Re: Property mania in Pakistan..
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I remember reading that mortgages form almost 60% of all bank loans in the USA. In contrast, mortgages form less than 10% of bank loans in Pakistan. Hence, Pakistani banks are not in danger of suffering losses due to defaults in their mortgage portfolio.
regards,
bob
Re: Property mania in Pakistan..
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Good point. I guess we are raking it in from both the fundies and the secularists these days. Barring a political meltdown, I dont see an end to the economic forces causing this realestate inflation, anytime soon, do you?
regards,
bob
Re: Property mania in Pakistan..
Inflation.
This thing called inflation has destroyed many a third world economy, Mexico, Venezuela, Brazil come to mind. We have to be extremely vigil on inflationary concerns which have recently raised their ugly head (11%+). High fuel prices, rising commodity prices across the globe, increased wage pressures and low interest rates may fuel accelerated price appreciation which again can lead to asset price bubbles.
Already the Pak Rupee is under strain because of inflation worries, interest rates hv started to move higher and bulk of the GDP growth in fiscal year 2004-05 is expected to come from excelelnt agricultural produce. Which we all know doesnt change the general income level of the masses. So how do u sustain this GDP growth rate? Investments. But, rising interest rates, lack of proper documentation, transperancy and detteriorating law and order situation spells bad news.
In the short run, I agree with u, it will be a political meltdown which will be a catalyst to any negative price movements.
Lets hope and pray that SBP can manage this asset price inflation.
Re: Property mania in Pakistan..
I dont think this is runaway inflation due to a careless monetary policy, do you? I see it more as local pricing coming in line with international prices, in a free market.
As far as transparency is concerned, I believe there is sharia law and colonial British law, both at the same time, each contradicting the other and neither making much common sense in todays world, without someone who understands it’s spirit. lol. It (transparency) is not happening anytime soon. Although, I have to admit things looked better in Pakistan than 10 or 20 years ago. Less stone walling, fewer people seemed to be asking for bribes and information was easier to get.
What is the PakRupee to the dollar fx rate ?
Re: Property mania in Pakistan..
So what are rents like in Islamabad these days? Does anyone know?
Re: Property mania in Pakistan..
Sorry if i am repeating what someone else already said before, cuz i didn't really go over everyone's posts, but the MAIN reason tht prices are so high right now in pakistan are due to the huge amounts of loans being given out by the banks in pakistan, allowing almost every person capable of spending some money a chance to invest in real estate. Foreign money might have a certain role, but the main reason behind all this are the loans...the common belief is that if you take a loan and invest today, you'll be making huuuge profits in the future, even after paying off all your debts!, so no wonder so many people are out there buying all this land at such high prices...but then, if we take a look at the U.S. history, the depressions caused by the huge amounts of people taking loans from banks, and then businesses collapsing, and as a result, people losing all their money and not being able to pay back, we should realize that maybe Pakistan is on the same track?...We can only hope not, but we have to step outta the box and think for a while...all these loans from banks, and all the new businesses that have sprung up from the real estate boom might lead to sumthing we don't want...depression...:)
Re: Property mania in Pakistan..
Hi waqi,
While banks are marginally adding to the boom, I feel, we cannot ignore the fact that realestate is less than 10% of the loan portfolio of banks in Pakistan. That is a very small amount. In most developed countries realestate mortgages form over 50% of the loan portfolio. Hence, there isnt any real danger of banks going under if there are defaults in mortgages, at this time. Infact, the boom might be in it's infancy, since banks are just getting into the business. Oil revenues are strong in the middle east and profits are no longer flowing into western banks. Perhaps they are now being diverted to places like Pakistan. In addition, Pakistanis in the west are also trying to shift their wealth to Pakistan because they fear development of anti Islamic western laws. We have to learn to properly take advantage of these fx inflows by providing such investors the security and opportunities that other nations are willing to provide them. The real danger to them is political instability and a new government that opposes free market reform. I think even guru agrees with me on this.
regards,
bob
Re: Property mania in Pakistan..
prices are up 500% in 5 years in Islamabad!
Re: Property mania in Pakistan..
bob while your evaluation of bank portfolio for mortgages may be correct, the prices can not stay high. While the analysis of the economy may indicate a need for real estate and while there will be more people able to buy due to mortgage programs, affordability is an issue.
It is far safer to invest in 10 modestly priced homes or condos than 2 large villas.
There is a small number of people who can afford to spend equivalent of $500K on a house in Pakistan
Those who do it for sheer investment want to see returns, and returns are there only if there is huge income potential..enough that its above what they can make elsewhere, or if the market appreciation rates promises them a return when they sell it.
with limited number of buyers for such expensive properties..the top end of the market is not just bound to fizzle but will crash
Re: Property mania in Pakistan..
