PAKISTAN REAL ESTATE FORECAST 2020
2019 was a bad year for Pakistan Property Market as prices continued to decline but worst is yet to come. Buyers / investors want to know about the best time to start investing. Whereas sellers want to know that why their properties are not attracting the serious buyers. This blog will answer all questions with Pakistan Real Estate Forecast 2020.
CURRENT TRENDS OF PAKISTAN REALTY SECTOR:
Volume of Property Transactions
Volume of real estate transactions is the best indicator about the market condition. Currently transactions are record low. In 2016 there were 150-200 daily file transfer in DHA Lahore but now only 15-20. The situation is the same in other housing schemes and localities. Low real estate transactions means low investment that leads to price decline.
Condition of Real Estate Agents
Estate agents are worst hit by the slowdown of real estate market. About 40% realtors have left the field due to extremely low income. Agents turned investors have sustained huge losses due to price crash. Realtors claim that recent property crisis is more severe than the property price crash of 2005/6.
Market Shifts from investors to genuine buyers
In Pakistan property files were traded as the stocks and shares on daily basis. But now property market has moved from investors to genuine buyers. The only buyers in the market are those who want to buy a property for living. This shift has also ended the speculation so prices are cooling down.
THINGS THAT WILL IMPACT PAKISTAN REAL ESTATE MARKET IN 2020:
FATF pressure to control black money
Globally real estate sector is hailed as the safe heaven to park the ill-gotten black money. In Pakistan people were used to invest black money through Benami Assets. But things have changed now as government has made the laws to curb black economy due to the pressure from FATF. The efflux of black money from realty sector will decrease the property demand so prices will crash.
Political Condition
Political stability is very important as investors hate uncertainty. People never invest in countries with political crisis. Pakistani political situation is very bad as there are regular protests against the government. Even there are news that parliament can be dissolved at any time. Under these circumstances we can assume that where property prices are heading.
Economic Condition
Economy also plays a major role in determining the property prices. Booming economies create good paying jobs. People move to the areas for aspiring jobs and real estate demand increases. High demand means high property price and vice versa. Currently Pakistani economy is not stable so don’t dare to bet on property price increase.
PAKISTAN REAL ESTATE FORECAST 2020 PRICE TRENDS:
Since 2016 property prices are approximately 25-50% down. DHA Commercial Broadway Lahore 8 Marla / 200 SQ Yards plots were selling at 12 crore but now no buyer at even 5 crore. DHA 9 Town 5 Marla plots are now selling at 50 LAC; declined from 85-90 LAC. DHA 9 Prims Plots are selling at 30 LAC. Same trends can be observed in other phases.
The efflux of black money has totally crashed Dubai real estate market as prices have declined by 75% from the peak of 2008. Pakistan realty sector will observe the similar trends. 70% decline from peak of 2016 is not impossible. So be ready for another 25-50% price fall from the current level.
WHAT SELLERS SHOULD DO?
Sellers are in worst condition as it’s hard to find the serious buyers. Sellers have only two options. First option; sellers with holding power should wait for the prices to rise again. Second option; sell property at some loss now to avoid huge losses in the future. Wait is like a poison for the sellers.
WHAT BUYERS SHOULD DO?
Buyers and investors should know that property market has cycles of 10 years. First property boom in Pakistan was from 2003-6 and first crash was from 2006 to 2009. The prices started rising again in 2013. So another boom will be observed by 2023. Wait will reward the buyers.
Jamshed
on said
Anwaar Ul Islam
All what is happening in the real estate, was very much expected
Jamshed
on said
Prices are rapidly coming down and I hope would be affordable soon for genuine buyers
ANWAAR UL ISLAM
on said
Jamshed
Transactions are record low.
Estate agencies are closing on daily basis.
Construction activities are also record low.
Hard to find buyers as people waiting for prices to bottom out.
DHA Islamabad is worst hit and same is DHA Karachi.
Navveed Aziz
on said
Beautiful and affordable to buy. Thanks for the ideas!
abc
on said
You wrote,
“DHA Commercial Broadway Lahore 8 Marla / 200 SQ Yards plots were selling at 12 crore but now no buyer at even 5 crore”
so its about the main road broadway commercials or main back?
ANWAAR UL ISLAM
on said
abc
Main Back
Zeeshan Riaz
on said
Dear Anwaar Ul Islam, Thank you for your valuable comments and analysis!
Please could you also provide your feedback on Housing Projects in Gwadar like Gwadar Golf City, Green Palms Gwadar, Naval Anchorage, etc. Thank you.
ANWAAR UL ISLAM
on said
Zeeshan Riaz
Issue with Gwadar Real Estate is that developers have failed to develop the project on time as they promised.
