‘Lahore real estate market going through correction phase

Zameen.com is an integrated real-estate platform that connects property agents/sellers with buyers through the internet. The portal offers a wide array of property listings: ranging from residential properties, land and commercial options, homes, villas, apartments, farm houses, etc, in Karachi, Lahore, in Islamabad and other smaller cities.

Founded in 2005, Zameen.com was started as a small side-venture by the entrepreneurial brothers who were running their own B2B e-commerce business in the UK at the time. BR Research recently sat down with the dynamic duo of Zeeshan and Imran Ali Khan, Co-founders, ZAMEEN.COM, over coffee and what followed was winding discourse about the real-estate space in the country; the trends that have seen the sector evolve over time and the shape of things to come. We have attempted to capture the essence of the conversation in the following transcript. 

ZAMEEN: SOWING THE SEED “When we began this project, it was little more than an abstraction and we were prepared to let the idea simmer and the brand name grow for as long as it took for the concept of an online real-estate portal to gain traction, begins Zeeshan-who is the older of the brothers and a chemical engineering graduate from Imperial College London.

At the time we came to Pakistan and started Zameen, the real-estate landscape was completely devoid of innovation. And for the next couple of years, Zameen.com was little more than a place where property listings could be put up for free–with the brothers deciding to monetize operations only in 2010.

They started by charging a very small fee for listings, with the intent to capitalise on the brand name they had built silently over the years. And their vision, it seems was headed in the right direction from the start. Shortly afterwards, in 2011 Gilles Blanchard, co-founder of France’s largest real estate portal Seloger.com contacted the brothers and declared his firm’s interest in making an investment in Zameen’s business. Although Seloger itself didn’t come to the country, Blanchard himself eventually became a minority stakeholder in the business and currently acts as the Chairman of Zameen.com

Today over 60,000 properties are actively listed on Zameen.com; however, the total number of properties that have at one time or another been listed on the portal hovers around 500,000, Imran-the younger of the two brothers tells us. Leaving a much coveted position at Deloitte to join his elder brother’s venture, the Oxford grad incurred the wrath of his family when he moved back to Pakistan.

But the choice both entrepreneurs made has seemingly paid off. Growth has picked up at a steady pace over the last 2 years, with the portal getting around 15,000 new listings each month. The firm makes up an increasingly large portion of its revenues from charging for listings; however, Zameen also has a number of advertising products that currently make up for more than half of the firm’s revenues.

“But the main focus is on increasing our listings and generating the bigger chunk of revenue from there. We have an extensive clientele of over 4,500 sellers and over 500 of these agents are paying customers with brick and mortar presence in the local real-estate arenas of their respective cities”, they tell us.

A TREASURE TROVE OF REAL-ESTATE DATA Real estate investments have always been considered a sure fire bet-secure investments that promise the investor a steady return over a period of time. However, the dearth of working knowledge about the local real estate market has introduced too many variables into the mix-lowering the potential of making serious capital gains. Consequently, many investors have begun giving the real estate market a wide berth because of its undocumented and unpredictable nature-after all the prudent investor can probably make more money off a government security with none of the hassle.

However, being the biggest real estate portal in the country, Zameen.com has priceless information on the online real estate trends that have been prevailing in the country since 2006. Although Zameen.com doesn’t actually take part in the end transaction (which means that they do not have numbers telling us exactly how many of the listings on their website culminated in actual transactions) their databases keep track of everything from prices prevailing in a particular area and the customer’s interest in a particular land denomination to the average rate of increase of returns on investment in a particular gated community over a specified period of time.

We at BR Research believe that this cornucopia of resources and information can be put to good use through the development of a functional Real-estate Index which will align and de-mystify a lot of information for the consumers.

RECENT TRENDS IN PROPERTY PRICES The brothers believe that while the real-estate market of Lahore is currently going through a phase of correction, the twin cities of Islamabad-Rawalpindi are on the rise. This is mirrored in the ever-increasing listings put up from Islamabad and the steady stream of interest Zameen.com receives from the cities. “Unlike Lahore, the consumer in Islamabad for instance is much more computer savvy. We are, therefore, seeing a very steady growth in traffic from Islamabad-so much so that the numbers are now neck-to-neck with traffic from Lahore,” says Imran.

The trend setting localities drawing major love from investors, however, are the same as in Lahore: suburban developed communities such as Bahria Town and the old-is-gold DHA. In areas where property rights are more secure, prices are automatically higher, they believe.

But, in cities like Karachi, where the “paradise-between-four-walls” gated communities have not been rolled out extensively, the investors feel short of options, they assert. “Lahore has a number of prime zones including WAPDA Town, Johar Town and Cantonment, whereas Karachi has very few similarly attractive localities. This is the reason you see a huge disparity in prices of plots of residential land in DHA Lahore and DHA Karachi,” they say.

Going forward the brothers predict if the computerisation of land registry is taken up on a larger scale, the overall volume of real-estate transactions will go up drastically. “The chunk of our business is still coming from secure developments, but we have witnessed interest in clusters all around Lahore. Areas such as Johar Town and WAPDA Town are particularly attractive to the expat investors and if the land documentation process is made more secure, even blue-collar expats will be able to make investments in the local real-estate space,” they believe.

Copyright Business Recorder, 2014

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