Dear Fraudia,
You are quite right when there is a better place to invest, investors move to it. So where else can these investors invest that is better?
regards,
bob
Re: Property mania in Pakistan..
property prices are continously going down
there r other good places 4 investment
Re: Property mania in Pakistan..
Yes Dubai property has been drawing interest. My understanding is, that because historically it has not allowed outside buyers, prices were very affordable compared to Pakistan and other countries with open markets. However, prices have risen nearly 300% recently in Dubai. Now what?
regards,
bob
Re: Property mania in Pakistan..
now next pice hike would be around Lahore-Kasur road as the road is being remade as dual carriage way..
Re: Property mania in Pakistan..
As a matter of fact I am in Lahore because of the property issues. Right now prices are stable in Lahore. In April I sold a 10 marla plot for 34Lac, I was thinking of buying a plot of 1 kanal in Wapda Town but then cancelled the idea because they asked for 70Lac (way out of my reach) & started to sell the house in Allama Iqbal Town (it was lying empty for a year).
Now I have bought a 10 Marla plot in Wapda Town for 22Lac (though 1 Kanal is now 55Lacs). That shows prices has down slided.
My younger brother built a house in Johar Town, costed in around 55Lac including land price (he purchased the land in 2000 for 14Lacs). He was offered 1 crore 85Lac for the house (1 Kanal), but he is not selling it, he is gonna live in it.
The reason(s) behind it,
1) The deportees from other countries (mainly USA) brought money with them and invested in property.
2) Government is not giving any rebates to industrialists & factories are closing, industrialists came in property business to secure the capital.
3) Black money invested in Property business.
Why the prices have started to come down?
1) NTN (National TAX Number) is now essential for registering/buying any new property in Pakistan.
2) Private schemes Management is made essential to provide details of all the people who have more then two plots of 1 kanal or 4 plots 10 marla or 8 plots of 5 marla in the same scheme.
3) The TAX department is now querying the people about the money they invested in the property.
I'd advise to invest in the property if one wants to in next three to four months as prices are stable but they will rise again.
British Government is now planning to search & deport the illegal immigrants from Britain & they will bring all the money they have collected through fraudulent mean. That money will mostly be invested in the property bringing the prices up again.
Keep in mind even if u are an overseas Pakistani holding NICOP (or even POC), u do need to have NTN to buy property. Any money brought in country by non-banking/western Union way can put u in trouble, so send money through bank wires or other legal means if u want to invest, otherwise TAX man will be knocking your doors.
Also dont buy any plot bigger than 1 kanal, actually make it 10 marla plots. Rather than buying one 2 kanal plot its better to buy four 10-marla plots in different societies.
This NTN has not only effected the property business but also started controlling the Jagga TAX known as "ON" on new cars.
Re: Property mania in Pakistan..
Najim,
I agree home prices are down about 30% from their peak in March, but now stable. I have also heard people speculate that prices are expected to start rising after September. I believe that Pakistan real estate is cheaper than comparable properties in India, BD and Afghanistan etc. Hence, prices could rise further.
regards,
bob
Re: Property mania in Pakistan..
Hi can any one please if they know, advise on how much 10 marla of land in sialkot cantt. would cost.
thanks in advance
Peaky
Re: Property mania in Pakistan..
YES IN DREAMS ONLY
Re: Property mania in Pakistan..
So you dont think realestate will ever recover? Where do you see it?
regards,
bob
Re: Property mania in Pakistan..
So you think that the Tamimi group that purchased 6.6 acres in Islamabad for $100 million this year are a bunch of dreamers. So according to you, they paid over US$15 million an acre which is over US$2 million a kanal and Pak Rupee 6 crore for 10 marla because they dont have the smarts you do, according to you. While there are no guarantees in any investment, I think you could be a little less cocky in your opinions. There are some very wealthy companies, with some serious economists and consultants advising them, investing in Pakistan these days. Kabul, Delhi and Dacca are all more than twice as expensive as Pakistan. There is no reason Pakistan real estate shouldnt be at par with them. Interest rates and Oil prices have been edging up that adds to the nervousness and there is a pause in the market. However, longterm, in my opinion, prices of land in Pakistan are still cheap compared to the rest of Asia and money continues to flow in from abroad. I think, unless the fundamentals change and China and India go into a recession and stop buying oil, the real estate boom should continue in Pakistan. As long as political anarchy doesnt break out here.
Read the above posts and notice people are paying a tenth of what the Tamimi group paid for their land.
regards,
bob
Re: Property mania in Pakistan..
Does anyone know of an online Real Estate Appraiser, based in Pakistan?
I am trying to find out the property value of our home (Morgah Officers Colony) in Rawalpindi.
Still indecisive as to whether we should sell this house and use the sale amount to invest in a home in Southern California.
However, reading this useful post it may be beneficial to hold off for a bit longer......