So without on ground developments people have turned away from Gwadar.
Riaz Sultan
on said
Dear Anwaar ul Islam, Your comments on recent advertised LDA city project offering 5 marla, 10 marla and 1 Kanal plots. Many thanks
ANWAAR UL ISLAM
on said
LDA City will benefit those who will invest for long time because project completion will take many years.
Jashed
on said
One more thing I would like to highlight is that the Government is making another blunder to attract hot cash by increasing the interest rates. This will artificially support the rupee but eventually the rupee will further depreciate when the government would decrease the interest rate until they would not improve the growth and exports.
ANWAAR UL ISLAM
on said
Jashed
High Interest Rates are like poison for the businesses as the borrowing cost increases.
Pakistan Auto Industry is another victim of high interest rate. Overnight monthly repayments increased from 25,000 to 40,000.
HIGH INTEREST RATE VS REAL ESTATE;
When banks give more returns on savings people sell properties and invest in banks and vice versa.
BUT;
This time even low interest rates can’t help as real issue is the source of income due to the pressure from FATF to curb black economy in Pakistan.
Jashed
on said
Bahria Town Karachi was launched and one can see the speculators / realtors started increasing the property prices every where particularly in DHA. Prices in DHA were so high that all people had to move towards Bahria town , Karachi because that area sounded to be relatively cheap with greater potential of appreciation. Even some of the investors sold there assets in DHA and bought properties in Bahria town. In my opinion, there was Satta/ gambling culture prevailing all over and people had no other options to earn and all the money was put in the real estate. The other reason was that it was easy to hide black money by investing in real estate. All these are now going to be reversed and are resulting in property crash . Actually, this is duty of the government to make policies to promote industry, agriculture so people should invest in those sectors and to move away from real estate . Instead government created an atmosphere where even the industrialists sold / stopped their industries and started real estate business because this was more attractive. Net result is no industry/ no agriculture and no growth. All money was in real estate that is considered as the dead investment. Now in my opinion , time is very difficult for Pak economy.
ANWAAR UL ISLAM
on said
Jashed
You have clearly pointed out the two main reasons of investing in Pakistan Real Estate;
1- No other profitable business
2- Whitening of black money
Pakistan Real Estate is alcoholic of black money so without it we can see the price crash.
Zahid Ali
on said
Government, Media and Top anchor persons are silent for Bahria town Karachi fraud. All are on same page. Before all agents were happy when speculation were on its way to increase the price. At that time, nobody was asking, when bahria have limited land then why they are giving plot to unlimited peoples. Now agents realized that it is difficult to earn commission in the current market situation, when everybody want to sell and nobody want to purchase, that is why they started protest. Jamat-e-Islami is the only hope for bahria town karachi affecties. The looser are ordinary people. Nobody else.
ANWAAR UL ISLAM
on said
Zahid Ali
Unfortunately in more than 70 years, Pakistan as state has failed to make and implement laws that protect the citizens.
Real Estate Property Mafia is strong in Pakistan because of the weakness of the state.
People have lot their life savings in Bahria Town Karachi.
But Bahria Town reputation is hard hit as no one is interested to invest in Bahria Town Karachi, Bahria Town Lahore or Bahria Town Rawalpindi.
Jashed
on said
Dear Anwaar Ul Islam
Excellent, scientific and professional analysis based on facts and figures.
ANWAAR UL ISLAM
on said
Jashed
Thanks a lot.
Pakistan Real Estate Sector has never observed such trends. Property speculation is now a history as prices will be dictated by the buying power of genuine buyers instead of the purchasing power of the black money buyers.
Wait and see as crash will be harder.
Muhammad azeem uddin
on said
Dear sir,
I have seen that middle class is become very very in trouble as behria increases 35% development charges and force possession and category charges.
Many people are saying that they will go court ? What you advise?
Similarly kindly put some light on FAZAIA housing, ASF housing , both project is STOP no working on SITE.
Middle class again losses , no way??
ANWAAR UL ISLAM
on said
Muhammad Azeem Uddin
This is the real issue in Pakistan as Land Mafia has nearly destroyed Pakistan Economy an lives of hard working people.
People are right that they should go to the court.
The great names are deceiving people this is why real estate market is dead.
Zahid Ali
on said
Now the myth has come to an end that whoever invest in real estate must reap some benefit. Investor who invested in real estate in peak time before June 2016 in bahrai town karachi or dha city karachi or anywhere in Pakistan are really struggling to dispose off their inventories. In youtube I have seen, one agent said that one investor invested 20 crore in dha city karachi in commercial plots. Now the values of his inventories is only 5 crore. The net loss is 15 crore plus tkme value of money.
