| Author: admin | Post Date: 2007-10-22 22:13:01 |
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Real estate: signs of recovery
By Nasir Jamal
The real estate market is beginning to show signs of steady but slow recovery in Lahore and other major urban centres of Punjab although it still remains a buyers market because of excess supply and relatively lower demand for residential plots and built houses, apartments and flats.
“The market is gradually moving from being a buyers market to a sellers market as the prices of land and houses and apartments have already begun to rise, though slowly, after having dipped to the lowest in the recent years,” says Mushtaq Khokhar, a realtor.
“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,” insists Akber Sheikh, a leading builder and developer. His claim is corroborated by renewed construction activity in quality locations in the city’s suburbs, a little away from the city centre, since the beginning of this year.
The renewed 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. Overseas Pakistanis returning home are also fuelling the demand, Sheikh says. But they are fewer in numbers.
“In the recent years we have seen the services, especially telecom and financial sectors, explode like anything. People working in these sectors are getting hefty salaries. Once you have spare money you immediately think of having a house of your own. That is from where the major chunk of the recent demand for property is coming,” says Sheikh.
“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,” says Abid Sagheer, a practicing architect.
He says the real estate market in Lahore is recovering faster than in other cities of Punjab. “And that is mainly because the moneyed people from other cities like Multan or Faisalabad or Sialkot do want to have a house or an apartment or a flat in Lahore for business or recreational purposes.
There is a general 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.
“The market is now stabilised and there is a normal upward trend in the prices,” says Asim Azmat, another realtor.
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.
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 fully 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. Such developers were also alleged to have been involved in encouraging speculative investment by stimulating an artificial demand for their projects by buying back and re-selling the files.
“These developers and big speculators made huge money in this business at the cost of unsuspecting small investors who lost their life savings at the end of the day when the bubble finally burst,” says a realtor.
In the last couple of years the real estate market has remained sluggish as investors went back to the country’s booming stock markets and original consumers waited with their fingers crossed for the market to cool down further and stabilise. “The demand is once again picking up. But this time consumers are more cautious and are choosing the reputable projects only,” says Gohar Ijaz, who is developing a resort residential community – Lake City - on the Raiwind Road. “The dynamics of our society are changing and with that consumer preferences and choices are also changing,” he says.
“Now the consumers are looking for well developed, gated communities that can offer them decent commercial area, hospitals, schools and recreational facilities. It is the quality of life, and not merely a roof, and convenience that consumers are looking for,” says Ijaz. He says more people prefer to buy a built house or an apartment or even a flat rather than purchasing a plot and then undergo the hassles of construction.
He claims that the market is now ready to meet the demands of a wide range of income groups – 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 Rs2.5-3 million in quality locations.
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.”Sheikh says consumers prefer to purchase built houses because of the availability of bank finance for the purchase. “It is like renting a house that will be yours at the end of a certain period. Any salaried person who is earning something like Rs50,000 can afford to buy a small independent unit.
But you shall have to move away from the city centres in to suburbs where the land is still cheaper as compared to localities within or near the city centres,” he says.
While the real estate market is recovering and sales of plots and built up units are picking up, the main worry for Sagheer is the provision of housing for the poor. “There is a nationwide housing shortage of 7-10 million units. Vast majority of people without a roof of their own to live under belong 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 becomes critical,” he insists.
But can government find resources for providing housing to all? “It can collaborate with private sector to provide small units at affordable prices to those who cannot afford to buy land and construct a house on it. Government has huge land resource almost everywhere in the country, which must be given free of cost to private developers for building small units and selling them to low-income groups at marginal profits.
http://www.dawn.com/2007/10/22/ebr2.htm |
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