Real estate business lacks positive momentum

KARACHI: Global economic slowdown and fear of uncertainty over law and order situation in the country has cast a negative impact on the struggling property business that is still in the red zone, real estate agents told Daily Times on Thursday.

The recent ongoing incidents of terror and violence in the city have further deteriorated the real estate property business and both local and foreign investors are reluctant to invest, they added.

Estate Agent at Real Estate Bank Ali Raza said, “The country is really gripped by uncertainty as it is facing serious problems at economic and political front.” The real estate business has been witnessing a declining trend over the last two years and the prices of the property have come down by an average of 30-40 percent, he said.

He said that genuine clients are in the market and are doing their business at some extent, but local and foreign investors have turned their eyes away from the local market. The builders that had gone to Dubai and other regional countries to cash timely emerging market after losing capital are having a liquidity starved and are making their way to other markets, he added.

Raza further said that a 2,000 yards plot in PECHS was available at Rs 4.5 billion a year ago. Now it costs at Rs 3.5 billion in the same vicinity. People are selling their plots at lower rates as compared to 2005 because of fears of further decline.

Raza said that prices of property in Defence, Tauheed Commercial area have come down by 25 percent and a 2,000 yards plot is being sold at Rs 1.1 billion as compared to Rs 1.5 billion earlier.

Another Estate Agent in Gulshan-e-Iqbal Adnan said that the property rates are on the decline due to the uncertainty and unrest because of prevailing law and order situation. “There had been only a paltry sale and purchase activity during last two months and these ongoing incidents of terror and violence could further disturb the situation,” he lamented.

However, new housing projects have also lost their charm as newspapers and TV channels have been presenting a flood of new projects’ advertisements till a week ago, he said adding that the local investors, after making joint ventures, had launched new projects to utilise their free land so that the land grabbers may not grab their land. The projects were mostly launched in Gulshan-e-Memar and Gulshan-e-Iqbal Scheme 33 areas but could not attract buyers.

Vice Chairman housing and construction committee FPCCI Munir Sultan said that property market in Duabi and Ajmaan have been witnessing a downward trend for last three to four months. Real estate business, after witnessing a downward trend in America, has also affected regional countries’ markets. Citing an example of American real estate market he said that every fourth house has default and the multinational bank Citi bank is bankrupt, as it had invested in the business that is about 40 down as compared to a year ago.

The country had a backlog of about 4.71 million houses in 1991, still has a backlog of 7.10 million and is expected to go on to 8.8 million houses till 2010, he said. staff report