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Pakistan real estate construction sector is stagnant

Pakistan real estate construction sector is stagnant

Pakistan real estate construction has always played a major role in national economy, as Pakistan is a developing nation and needs new residential areas & commercial centers for its booming urban population. But, now things are not rosy for real estate construction sector. In December 2015, more than 40 new real estate projects were launched. But in December 2016, just 3-5 new real estate projects have been launched so far.

Reasons of stagnation in real estate construction sector

Higher taxes imposed on construction industry

Things have changed after property taxes were increased in Budget 2016-17. Now developers have to pay higher taxes on sale and purchase of properties. FBR has also imposed construction / map tax according to size of the property that has also increased the overall development cost. Due to all these changes, profit margins of developers have decreased. Many uncompleted projects can be seen in all major urban areas of Pakistan.

Economic meltdown of West and Middle East

10 million Pakistanis live in foreign countries. These Pakistanis send huge remittances and major portion of this money is used to purchase properties. Majority of new real estate projects in Pakistan are purchased by foreign Pakistanis as they have more buying power than local Pakistanis. But due to economic meltdown of West and Middle East, remittances are decreasing. The decrease in foreign remittances has great impact on real estate construction sector of Pakistan.

Impact of black money on real estate construction sector

Real estate sector is major source to whiten the black money worldwide. In Pakistan, money collected from illegal means was parked in reality sector. But after tax laws, FBR was enforced to check the flow of black money to reality sector. Real estate construction was hit hard by blockage of black money. Now government has given tax amnesty but still investors are hesitant to avail it as many consider this as big trap. Without black money, pace of real estate construction sector has slowed.

New projects in top cities of Pakistan, December 2016

Pakistan real estate sector was dependent on three major cities; Karachi, Lahore and Islamabad. But now Gwadar is also the major investment hotspot and dubbed as game changer by experts. GDA has cancelled the NOC’s of numerous housing schemes and only 6 have fresh NOC’s. Let’s have a look at 4 projects in 4 cities.

Legends Executive Apartments Bahria Town Karachi

LEGENDS EXECUTIVE APARTMENTS is the new residential / apartment project in Karachi by Legend Developers. LEGENDS EXECUTIVE APARTMENTS is located in Bahria Town Karachi. LEGENDS EXECUTIVE APARTMENTS is offering 2 bedroom, 950 sq ft, apartments for sale. Apartments in LEGENDS EXECUTIVE APARTMENTS can be booked on cash payment and also on easy installments of 3 years.

BALCONY 6 APARTMENTS Dream Gardens Lahore Phase 1

BALCONY 6 APARTMENTS is the new residential / apartment project in Lahore by Izhar-Monnoo Developers. BALCONY 6 APARTMENTS is located in Dream Gardens Phase 1, just opposite to COMSATS University Lahore. BALCONY 6 APARTMENTS is offering 2 bedroom apartments for sale. Flats in BALCONY 6 APARTMENTS can be booked on cash payment and also on easy installments of 6 months.

Teeraces Dream Gardens Capital Islamabad

TERRACES is the new residential / apartment project in Islamabad by Izhar Monnoo Developers. TERRACES APARTMENTS are located on Islamabad Murree Expressway. Izhar Monnoo Developers have successfully delivered many state of the art commercial and residential projects in Lahore and Multan. TERRACES is offering 1, 2 & 3 Bedroom Luxury Apartments. Flats in TERRACES can be booked on cash payment and also on easy installments of 2.5 years.

Jamal City Gwadar

JAMAL CITY is the ongoing mixed-use residential and commercial project in Gwadar by Jamal Baba Builders & Developers. JAMAL CITY is located in front of Water Sports Club on Marine Road, Gwadar. JAMAL CITY is offering 5, 10 & 20 Marla Residential Plots and 4, 8 & 16 Marla Commercial Plots. Residential & Commercial Plots in JAMAL CITY can be booked on cash payment and also on easy installments of 4 years.

Developing story that will crash the property market

Story of Indian currency crisis and its impact on Indian reality sector are the talk of the town. After Indian currency crisis, Indian property prices have crash by 50% in many areas. Indian effort to control black money has hit hard the reality sector. Now Pakistani government wants to control the black money by abolishing 5000 PAK Rupee Bills. As we know that black money is mostly parked in higher notes, abolition of 5000 PKR NOTES will ensure a blood bath for Pakistan property prices.

Recommended:
New projects in Pakistan

(20) Comments

  1. noman

    on   said 

    Property rates are still at peak in KARACHI. Yes, you can say that the rate of change is decreased now. For example a 500sq yards plot in DHA P8, Karachi was increasing like 1 to 1.5 crore each year but now the rate of change has been decreased but still its way to high as PH8 is a last phase in old DHA and hence it is considered a premium market in Karachi.

    Reply
    • Adnan Shaikh

      on   said 

      You are absolutely right brother…property rates not even high but it is increasing day by day after amnesty scheme for example in Gulistan e Jauhar Karachi a 240 yard banglow asking price before amnesty scheme was 230 to 240 lacs and now agents are asking 270 to 290 lacs for 240 yards banglow….

      Reply
      • Zohaib Ahmed

        on   said 

        You are absolutely right. Prices are abnormally high. Properties which were demanded 3 crore just couple of weeks back or last month are now available in 3 crore 45 lacs. An increase of 45 lac in weeks.

