laws introduced by amnesty international now countries have to share the details of the people who invest in foreign countries. Once black money is out we can see that Dubai property prices are just 25% of what they were back in 2008.
      The situation of Pakistan property market is same ad that of Dubai.
      Property prices are falling.
      Investors should wait for the prices to bottom out.
      If we keep in mind the 10 years cycle then property prices will be record low in 2019 as were in 1009. But stagnation might be longer than the previous recession. Therefore no hurry to buy property as prices seen in 2016 will not recover soon.

      Reply
  8. Can you guide us on sangar housing scheme. What is the current market situation in gawadar. When will be the right time to invest there. Also, what is your opinion about investment in pak china enclave.

    Reply
    • Syed
      This is not the right time to invest in Gwadar due to 3 reasons.
      1- Prices are in decline.
      2- NAB is investigation 100’s of illegal housing schemes in Gwadar and across Pakistan.
      3- The developers have not developed the projects on time.

      Reply
  9. Zahid Ali

    on   said 

    I just chat one person on facebook who want to sell his 120 Sq. Yard plot in Noman Royal City near Surjani Town Karachi. The builder is still selling the same 120 Sq. Yard plot in 2.25 million, however this person want to sell his plot in 1.55 million but still unable to sell his plot. Although the builder is selling the same in 2.25 million but the builder is not interested in purchasing this person plot in 1.55 million. It means that builder is sure that even if he purchase plot in 1.55 million, he cannot sell the same plot more than 1.55 million in the current market situation. Moreover, the builder also have plenty of plots which he has to sell. In the current market situation, the builder can only sell his few plots to some naive parties. This needy person even ready to sell his plot on installment and maybe he can further reduce the demand.
    Conclusion: The genuine property holder is unable to sell his plot even in 30 percent less than what builder is demanding for the same plot and builder is not interested in purchasing the same plot in 30 percent less price.

    Reply
  10. Abdullah

    on   said 

    Sir,
    Excellent analysis. There are certain other factors which have been missed in above article. Rupee has devalued 26% against dollar in current financial year which means any asset owned in our country has lost 26% in dollar terms if its price hasn’t appreciated. Pakistan stock is in bear market territory as it is more than 20% below peak. In all property bull market, money flows from stock yo property which is not going in next couple of years as stock market is not going up for last couple of years.

    Reply
    • Abdullah
      Thanks for your views.
      I agree that investors have already lost huge money in real estate sector.
      Inflation is the best tax system as people never protest and governments can easily collect money.
      Pakistanis are now 25% poorer from 2017.
      Property prices we saw in 2016 will not be recovered till many years to come.
      I know a dealer who is riding a bike after selling his PRADO.

      Reply
  11. muhamamd azeem uddin

    on   said 

    Dear Malik sahab,

    kindly read read theartilce :https://www.express.pk/story/1427730/6/

    the govt is collecting date from different sources, and FBR is active to collect tax, if govt is serious according to this article, then i am very strange about to see the prices of home and an open plot that all still not going downward. Because it is everyone knows that house and open plot prices are all is based on BLACK MONEY.

    Reply
  12. Nazish Fatima

    on   said 

    Dear sir,

    Read the article : https://jang.com.pk/news/577130-imtiaz-alam-column-18-11-2018.

    and according to the write the interest rate would go up to 14% and GDP will lower in the region.
    As well as population rate is become high .

    what you will think and comments about it regarding REAL ESTATE prices coming year 2019 in pakistan.

    similarly in international news : it has always commenting many popular write that housing bubble just near to coming in Australia , USA and china also.

    is their any impact for this in pakistan or not.

    Reply
    • Nazish Fatima
      I have already described that world is near to new recession might be in 2019. Like old recession of 2008 property market will first fall and we can see the signs. If you remember during last recession property prices declined massively in Pakistan.
      Interest rate increase always decreases the property prices.
      So as per the scenarios Pakistan property is falling and we will see Dubai style crash. Already prices are 35-40% down from the peak of 2016.

      Reply
  13. Dear Malik sb,
    What you have been saying for quite a long time now makes complete sense but allow me to please challenge the scenario because in reality I see prices see struggling and not going up but not falling either. Prices are exactly where they were few months ago if not gone up. What do you think are the reasons that have been holding the prices and not crashing?

    Thanks

    Reply
    • Umer
      You are talking about the small properties worth under 5 million PKR. Due to new laws, non filers can buy property up to 5 million PKR. Small properties also have low sleculation. So small properties have strong demand and prices are stable.
      WHEREAS LUXURY MARKET IS THE REAL VICTIM:
      Large properties are the real victim of ruthless accountability and crack down on black money. In DHA Karachi the most expensive area for living in Pakistan, prices are 40% down from the peak of 2016.
      Same is true in Lahore and across Pakistan.
      Other posh societies have also seen major price crash.
      LAST DAY A GUY TOLD ME THAT A DEALER IN DHA LAHORE HAS SHOT HIMSELF BECAUSE OF MASSIVE LOSSES FROM EARLY INVESTMENTS.
      Dealers are also hit hard.
      PROPERTY TRANSACTIONS ARE RECORD LOW IN PAKISTAN.

