KARACHI: A flow of money from a slowing Dubai property market to Pakistan has pushed up prices, as much as double in some areas.

Property dealers and de­­ve­­lopers said higher demand, especially in Karachi and Islamabad, was driving prices higher on a daily basis.

In contrast, investors said Dubai market had lost attraction, falling by 15 to 20 per cent in recent months.

According to Dubai Ann­ual Market Update Report issued in mid-December, ave­rage residential property rates have fallen 16pc and 14pc year-on-year for apartments and villas, respectively, while overall unit transactions declined by 33pc.

However, it was also noted that money laundering was checked by the law-enforcement authorities, particularly in the wake of operations against terrorism and its abettors. Recently, some money changers were grilled in this regard by the authorities while a big money changer is already in custody over charges of money laundering.

“Ample liquidity for property investment is pushing prices everywhere, particularly in Karachi and Islama­bad,” said Ashraf Hameed, the director of property developer Value Housing.

He cited closer monitoring of cross-border money movement and improved law and order situation in Pakistan as reasons behind the uptrend. “We have no problem of law and order in Islamabad while situation in Karachi has also improved significantly.”

M. Anwar, a private investor residing in Karachi, said: “Property prices in Dubai have dropped 15 to 20pc in commercial and semi-commercial areas, and 5 to 10pc in posh areas.”

Pakistanis have been leading investors in Dubai properties and achieved top position a year ago. Most of them were businessmen, politicians, government officials and those who migrated to other countries and shifted their property in Dubai for better returns.

It is also believed that illegal money earned through corruption found Dubai as safe haven. The balance of trade has been in favour of the United Arab Emirates. In FY15, imports from the UAE were $7.4 billion while exports were just $1.3bn. Imbalances due to illegal trading could be much higher.

Since the money laundering has substantially reduced these days, the exchange rate, particularly in the open market, is stable for more than a couple of months with slight fluctuations.

Exchange companies said the demand for the US dollar is normal. “The State Bank of Pakistan and the government took money laundering as a very serious offence and a number of money changers came under investigation. It discouraged people and even if it has not stopped completely the scale of such shady transactions has shrunk,” a money changer remarked.

Leading currency dealers told Dawn privately that several illegal exchanges indulged in unlawful activity of money transfers. Many such outfits were operating openly from many cities of the country.

Published in Dawn, February 21st, 2016