Pakistan realty market has no end user:
Insanity is doing the same thing over and over again but expecting the different results. Once again the government has offered another amnesty scheme for the real estate and construction sectors. The aim of the current amnesty scheme is to offer; firstly another chance for the people with ill-gotten wealth to be filer and secondly to provide the jobs for the daily wagers. But history shows that all amnesty schemes have failed in Pakistan. This scheme has already failed as Pakistan realty market has no end user.
Who are the End Buyers or End Users?
In a typical real estate market properties exchange many hands. This is due to the selling of properties for profits. Some people sell properties within months of the purchase whereas others in years. But eventually plots or houses are bought by the people who are not investors but buy for living purpose. These people are known as the end users. The end users have huge impact on the real estate prices. High demand from end users increases the property price and vice versa.
Who are the End Users of Pakistan?
Pakistan is among the countries that depends on the foreign remittances. Nearly 10 million Pakistanis live in America, Middle East and Europe. Yearly remittances sent by Pakistani expatriates are more than $20 billion. Most of the money ends in the real estate sector. So first end users in Pakistan are the expatriates. The second group of end users is of local Pakistanis including the businessmen and professionals. These two groups are responsible for the most real estate transactions in Pakistan.
Pakistan realty market has no end user due to the declining purchasing power:
Unemployment is widespread in Pakistan. Experts have predicted that Pakistani unemployment due to COVID-19 will be 30%, highest in the recorded history of Pakistan. Pakistani economy has also contracted first time. Local Pakistanis have seen massive purchasing power decline. The Pakistani expatriates are also not well off. Hundreds of thousands of Pakistanis have lost their jobs in UAE, Saudi Arabia, Europe, UK, USA, Canada and Australia. Foreign remittances are already low. This means less people will be investing to build homes or buy plots. This will result in mass unemployment for the daily wagers and also real estate prices will crash. Cement sale is already 37% down, a very disappointing indicator.
End Results
Global real estate market has already crashed. In US and Europe people are leaving cities and real estate transactions are record low. Due to unemployment, people are unable to pay the mortgages that will further crash the property prices across the globe. High end luxury properties are the real victims due to the declining purchasing power.
The situation in Pakistan is not better. Investing in Pakistan real estate property is very tricky as speculation is very high. Small properties are exchanging hands but no buyers for the luxury properties. This amnesty scheme will temporarily increase the real estate prices across Pakistan but in the long turn prices will crash as there are no end users. Therefore buyers should be very careful.
Jamshed
on said
Anwaar
U are absolutely right. There is a property crash world wide . I just bought a property in DIFC, Dubai . This property was 5. 1 millions Dirham when this was launched . I bought in 1.15 dirhams . The rent of this property was 200 K plus dirham and now is 90 K Annually . Now u can imagine
ANWAAR UL ISLAM
on said
Jamshed
Thanks for sharing the condition of Dubai Real Estate Market.
In Pakistan situation is very difficult.
Opposition is working hard to put Pakistan on Grey List of FATF.
Many laws are coming to curb the black money easy flow.
This are very bad in Pakistan.
Jamshed
on said
Anwaar
Properties in Dubai are very affordable now a day. Such a lower price was seen a decade ago after the 2008 recession . Most of the local and international investors, End users are buying in UAE now a days because this is a buyer market . Prices are nearly at the bottom. Prices are 50 to 80 percent down compared to the peak prices
ANWAAR UL ISLAM
on said
Jamshed
Pakistan real estate will witness the same trends.
ANWAAR UL ISLAM
on said
Jamshed
Pakistani Housing Market is also out of proportion in term of home sizes.
US has population density 35 people per sq kilometres.
But Pakistani population density is 275 people per sq kilometres.
But we are building even bigger houses than USA.
Correction is long overdue.
We have wasted a lot of useful land.
Flats will get more momentum in the near future.
So lot of changes in term of size and affordability are in the store for Pakistan real estate market.
https://www.zerohedge.com/economics/american-housing-market-splintering-houses-get-bigger-and-apartments-get-smaller
Zia
on said
I can’t see any reduction in price even DHA Lahore recent ballots are also on much appreciated price. See link
https://ballotapp.dhalahore.org/
So moral of story is all economic theories fail when it comes to pakistan realestate market. I believe should not waste time and money with day dreaming of price reduction.
Zia
Waseem akter mirza
on said
very good article on the real estate situation in Pakistan, as per this article prices needs at least 50% correction for betterment of economy and people.
https://profit.pakistantoday.com.pk/2020/07/11/why-and-how-much-pakistanis-overinvest-in-real-estate/