Post-election review of the real estate market in Pakistan

The general elections held in May 2013 put a positive impact not only on the stock market but also on the real estate sector of Pakistan. The new pro-business government upheld the realty market to bolster in the second half of the calendar year (CY) 2013. However, a particular stability was witnessed subsequently in the property prices in the first quarter of 2014.

Let’s have an overview of the post-election performance of the real estate markets of the three major cities viz. Lahore, Islamabad and Karachi.

Ups and downs in Lahore real estate

Defence Housing Authority (DHA) is one of the most sought-after communities in Lahore, per Zameen.com’s search trends. In DHA, the average sale price of 1-kanal plots in May 2013 was registered to be Rs 11,807,331, which spiked notably in the post-election months of the CY 2013. In November, the average sale price of the plots of same size shot up to Rs 14,377,440, giving a price hike of 21.75% in five months after the elections. However, the prices then witnessed a slight correction and hovered around Rs 13,500,000 mark in April 2014.

Property prices in Bahria Town, on the other hand, also witnessed a slight upsurge. Albeit, 1-kanal plots in Bahria witnessed a price rise of 16.50% between May 2013 and April 2014, but they did not surprise the investors much after elections or even after the announcement of budget.

Lahore Development Authority (LDA) Avenue I and Wapda Town, also witnessed a promising year, in terms of property values, as both societies exhibited rising trajectories for 1-kanal plots prices.

The housing segment of Lahore presented a similar story. Despite the fact that the Punjab Government levied luxury taxes on 2 kanal houses  in upscale areas of the city, Zameen.com’s data, however, showed that the average sale price of 2 kanal houses in the DHA increased by 19% between May 2013 and April 2014.

Housing sector of the city performed well after the general elections and registered notable price increases before stabilising towards the end of CY 2013. An increase of 16.36% and 14.71% was seen in DHA and Bahria Town respectively for 1 kanal houses between May 2013 and April 2014.

 

Average Prices of 1-Kanal Houses in 2014
Localities	Avg Sale Prices	Avg Monthly Rent	Rental Yield
Cantt	36,663,523	112,596	3.78%
DHA Lahore	33,520,769	120,487	4.31%
Johar Town	26,981,235	118,685	5.28%
Bahria Town Lahore	25,701,511	88,250	4.12%
			© Zameen.com

 

Rises and falls in Islamabad property market

Property prices in Islamabad remained largely stable, except for a few localities where prices hikes were witnessed during the last 12 months. Even after the general elections, the average sale price of 1-kanal plots in the high-end areas of the Federal Capital remained steady.

However, Sector F-11 witnessed an opposite trend in terms of property prices, where the average sale price of 1-kanal plots remained bullish comparatively and recorded a 10.14% rise in value in the first four months of the CY 2014.

Bahria Town and Sector E-11 could not compete with Sector F-11 in performance. The value of 1 kanal plots in Bahria Town has been impaired by 18.87% since January 2014. Similarly, in Sector E-11, the property prices started to follow a downturn from the beginning of the current year.

The housing segment of Islamabad, on the other hand, performed comparatively well. The average sale price of 1-kanal houses in E-11, F-11 and G-11 increased by 24.61%, 11.32% and 43.28% respectively in the last 12 months. The rental market of Islamabad also showed favourable figures in terms of rental yield in the first four months of the CY 2014, and Sectors E-11, F-11 and G-11 of the Capital Development Authority (CDA) posted decent rental yields in the said time period.

Average Prices of 1-Kanal Houses in 2014
Localities	Avg Sale Prices	Avg Monthly Rent	Rental Yield
F-11	63,408,572	189,709	3.60%
E-11	58,188,889	167,475	3.46%
G-11	57,251,111	171,889	3.61%
Â			 © Zameen.com

 

 

Uptrends registered in Karachi’s real estate market

The law and order unrest in Karachi could not keep the market much from showing favourable trends in property prices. As compared to the real estate sectors of Lahore and Islamabad, the realty market of Karachi exhibited a better performance, with consistent uptrends in property prices.

In DHA Karachi, the average sale price of 1 kanal plots stood at Rs 19,811,940 in May 2013, which spiked by 27.96% towards April 2014.

Even in Gulshan-e-Jauher and Gulshan-e-Iqbal, decent property price jumps were witnessed, mainly due to the scarcity in plots supply that created demand and supply lag in the said localities.

With regard to rental yield, Clifton outshined other localities as the rental yield in the area was witnessed to be 5.98% for 5 Marla (1125 sq.feet) accommodations and other smaller apartment units. According to the data maintained by Zameen.com, this rental yield is by far the highest, as compared to any other locality in the country.

Upcoming months

The month of Ramazan and also the annual budget are around the corner. The property prices and investment are unlikely to register any significant rise in the coming two months. However, after the announcement of budget and the end of the month of Ramazan, the prices may start inching up again.