The real estate sector witnessed mixed trend in 2013, as it seems that buyers have invested in small houses due to high demand, analysts said.
As compared to the 10.35 percent rise recorded in the rates of 125 square yards houses during 2012 in Karachi, 2013 brought along a price hike of 33.1 percent. Similar are the statistics for 250 square yard houses, Samra Zulfiqar, spokesperson for the real estate portal Zameen.com, said.
Interestingly, the rise recorded for bigger residential units during the year is considerably smaller than that recorded in 2012.
The statistics recorded by Zameen.com for the residential plots in Karachi also seems to be in favour of the smaller properties.
Much of the real estate activity in Karachi was seen during the second quarter of the year.
It was when the sale prices of plots and houses were on the rise. In addition, the property rates in the city had previously dropped enough to lure people about buying property, Samra added.
The record-breaking response received by Bahria Town projects in Karachi during the third quarter also triggered the real estate activity, she said.
According to the data, the average price of 125 square yards of house in various localities of Karachi from January 2013 to November remained in between Rs5.5 million to Rs11.3 million.
The average price of 250 square yards house was recorded at Rs18.1 million to Rs27.4 million from January to November, while the average price of 500 square yards house remained in between Rs38.1 million to Rs49.3 million.
The average price of 1,000 square yards house remained in between Rs68.4 million to Rs100.2 million, the data revealed.
On the other hand, prices of apartment’s of different sizes from January to November remained in between Rs4 million to Rs30.5 million. The average price of 125 square yards apartment was recorded at Rs4 million to Rs6 million, 250 square yards stood at Rs10.6 million to Rs15.5 million, 500 square yards apartment average price was Rs37.3 million to Rs30.5 million, it showed.
The average house rent during the year ranged between Rs29,000 to Rs32,000 for small covered area houses such as 125 square yards, while the house rent for 250 square yards was Rs60,000 to Rs65,000 and 500 square yards was Rs129,000 to Rs144,000.
The average rent of 500 square yards house in different areas during the period under review was recorded in the range of Rs115,000 to Rs160,000 and for the 1,000 square yards the rent was Rs290,000 to Rs350,000.
The year 2013, in general, was a good year for the real estate sector, where house prices witnessed hike. Overall, with an average 32.91 percent increase in the value of a 125 square yards house was recorded at Rs7,064,274. The average cost of the same house was around Rs5,310,996 in 2012.
Even better numbers were recorded for Karachi, the biggest city of Pakistan where housing units of different sizes recorded impressive price hike as compared to their value in 2012.
Houses exhibited a 55.77 percent year-on-year rise in their sale prices in Karachi. Specifically, DHA Karachi remained the most popular area in terms of investment in both plots and houses.
According to the statistics, 44.06 percent of the total people looking to invest in plots in Karachi were considering DHA over other areas because of better law and order situation.
A significant rise was witnessed in the popularity of DHA Karachi, which only claimed the attention of 26.46 percent during 2012. Similarly, 9.52 percent hike was witnessed in the popularity of houses in DHA during 2013 against to the figures in 2012.
While smaller houses and plots may be popular in secondary localities of the city, the trend is completely different in primary or posh localities of Karachi such as DHA, Clifton, Bath Island and Tipu Sultan Road. Rich investors have been investing primarily in larger houses and plots in DHA, Clifton, etc, where 500, 750 square yards units are more popular than 125 or 250 square yards, Samra said.
Mohammad Hafiz, a property dealer in Gulshan-e-Iqbal, said that mixed trend was seen in the property market and the people preferred to go for smaller houses because of high inflation and poor law and order situation.
Another reason to move into smaller houses is that it reduces the maintenance cost for security, sanitation and other utilities. The same is much higher in the case of a bigger residence, he said.
Khalid Lakhani, chief executive officer of Rabico, said that the prices of the property have witnessed an upward trend, as property owners demand more money. Lakhani added that in the future too, the property market will flourish in Karachi as long as black money keeps on flooding the market.
Abdul Wahid, a real estate agent in Clifton, said that property prices had risen by 50 percent to 70 percent from January to November and is likely to further go up by 20 percent to 30 percent in the near future.
The decision of allowing the Federal Board of revenue (FBR) officials to get access to bank accounts of people having Rs1 million turnover, caused fear among the people who pulled out their money from the banks and started buying property and buying dollars, he said.
Wahid said in an undeveloped area of Phase VIII, the price of 500-yard plot is now priced at Rs15 million to Rs17.5 million. In the developed area of the same phase, the rate of the same size plot hovers between Rs22 million and Rs25 million, while a 1,000-yard plot in Phase VIII costs at least Rs45 million, he added.
A 500-yard brand new double storey bungalow in Phase V, VI and VII ranges between Rs45 million to Rs52.5 million, while a double-storey brand new 1,000-yard bungalow is priced at Rs80 million to Rs90 million, while in A-One category, its price is Rs100 million, Wahid said.
One of the factors that had been injecting life in the property prices is the arrival of record remittances from overseas Pakistanis in several areas, including purchase of property, he added.
Abdul Qadir, a real estate owner in Defence, claimed that the property prices started crawling up from 2011 and witnessed further jump after the new government took over the charge.The market is expecting some increase in taxes in the Budget 2013-14, besides imposition of new taxes.
The real estate prices rose by almost 10 percent to 30 percent in the first quarter of the new government in almost all sectors (plots, flats and houses) in areas such as Clifton, Defence, Bahadurabad, etc, he said, adding that the real estate market has been in the positive trend for almost last three years and it will continue to maintain the trend for another two to three quarters.
For apartments and houses, it will take some time before the sales are affected, as the prices tumble. The market will stand at those lower prices and then constructed property will be affected, he said.
He linked the increase in prices to rising demand for housing units. The ever-increasing population in the city generates almost a million unit demand every year. However, this demand remains unmet, despite the development of new housing projects, he added.
The News report by Hina Mahgul Rind