Pakistan’s property sector stalled in the first quarter of 2015, according to new data released by Lamudi Pakistan. A new quarterly property price report from Lamudi shows that all categories – houses, apartments, plots and new developments – were sluggish during the first three months of 2015.
This holds true for all major cities including Lahore, Islamabad and Karachi, in both the rental and buying categories. However, the analysis also reveals increasing interest from property investors in mid-tier cities such as Gujranwala and Faisalabad. With new developments springing up in these areas, investors are eager to cash in on the emerging real estate potential.
Delving deeper into the property categories, Lamudi’s data shows that the apartment segment registered a slight decline. Karachi, which has the highest number of apartments in the country, saw a major decline in prices to buy. This decrease in prices could be attributed to the slowdown in the real estate sector overall. Prices for rental apartments in the city have also stalled.
In the housing category, this segment has also shown negative growth in both the rental and buying categories. Lahore saw the most decline in average house prices (for buying), followed closely by Faisalabad and Gujranwala. Islamabad, on the other hand, only registered a slight decline. The prices for rentals in almost all cities recorded a slight downward trend, except Gujranwala which registered an increase.
Saad Arshed, Country Manager of Lamudi Pakistan, said: “Currently, there are few genuine buyers in the market and until investors make profits in their current investments, they are not likely to invest further.”
In the commercial buying category, Lahore registered the highest decline in prices. In the commercial rental category, Lahore and Karachi saw declines whereas Islamabad and Faisalabad saw slight increases.
“The commercial property sector has come to a standstill across the country, with prices showing a much steeper decline than within residential categories. With the property market offering low or negative returns, investing in commercial property is currently seen as a costly exercise,” Mr Arshed said.
Lastly, in the plots category, prices across all major cities declined over the past quarter. With the withholding tax imposed in the 2014-15 budget, the property sector was dealt a huge blow. Investors are now waiting for the new budget to be announced in June 2015 and hoping for tax cuts to see a revival in this sector, otherwise the slump is forecast to continue.
According to Mr. Salman Sheikh, CEO of First’N’Final: “In Q1-2015, the real estate market was undergoing a slump with property buying and selling close to nil. This is mainly due to the heavy taxes imposed by the government.
Recent trends in real estate have shifted the interest of investors to these short-term gains. Therefore, there are no genuine buyers or investors available in the market currently for long term investment. We are hopeful that the government will take favorable measures for the real estate sector in its upcoming budget.”