KARACHI, Oct 25: Property prices have further declined by at least 15-30 per cent this year as investors have been on the sidelines since 2005 owing to uncertain political and economic conditions in the country.

Even the formation of a new government after the February general elections and the PPP-MQM alliance in Sindh has failed to woo the investors. As a result, there has been no impact on the property market after these developments. Real estate dealers had estimated price hike by 20-30 per cent after the PPP-MQM alliance.

Real estate dealers said that investors were more interested in ‘playing with the dollar’ instead of taking risk in the property.

There are also reports that investors have been trying their luck in Malaysia and some other Islamic countries rather than property markets of Dubai and Pakistan.

Giving a brief review of prices, Owner of Pak Estate at Clifton Khan Zubair Shaheen said that a 500-yard plot in some phases of DHA is now priced at Rs7.5 million and the market lacks any enthusiasm among the buyers despite massive fall in prices. The same plot was available at Rs10 million in Dec 2007, falling to Rs8.5 million ahead of election. He added that even buyers are not ready to lift it at Rs7 million these days.

He said that a 1,000 yards plot was available at Rs18 million in December 2007. Its price had fallen to Rs15 million ahead of election and further fell to Rs12 million.

Khan said that some investors had been active in Malaysia and Oman after Dubai. He said only eight to 10 deals of property were taking place in DHA office as compared to over 100 deals in the boom period.

Chairman Clifton-Defense Real Estate Association Arif Malik was of the view that the price of property has declined by 30-40 per cent in the DHA, especially from January till now.

“Investors are busy in investing in dollar rather than property,” he said adding that there were hardly any investors interested in real estate. He also said that some investors, after making windfall from Dubai property boom, are now active in Malaysia.

“Property transactions may remain at the bottom as much depends on the law and order situation, political and economic uncertainty and unfortunately the situation has not improved yet,” Malik said.

Owner of Parekh Estate Abdul Wahab Parekh said that buyers of property in Karachi demand further cut in prices from the sellers despite 20-30 per cent fall in the rates.

Only genuine purchase and sales are taking place as investors have been cautious to invest in the property business. However, he said that some clever buyers are buying the property as they think it is the right time to purchase when rates have plunged sharply.

He said that a new single storey 1000-yard bungalow in Phase V, VI and VII is priced between Rs50-55 million as compared to Rs60-65 million in January this year. A double-storey 500-yard bungalow sells at Rs25 million as compared to Rs30-35 million. An old double storey bungalow is available at Rs35 million as compared to Rs40-45 million in January this year.

He said that property market may remain dull in view of reports of financial crisis in Pakistan and stock market crash.

Parekh recalled that the people and investors had made massive investments in booming real estate business in DHA and other areas like Gulistan-e- Jauhar following huge influx of home remittances during the period 2001-2005, which had pushed the property rates up by four to six times.

The imposition of two per cent capital value tax (CVT) two years back had also discouraged the investors to operate in the property market.

Commenting on reports of upward revision in property valuation table to increase the revenue, he said it is not the right time but a slight increase of five to 10 per cent may not make any negative impact on the market. However, a sharp increase would encourage sale and purchase of real estate on power of attorney in order to avoid tax.

Owner of Johar Associates in Gulistan-e-Jauhar, Abdul Wahab said that a 240-yard plot in Block 2 and 3 is now priced between Rs5.5-5.7 million as compared to Rs6.5 million in January this year. The price of 400 yards plot in the same blocks is, however, between Rs7.5-8 million as compared to Rs9.5-10 million in January 2008.

He said that sale and purchase had been very negligible owing to uncertain political and economic situation in the country in the last 10 months. He said the impact of financial crisis in the world will be slightly felt in the country’s property markets in future.

He said investors still feel that Pakistan’s property market is not safe for investment. Many of the investors are trying to pull back their investment from Dubai and are waiting for the economic and political harmony so that they could invest in their country.

He was of the view that increase in property valuation table would further depress the sentiments of the investors and general public, who are already holding cash and were waiting for an appropriate time to invest in real estate.