      Reply
      • Sir,
        When will be the right time for investment in real estate?
        I am working in GCC country & having job threat and may come back in Pakistan in 6 moths. What kind of business you recommend. By the way, I am Civil Engineer by profession touching 50 year age. Kindly respond.

        Best regards

        Reply
        • Nazir
          The best time is always when its buyer’s market as prices are always low. Currently prices are falling so time to hold back investments and watch the price trends. You are living abroad so know the property situation of DUBAI where prices are 75% down from the peak of 2008. Pakistan is facing the same crisis and according to new laws non filer can’t buy property worth 5 million PKR or more.
          BEST TIME TO BUY PROPERTY IN PAKISTAN WILL START FROM 2020.
          The best way to hedge your money at the moment is Gold. The prices will shoot high as happened during the last recession when per tola gold prices increased from 17,000 to 38,000.

          Reply
          • Iftikahar Ahmed

            on   said 

            Malik sb

            allow me to say it bluntly, there is no price decrease in Karachi just very few deals are happening. i have been following your comments for a while you were predicted end of 2018 and now its gone to 2020 . your analysis is based on hearsay as far as karachi property is concern .
            I don’t see any decline in near future .

        • muhammad azeem uddin

          on   said 

          Nazir sb

          you can start your own business because pakustani market have space in your field. still people have hunting honest enterpreuner. in this way you can serve the people in good manner.
          you will be in better positiin to invest your own money once you involve in market personally.

          first start consulting business and make a team. in this way you can also be able to generate job for others.

          Reply
          • Nazir

            on   said 

            @Muhammed Azeem UdDin sahab,
            First of all thank you very much sir for your time and honest advice.
            I am little conservative in opening a consultancy as though, I studied design while studying but in my whole professional carrier I am involved in construction (project execution, tendering/ pricing, bidding). I want to start construction business rather consultancy (which might be started later). Is it good time to kick off construction business in Pakistan Kindly advise if time permits you.

            Best regards and again thank you sir.

      • Agree 100%.

        But i just called a dealer in phase 6 for buying a plot in phase 7. Guess what prices have actually gone up from what they were 2 months back. I am not understanding bcz everything you say makes a lot of sense but still sellers are not dropping prices and someone like me who wants to buy plot for construction would rather lose on the construction cost as thats also increasing day by day.

        Reply
        • Umer
          DHA Dealers have started other Businesses. Who are left want to jump the sinking ship as soon as possible. This is why asking the bug money so they can replace the real estate business with someone more profitable.

          Reply
          • Sir but how do I know the real price and actual demand of seller because our market is in the hands of brokers and they decide the market value of a property. So even if we know that dealer is asking higher value and market is on the verge of a crash, we have no other way but to rely on what he tells. this is a vicious circle they have created, is there anything anyone doing to break this monopoly of dealers?

          • Umer
            The only solution is;
            1- Go to different dealers and tell them you want to buy a plot for example 10 MARLA / 250 SQ YARDS.
            2- Call the dealers after few days to ask that you want to sell plot of 10 MARLA / 250 SQ YARDS in the same society..
            Dealers will give you the different prices if you want to buy or sell the same size plot. The market price of the plot is on which dealers will sell your plot.

      • M ANWAR

        on   said 

        Sir, strength ur comments with some sort of data.
        what were prices in 2016 and what are now.
        without data, ur comments are not appreciable as in actual, prices are increasing.

        Reply
        • M ANWAR
          If prices are increasing then don’t waste time. Just buy to sell it letter at high profit.
          I have a plot for you if you are interested.
          5 MARLA COMMERCIAL in Tipu Block Bahria Town Lahore.
          Price was 4.5 CRORE IN 2016.
          Now you can buy for 180 LAC.

          Reply
  14. Shaista lodhi

    on   said 

    Sir
    I am trying to sell my plot in DHA Islamabad. But no calls. Dealers say reduce price. Please tell me what is wrong. Its third month but no progress.

    Reply
    • Shaista Lodhi
      Market is almost dead due to ruthless crackdown on black money. As per new laws non filers can’t buy property worth 5 million PKR or more. This is why now properties sit more on the market before changing hands. Actually hard to find filer buyers.

      Reply
  15. muhamamd azeem uddin

    on   said 

    Dear malik anwar sahab,

    Yes what you have write is 100% correct according to to the economic laws.But i have seen that at pakistan the market is become very abnormal. I mean

    1) Inflation is become very high.
    2)Economic growth is quite slow
    3)export is going downward trend
    4)employment ration is quite higher

    in the whole scnerio it has been noted that real esate market is going higher and higher.

