KARACHI: While falling property prices attracted genuine buyers only the bleak economic scenario and uncertain future irked the investors, who led the rally five years back, estate agents said.
They said the falling property rates did not translate into more sale/purchase deeds over the last three years. Rising cost of living on account of surging food prices, higher utility charges drove even some genuine buyers out of the property market.
Estate agents interviewed by Dawn said that the prices of plots and bungalows, which had witnessed a tremendous boom during 2005, had declined in the last three years by 10-20 per cent in developed areas, 30-40 per cent in areas still developing and more than 40 per cent in new investment areas.
In areas like F.B. Area, North Nazimabad, PECHS, North Karachi etc, wealthy residents in the past had been purchasing old houses for renovation, reconstruction to lift the worth of property. Estate agents said that the poor law and order, terrorist and suicide attacks, higher property valuation rates, capital value tax (CVT) and other taxes had shaken the investors’ confidence.
They said fewer deals are sealed as investors seemed to be waiting for the economy to pick up.
Chairman United Defence Clifton Estate Agents Association Raja Mazhar Hussain said the price of open plots and bungalows in the posh areas had fallen by 10-40 per cent and 10-15 per cent, respectively.
He added that only seven to eight property transaction files are moving in the DHA office daily. In better times the turn over was as high as 90 files a day.
He was of the view that property market had been in turmoil and the rest of the damage was done by sharp increase in the valuation rates by the government.
He said the association had proposed to the government to remove CVT and valuation rate should not exceed 40 per cent.
Owner of Parekh Estate at Clifton Abdul Wahab Parekh said that only a stable government and its positive decisions can inject a new life in the property business, otherwise chances are remote to see any hustle and bustle in future.
Parekh said after persistent increase in gold prices in world markets and in local markets, gold has emerged as the best investment avenue in the last one and a half years.
Giving an example, he said the valuation rate has gone by two to three times from the pre-budget rate. The valuation rate on a 1,000 yards A-1 category plot in DHA is now 14,850 per square yard as compared to Rs4,950 ahead of budget.
A single storey bungalow in DHA phase 1 (A-1 category) carries Rs23,100 per sq yard as compared to Rs7,750 while the valuation rate for a double storey A category bungalow is Rs28,875 per sq yard as compared to Rs9,625.
Besides, the buyers have to pay two to three per cent CVT, one per cent registration fee and one per cent union council tax.
Owner of Marksman Associates in Gulshan-e-Iqbal Mohammad Zafar Khan said many estate agents had packed up their business in the last two and a half years. After falling sale and purchase in open plots and bungalows many of new estate agents have been focusing more in dealing mainly in rental business.
Owner of Johar Associates at Gulistan-e-Jauhar Abdul Wahab said that the prices of plots and bungalows in the area have fallen by 20-30 per cent in the last three years. There is hardly any investor taking interest, while only most need genuine buyers are in the markets.
Owner of Nazimabad Estate in North Nazimabad Mohammad Najib said a single storey house of 400 yards, which used to sell at Rs17.5 million three years back is now priced around Rs12.5 million depending on the location, while a double storey house can be purchased at Rs15 million as compared to Rs20 million.
He said investors and even general public are now scared to put money in property business to avoid getting exposed after rising cases of kidnapping for ransom.