        Reply
        • rizwan

          on   said 

          NO GENUINE PERSON CAN BUY HOME FOR LIVING ONLY BLACK MONEY PPL R BENEFITTING FROM HUGE PROFITS…THIS IS REALITY OF AMNESTY BY ISHAQ DAR

          Reply
          • Rizwan
            According to world home affordability recent survey

            Highly Affordable property = 3 times the annual salary
            Affordable property = 4 times the annual salary
            Slightly Affordable property = 5 times the annual salary
            Unaffordable property = 6 or more times the annual salary

            LETS SEE IN PAKISTAN

            PEOPLE WITH 1 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 60 LAC (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 2 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 1.2 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 3 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 1.8 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 4 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 2.4 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 5 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 3 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 6 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 3.6 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 7 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 4.2 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE WITH 10 LAC MONTHLY SALARY IN PAKISTAN CAN BUY PROPERTY = 6 CRORE (EQUIVALENT TO 5 YEARS SALARY)

            PEOPLE CANNOT BUY 500 SQ YARDS HOUSE IN DHA KARACHI WITH EVEN 10 LAC MONTHLY SALARY

            SO WHO ARE BUYERS?

            BUSINESSMEN
            OR
            PEOPLE WITH BLACK MONEY

          • rizwan

            on   said 

            DEAR GHAR47 YOU ARE ABSOLUETLY RIGHT BUT I WANT TO MAKE ONE MORE ADDITION…

            THE HYPOTESIS WHICH U GAVE LACKS ONE THING WHICH IS:

            PEOPLE WHO MAKE FOR EXAMPLE 1 LAC MONTHLY SALARY DOES NOT SAVE THE WHOLE 1 LAC BUT USKO MAHANA KHARCH BHI CHALANA HAI AND APNAY GHAR KA KITCHEN BHI CHALANA HAI N BILL BHI PAY KERNAY HAIN…SO 1 LAC SALARY WALA END MAIN 10 20 THOUSAND HE SAVE KERSAKTA HAI SIRF ISI TERHAN BAKI HIGH SALARY WALAY BHI SAME CHEZ HAI UN K SATH TU INFACT MAHAN 1 LAC EARN KERNAY WALA 1 LAC SAVE NAI KER RAHA IS TERHAN TU SARI ZINDAGI BHI WOH GHAR NAI LAYSAKTA

          • Rizwan
            Perfect
            Affordability chart was calculated on 2 assumption
            1- AVERAGE WORKING LIFE
            Average working life is 25-30 years. So one can save 20% of all life earnings.
            2- ONE CAN SAVE APPROXIMATELY 35% OF THEIR MONTHLY SAVINGS. AS CALCULATED FOR MORTGAGE

            PERSONAL OBSERVATIONS

            Few of my friends earn 2 Lac / month.
            I always tell them to buy property for better future of their kids

            Their answer
            They can save just 40,000 per month.
            What they can buy with this money. Average per Marla land cost in Lahore is 8 Lac. So they need 8 years saving to just buy 5 MARLA / 120 SQ YARDS plot. But according to them when they will have 40 Lac in Hand price of same plot will be 1 Crore.

            Fully agree,
            Calculations are just calculations but reality is very different.
            Reality is that due to abnormally high prices salaried person cannot buy property in Pakistan.
            Due to frustration, people are forced to use illegal means to buy properties.

            Biggest problem in Pakistan

            Limited resources and population bomb

            IMPACT OF POPULATION

            Subedar in army was offered land in Saddar Lahore in 1980. His property is worth 40 Crore.
            How many high ranking officers including generals will get this pension?
            Living standards are declining due to limited resources and fast populations increase.

            Once luxury house size in Lahore was 1 ACRE SIZE like in Model Town Lahore.
            This changed to 4 Kanal / 2000 sq yards
            After that 1000 sq yards house was symbol of riches in Pakistan.
            Then standard declined to 500 Yards or 1 Kanal
            Now even 10 Marla / 250 SQ Yards houses have rich owners
            Why?
            Average price of 10 Marla / 250 SQ Yards house is 2 CRORE in Pakistan
            Even people with 120 SQ YD / 5 Marla house are rich as average house price is above 1 Crore rupees.

            UNLESS WE CONTROL OUR POPULATION, WE ARE DOOMED

            UK HOUSE (262 PEOPLE LIVING PER SQ KM)
            WITH 3 CRORE ONE GETS 2 MARLA HOUSE
            USA HOUSE (35 PEOPLE LIVING PER SQ KM)
            WITH 3 CRORE ONE CAN GET MAC MANSION WITH 1 ACRE LAND)

            PAKISTAN SHOULD KNOW THE CHEMISTRY OF:

            LAND VS POPULATION / POPULATION DENSITY

  2. Gohar

    on   said 

    Prices are still way higher. Honest people cannot buy property in Pakistan. If 5000 notes can crash property prices by 50 percent like you mentioned in INdia it will be great news for middle class people.

    Reply
  3. Khalid ali

    on   said 

    I am estae agent in lahore. Prices are down and investors are not impressed by amnesty scheme. 100s of estate agents have left DHA.
    Its looks that property prices and market will not recover till 2020

    Reply
    • rizwan

      on   said 

      PROPERTY KAHA DOWN HAI KHALID BHAI …. MJAY TU KAHIN DOWN NAI MIL RAHI PROPERTY BALKAY JAB SAY AMNESTY AY HAI PROPERTY AGENTS K MUN AUR KHUL GAYE HAIN AND DEMANDS AUR BARH GAYE HAIN…SPECIALLY IN KHI …DUNNO WHERE PROPERTY IS DOWN ??

      Reply
  4. Saima

    on   said 

    Nice blog and updates
    Look like that prices are down
    Investors are afraid of tax amnesty strange
    Dont know but we Pakistanis are scared of taxes
    5000 notes if removed from circulation will cause massacre of property prices

    Reply
  5. Jawad ali khan

    on   said 

    Jamal city look nice but do they have NOC
    Best project was Green PAlms Gwadar
    What is the last date of green palms

    Reply

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