    RESULT: Local manufacturing set up just to end, nobody want to set up industry every one want to invest real esate because the RETURN is quite high and no work. PM and Finance minister sometime say Saudi arabia will give USD, some time say china will give USD and some time say UAE will give USD. some time says Malaysia will give USD.

    But if i look the whole world no country PM and finace minister says like this. Every one want to make money themselves.i mean they make policy and from this policy their export will become grow.

    my question is from you:

    1) Still today i did not see any price fall in the karachi market because i live in karachi and i get in touch with estae agent.

    As well as i look always Zameen. com , but i see price is stable and it seems it is quite FIX, like 120 sq/yard home = RS 120 lakh.
    So it is quite easy for everyone to calculate price = if some one want buy home 240 SQ/ yard then he first check his bank balance RS 240 lakh and similarly for 500sq/yard home RS 500 lakh.
    can you imagine if someone show on income tax return profit 500 lakh then in my knowldge he will have to pay government RS 175 lakh as form of income tax.

    it means PM and finance minister dont have need to go and request for money.

    And would you think how many people can become afford to buy 500 lakh property , if a medium size companies CEO not have 400 lakh and average salary in pakistan not more than 50,000.

    Conclusion: in my opinion , the prices are sky rocket is beyound to understand or it is a conspericy of the enemy of pakistan to increase deliberately and make pakistan from a manufacturing country to a Trading country.

    Reply
    • Muhammad Azim Uddin
      Now a days just enjoy the music. Keep an eye on Bahria Town; the society is almost dead. No sale purchase. This is the start of NEW ERA FOR PAKISTAN REAL ESTATE as I predicted years before. Property prices are now declining on daily basis.
      END OF PROPERTY MAFIA
      END OF SATTA CULTURE
      END OF SPECULATION
      JUST ONE RULE;
      SHOW THE SOURCE OF INCOME otherwise you are in jail.
      Therefore only genuine buyers in the market.

      RECORD LOW TRANSACTIONS;
      Transactions are record low in DHA Lahore and Cantt the posh areas of Lahore.
      This is the first time that property prices in Lahore cantt have dropped by 30%. In last recession LAHORE CANTT property was crash proof.
      WHY THIS TIME?
      CRACKDOWN ON BLACK MONEY + NON FILER RESTRICTION + PENALTY WHO WILL DARE TO REGISTER PROPERTY OF NON FILER.
      NO ONE IS INTERESTED TO INVEST IN A MARKET THAT IS CRASHING.

      THE NEXT STAGE;
      IK has recovered a lot of money from the traitors and money launderers.
      NAYA PAKISTAN HOUSING PROGRAM; house construction will start from 1 July 2018. This will further collapse the property prices.
      PAKISTAN WILL WITNESS THE DUBAI STYLE PRICE CRASH WHERE PRICES ARE JUST 25% OF WHAT WERE IN 2008.

      ESTATE AGENTS;
      1000’s of estate agents have closed their agencies in Lahore. Many have lost their life saving.
      One estate agent invested 6 crore in a housing scheme on Raiwind Road Lahore. His investment worth is now 95 LAC.
      Many have sold their homes, cars and jewelry. Met an estate agent who had bought “Toyota Land Cruiser Prado” in 2017 and now riding a bike.
      Just told me that his condition is the condition of property market in Pakistan.
      MOST ESTATE AGENTS IN DHA LAHORE WHO HAVE MORE THAN 20 YEARS OF EXPERIENCE CLAIM THAT THEY HAVE NEVER SEEN SUCH A BAD CONDITION. THE SITUATION IS WORST THAN CRASH OF 2005-8.

      Reply
      • Ahmad

        on   said 

        What will happen to those who invested in BTK their life savings. Who will be responsible government or state institutions for not taking right decision at right time. How Bahria managed to do illegal activity at such massive scale.
        Cheers

        Reply
        • Ahmad
          The real trouble makers are the officers of LDA, CDA or KDA. They must be nailed. They were involved in all illegal activities. I feel sorry for the people who have invested in Bahria Town. As per my sources investors are desperate to sell files / properties but no one is willing to buy. Same this trend will be seen in other societies as there are approximately 2-3,000 illegal housing schemes in Pakistan.
          PROPERTY PRICES ARE ALREADY CRASHING NATIONWIDE.

          Reply
      • shahbaz

        on   said 

        sir your analysis is 100% true and as per the economic conditions and policies of Pakistan, i must really appreciate your thorough analysis and deep thinking and the close eye on property market. i want to share an article published in the economist december 2018 issue about american property market “The American housing market is having a wobble. Don’t be alarmed”. please share your email address.

        thanks.
        shahbaz

        Reply

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