DHA city Karachi started in 2009 and after 10 years only gave possession of 2 to 3 sectors out of 16 sectors. I remembered DHA management posted advertisement in 2014 or 2015 in leading newspaper that DHA city karachi would be liveable in 2016. That time also i commented that the whole DHA city karachi would not be liveable even in 2030. The management deleberately issued such statement to speculate the market.
Now DHA city Karachi have taken all thd amount from allottes around 100 billion rupees. The total project cost was around 300 billion Rupees estimated in 2014, and DCK management had to arrange rest of the amount through investment. Keeping in mind the curreng devaluation, the total project cost now may be 350 billion rupees. I dont know about DCK current account balance sheet, but I am sure that dck management will struggle to complete the complete the project due to unavailability of financial resources as any investor will not invest unless he sees huge profit.
Earlier the agents always allure investors to invest in bahria town karachi. Now agents just saying to investors dont sell in panic to bear huge losees. Agents desperations and frustrations are evident. Most of the agents still thinking that situation would be better in few months which is contrary to facts.
Zameen.com started showing negative trend in some areas.
In cut short, people who were always positive about real estate, they now also realizing fact that golden days of real estate is over for thd time being.
ANWAAR UL ISLAM
on said
Pakistan Real Estate Property Forecast 2020 Price Trends Predictions
Same trends in DHA Lahore. People who invested in Commercial Broadway, Phase 9 Prism or Phase 9 Town have sustained huge losses. Home builders have also lost life investments.
What is happening to Pakistan Real Estate?
Decline in investment leads to property crash. Low investment is sometimes permanent as happening in UK, US, Dubai and Pakistan.
UK = Property prices falling as low investment due to Brexit
US = Price fall as Chinese government is after the tax evaders who invest money in New York
Dubai = Amnesty International Laws that check the black money flow to Dubai
Pakistan = Price crash as buyers have to show the source of income
Realistic property price in Pakistan:
If we see average UK salary vs average house ratio its 1:8. So one can buy house in UK after spending 8 years salary.
Lets do some math. Average salary in Pakistan is 5 LAC per year. So a house price should be 5×8 = 40 LAC
So what we can buy with 40 LAC, not even a 2 Marla 50 sq yards house.
So Pakistani property market is highly over priced and correction is a must which is happening.
50% price crash is on the corner as black money investors are out and genuine buyers will low purchasing power are in the market.
Riaz Sultan
on said
Dear Anwaar ul Islam, I agreed what you said in reply sellers are not comfortable to reduced their price in Islamabad since they have already paid premium, but sooner they they have to come down, now buyers are waiting for P.T.I government to commence affordable housing schemes . Especially overseas Pakistanis investors who have no issue to provide money trail to any agency. I hope Pakistan will receive huge amount of hard currency in stock.
ANWAAR UL ISLAM
on said
Riaz Sultan
Sooner or later sellers in Islamabad have to reduce the prices.
Riaz Sultan
on said
Islamabad properties are being advertised on speculation in the hope of gain but with the risk of loss. There is no buyer in market by the end of 2020 it will be bottom out. Hopefully middle class salary earned will be able to buy there own roof this year.
ANWAAR UL ISLAM
on said
Riaz Sultan
Islamabad Realty Market is worst hit by the slowdown.
Dealers are trying their best to hold the prices but prices are falling day by day.
Ahmad
on said
Don’t invest in any property in Karachi especially if it is housing schemes. Bahria is extorting money from people and whole govt machinery and media are silent. Money collected from innocent people in the name of land which was not acquired. Now playing dirty games to pressurize customer to get possession of land which is not acquired/developed and recent one is imposing 35% development charges on all plots. Just imagine when all installments are done they are telling customer to pay 35% more. This is new form of “Extortion” people of Karachi are facing which is very systematic.
Fazaia housing scheme whatelse can I say just read bbcurdu website. They took money and ran away. No one can dare to challenge them. Needless to mention “WHY” no one can challenge them.
ANWAAR UL ISLAM
on said
Ahmad
The same story can be heard in every city of Pakistan.
Jashed
on said
Shear Ali
Property market in Pak is facing the worst crash and crisis any one would had ever seen.
ANWAAR UL ISLAM
on said
Jashed
Worst is yet to come.
World will forget Dubai Real Estate Crash. People across the globe will quote Pakistan Property Crash in future.
Sehar Alii
on said
Pakistan Property Market has crashed.
My uncle is a dealer and he has moved to a rented home after selling his ancestral villa.
ANWAAR UL ISLAM
on said
Sehar Ali
Situation is same across Pakistan.
Karachi, Lahore and Islamabad are the worst hit regions.