After over a month of the crash of stock market,
the much-trumpeted real estate business in the provincial capital of
the Punjab is showing a mysterious slump.
In fact, for the time in the history of this, the
commercial banks and other financial institutions opened their doors
to the consumer financing especially with their house financing
products an affordable interest rate 7-8 percent, was of course a
major factor behind the booming real estate which also ignite a spark
among the builders and the developers all around the country.
The helping out attitude of the provincial
government and comparatively better law and order situation in Lahore
had become the focal point of the investors especially in the real
estate business. According to an estimate, over 70 percent of the
builders and developers had moved from Karachi to Lahore to grab the
It is said that the real estate business being the
most sensitive indicator of the economy reflected the shadows of the
coming events. The real estate experts were of the view that the
situation calls for immediate corrective steps into the factors
responsible for a serious disruption to otherwise fast growing real
estate and the construction industry.
It is interesting to note that as compared to
administrative and procedural complexities in the province of Sindh in
general and Karachi in particular where the builders and the
developers have to deposit huge security prior to launching a project
and stamps duties etc, the real estate business has been given almost
a free hand in Lahore in conformity to the government policy to use
this sector as an engine for economic growth.
Resultantly, Lahore had assumed a leading role in
the real estate business by attracting investors not only from all
over Pakistan but the non-resident Pakistanis as well. According to a
senior banker of Lahore, the demand for housing finance as well as the
market price of the real estate was more than double from what it was
However, this ballooning trend was suddenly pricked
to the surprise of a large number of small and big investors in
For the last one month, the sale and purchase in
real estate business, especially the major transaction in Lahore has
almost stopped, said Hafiz Muhammad Ashraf, the owner of a real estate
agency, dealing in prime commercial areas in Abbot Road, Davis Road,
Edgerton Road and Mason Road. "We are only doing business of rent
these days and looking for customers to strike deals for various
residential, commercial plots, residences, shops and offices for the
last one month," he said.
Different perceptions about impending crisis in
real estate, very high prices, levy of federal tax in coming budget,
ongoing crisis at stock market, upcoming political crisis and rising
rate of interest are some of the major factors that are keeping
investors away from real estate business, said Hidayat Ali, another
dealer who is doing the same business in Defense areas for the last 10
years. He said that the trading of files was gradually going on, but
no sale and purchase transaction was taking place in real estate
business these days.
He pointed out that in last three years, the real
estate has attracted billions of rupees of investment as a result the
prices of plots, shops and residences have reached the highest level.
Hundreds of investors, expatriates and countrymen
have invested their surplus capital in this business which gave a boom
to prices and a quick and hefty dividend to investors, he said.
How much the prices of property have expanded can
be imagined from the fact that one of my friends in Karachi sold his
residence worth Rs6 million last month and now he was looking for a
residence in posh areas in Lahore like Shadman, Iqbal Town,
Gulshan-e-Ravi and Samanabad, having range between 5-6 million rupees,
but during last one month the person could not find a single
accommodation matching his price range in the said areas, said
Choudhry Qaisar Mahmood, another dealer, engaged in the sale and
purchase of files of plots in Defence and adjacent areas.
"We have a number of residences, shops and
offices for sale in posh areas, but we are not finding customers these
days," he further said.
He said that a mysterious silence is prevailing in
the real estate business in Lahore that is very embarrassing for the
dealers and disappointing one for the owners, who want to dispose of
their immovable assets for different reasons.
He said that the rumor of imminent political
changes in the country has become a talk of the town in Lahore that
has given a blow to sale and purchase business in real estate.
He said that stock market crisis has made investors
cautious who have also sidelined and are waiting for a blow over to
the sky high prices of property.
During last couple of years, it was a common trend
that some major investors used to make heavy investment in one of
their selected schemes and areas, he said, adding they used to dispose
of the immovable property as soon as they got a better price. He said
that this trend was giving boom to real estate business, but it has
now vanished, leaving the stakeholders high and dry.