LAHORE: The stagnant real estate sector, which showed a sign of recovery with the setting up of new democratic government, seems to have failed to materialise the upturn as support elements are missing and investors appear to prefer to stay on the side-line.
The prices of plots are almost unmoved for the last three years. If there is any change, it is nominal. The Defense Housing Authority (DHA) sector which usually lead the real estate sector are facing the same fate.
A plot in the newly developed sector VI, which costs between Rs5.5 million to Rs8 million-depending on its location, is still in the same price range. A plot file for proposed sector VIII whose price has been fluctuating from Rs3.8 million to Rs4.5 million is in the same bracket for the last three years.
Dealers attribute the situation to the wrong policies of the DHA. The authority, they say, promised to hand over possession of the plots in December 2007 but went back on its words. Resultantly, they added, the market price of the plots stayed where they were two years ago.
Not only in the DHA, the prices of plots in other posh areas are also facing a similar situation. For instance, a 20-marla plot is Model Town which was worth Rs10 million or little more is still available at the same price.
Similar is the situation in Johar Town, Faisal Town, Wapda Town, NFC, and Valencia Housing Scheme. In fact, at certain places, the price of plots has come down as compared to their prices three or four years ago.
However, the prices of shops and offices in the busy commercial areas of Gulberg, Cavalry, Shadman and DHA are rising. A front shop in a commercial plaza in Gulberg which was available for Rs10 million three years ago has now gone up to Rs1.17 million or more.
Similar is the situation of offices in the high rise buildings on the Main Boulevard Gulberg. The price of commercial plots in DHA is also shooting up. A four marla commercial plot which was costing about Rs10.6 million is now available for Rs20.5 million.
According to a banker of Muslim Commercial Bank (MCB) Rizwan Bukhari, owners of plots and other real estate are benefiting from bank schemes by pledging their land for obtaining reasonable amount and doing businesses.
Muhammad Akram, an investor in real estate says that when there is no fluctuation in the prices of plots, there is no use of putting your money at stake in real estate.
Abid Hassan, another investor, told The Post that he had shifted his investment from real estate to stock market from where he is getting 20 to 25 percent return.
The inactivity in the real estate sector is making about 3,000 real estate dealers almost jobless. The unrest among the dealers is touching its peak. They have expressed fear that the Capital Values Tax (CVT) which the Federal Government is proposing to levy in the budget would prove detrimental for the real estate sector.
“A sector which is already not able to generate any taxes, will not be able to pay CVT, instead, it will ruin whatever the little business is left in the real estate area,” they added.
Source: The Post, 16/5/2008