REAL ESTATE BUSINESS STARTS SLOW RECOVERY IN LAHORE, OTHER MAJOR URBAN CITIES
KANWAL SALEEM, LAHORE
Nov 12 - 18, 2007
The real estate business in Lahore and other major urban cities of the Punjab is showing signs of steady but slow recovery and the market is gradually moving from being a buyers market to a sellers market.
The prices of land and houses as well as apartments have already begun to rise, though slowly, after having dipped to the lowest in the recent years. There is excess supply and relatively lower demand for residential plots and built houses, apartments and flats, property dealers told PAGE.
According to them, there is a visible increase in demand for land as well as built houses and apartments in Lahore and some other major cities of the province in the recent months. The demand for built property as well as residential plots is mainly triggered by the burgeoning middle classes-bankers, corporate executives, etc, who are drawing hefty salaries now and want to have their own roof to live under.
They said the real state market had been suffering for the past few months due to high mark-up rates, the stock market crash, blacklisting of major property brokers etc.
In the recent years we have seen the services, especially telecom, media and financial sectors, explode like anything. People working in these sectors are getting hefty salaries. The good thing about the new demand for land or houses/apartments is that it is coming from the original consumers and not from the speculators who enter the market to make quick bucks. Only those speculators are left in the market, who have the staying power in the market for a longer period and are not in a hurry to off-load their investments, one of the dealer Haji Mohammad Afzal said.
He was of the view that the real estate market in Lahore is recovering faster than other cities of Punjab. There is a consensus among developers, builders and realtors that speculators have vanished from the real estate market after the explosion of the property bubble almost two years ago. In addition, they insist, the demand is now restricted only to reputable and respected housing schemes in quality locations, he added.
It may be mentioned that in the period from the beginning of 2002 to the first quarter of 2005 the land prices in Lahore and other parts of Punjab, like other parts of the country, touched their peak owing to a sudden, huge improvement in the inflows of remittances to an average annual $4 billion from $1 billion in 2001 from the United States and the Gulf in the aftermath of 9/11 terror attacks in New York and Washington. A major portion of the remittances is believed to have gone into real estate. That led to a kind of feverish speculation in real estate market as it offered investors a window of opportunity to make big money in days.
Moreover, there was an over expansion of properties through major developers like Defence Housing Authority, which announced its plans to develop its new schemes that required up to 30 years to mature. Some developers like Bahria Town too created an artificial supply in the market through the sale of more files than the number of plots available with them. The demand is once again picking up, the dynamics of our society are changing, and with that consumer, preferences and choices are also changing, another property dealer said.
He claimed that the market is now ready to meet the demands of a wide range of income groups ñ from middle to upper middle and upper classes. "If we look at the market of built houses, it has quality small independent units built on an area of five Marla or 125 square yards available for just Rs 2-3 million in posh localities. A one kanal or 500 square yards house can cost up to Rs15 million or more depending upon the location and quality of its finishing, a property consultant at Defence said.
According to him, consumers prefer to purchase built houses because of the availability of bank finance for the purchase.
According to analysts, there is a nationwide housing shortage of 7-10 million units. Vast majority of people without a roof of their own to live under belongs to lower to middle class. The concept of low cost housing no longer exists. The high cost of land and ever-rising cost of construction is diminishing their chances of owning a house of their own. That is the area where government intervention is inevitable.
Moreover, Bank of Punjab (BoP) has recently entered into an arrangement with Red Mountain Suria Pvt. Ltd. for the launch of "Suria Resorts House Financing Scheme"-Red Mountain Suria, a joint venture with a Malaysian company is developing state of the art luxury resorts situated in the pristine and idyllic setting at the foothills of Soan Sakesar in the Salt Range Mountains, over a 4000 canal area-Under this scheme, the BoP will provide house finance facilities to overseas and resident Pakistanis to purchase Suria Resorts condominiums and villas on attractive terms for a maximum tenure of 20 years.