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2012 bleak year for Karachi real estate sector

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* Law and order, weak economy, land grabbing remain major factors

Poor law and order situation, unstable economy and land grabbing remained the major contributors towards dull activity in real estate sector during 2012, said Anwar Gagai Chairman Association of Builders and Developers of Pakistan (ABAD) on Saturday.

We still have enough demand but poor security and law and order situation became barrier in the way of investment in real state sector, he added. Government should take concrete measures to placate the situation other wise this sector would more adversely affect in 2013, he said.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Standing Committee for Real Estate Chairman Munir Sultan said country’s requirement was 1.5 million houses per year but around half of the numbers are built.

Quoting State Bank of Pakistan’s figures, he said only 4.5 percent contribution in GDP from real state sector was recorded in 2011-2012 fiscal year while it was 18.5 percent in 2005.

Munir termed it was a failure of government as they constantly showing apathy toward real sector resulting high housing backlog.

He said country has 12 million housing backlog, as it was just 6.6 million in 2005, increasing backlog is due to 4.5 percent population growth per annum according to World Bank and population influx in urban areas from rural areas.

Implementation of Real State Investment Trust (REIT) and mortgage finance is a need of the hour to stable real state sector as we approved REIT in 2002 but it was still unimplemented due to some flaws, government should review on it and implement on early basis, Munir added.

Although Karachi is facing security issues, which are impacting its real estate sector, yet this is for sure Karachi is still in the list of the most desirable areas to invest or live in Pakistan.

For the stability of Karachi realty sector, the government should try to fix the law and order situation in the city, cutting down mortgage rates and also to attract foreign investment.

Moreover, it has been observed Karachi’s unsafe atmosphere led a number of residents to move to other cities in search of peace and security. This migration, if one hand proved vital for Lahore real estate (others) and raised its property prices by as much as 30 percent, then on the other hand it also left a small blot on performance of Karachi real estate. By Abrar Hamza Daily Times

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