Floods take their toll on Lahore’s real estate market

[Lahore_Real_Estate]

* Prices of property had begun to recover from five-year slump only
for investors to be scared off by floods

By Shabbir Sarwar

LAHORE: Following five years of a slump, the city’s real estate business and property prices had finally recovered by up to 10 percent, however the flood factor has once against reduced prices by 5 percent as investors are showing reluctance to pour in their money, market analysts told Daily Times on Thursday.

The real estate business saw an unprecedented boom from 2001 to April 2005 and during this period, 100 to 1,000 percent increases in prices of property (both plots and houses) had been witnessed. Later, a severe slump was witnessed; the business however survived somehow until 2007 as scattered investors remained in the market. However, from 2007 to 2010 there has been no investment in the markets and the rates fell by 50 to 100 percent depending upon the areas and location of the plots and constructed houses.

Defense Housing Authority (DHA) Estate Agents Association Information Secretary Hazi Zahid bin Sadiq said that 9/11 triggered a boom in Pakistan’s property business. “Pakistanis settled in the US felt insecure and they transferred their money to Pakistan and preferred to invest in real estate, which meant that prices increased up to 400 times. A plot with a value of Rs 0.4 million was suddenly valued at Rs 5 million,” he said, adding that later the ratio of tax and transfer fee was increased by up to five times.

Zahid said that during 2005-06, the prices of developed plots were decreased by 30 percent and undeveloped plots by 75 percent. “Private housing societies, ghost plots and the file mafia caused a further slump in property prices,” Zahid said, adding that in DHA, during the last few month, prices had started recovering and in phases 1, 2, 3, 4 and 5 the price increased by 5 to 8 percent, while in phase 7, prices increased by 20 percent and in phase 6 by 25 percent.

Farooq Jamal, the CEO of Estate Homes, while giving statistics, said that in DHA, phases 6, 7 and 8 were the worst hit during the slum period, as a one-kanal plot’s value decreased from Rs 8 million to Rs 4 million, while in phase 9 and 10, the value of files decreased from Rs 4.5 million to 1.5 million. “Before the floods, the prices started recovering by 8 to 10 percent, but now investors are again reluctant,” Farooq said.

About the current price of a one-kanal plot in DHA, Farooq said that in phase 1 and 2, prices stood between the range of Rs 8 to 12 million depending on the location. “In phase 3, Rs 8.5 to Rs 1.3 million, in phase 4 Rs 7.5 million to Rs 12 million, in phase 5 Rs 7 million to Rs 12 million, in phase 6 Rs 4.5 million to Rs 8 million, in phase 7 Rs 3 million to Rs 5 million, in phase 8 Rs 4 million to Rs 6.5 million and in phases 9 and 10 the price of files is Rs 1.5 million,” he said.