Express Tribune report by Shahram Haq
Lahore’s real estate sector, which has been under immense pressure due to lack of investment and trust, especially after the breakdown of the boom observed between 2003 and 2005, has finally started to rebound. The recovery has taken seven years, but this time it builds on more solid grounds.
Lahore’s real estate revolves mainly around the Defence Housing Authority (DHA), which has expanded massively in recent years. Although there are similar housing societies in the city which provide comparable living standards, prices for land in DHA are more volatile and sensitive to investor sentiment.
For the past year and a half, prices of plots in DHA have witnessed a steady upward trend. Price increases in some blocks have crossed even the 100% mark. For instance, the price of a residential plot in DHA Phase-8, a prime location in front of the Lahore airport, is around Rs11 million for one kanal of land. The price of that same plot around two years ago was around Rs4.5 million. Similarly a one kanal plot in Phase-6 was available two years ago for around Rs6.5 million, now costs Rs12 million.
Bahria Town, located on the other side of the city, has also witnessed an uptick in plot prices. Bahria Town, which has shot to prominence over the last decade, has witnessed a nearly 60% increase in prices for one kanal plots. A one kanal plot, available one and a half years ago for Rs5-5.5 million, is now available for Rs8-8.5 million.
And although the housing market is currently taking a breather, real estate agents say that transactions are still taking place. After the announcement of elections, prices of land have fallen slightly all over Lahore, but investors are firm and are not willing to sell their properties.
“The increase in prices this time round was solid, unlike the boom we witnessed between 2003 and 2005, when prices of land increased abnormally,” said Sadaqat Ali, managing director of Pak-Estates, a realty firm. “Price fluctuations for a one kanal plot in DHA at that time often crossed the million rupee mark in a single day.”
“But investors are now coming to invest in property from Karachi, Quetta and Peshawar due to the law and order situation in these cities. A major chunk of investment is also coming from overseas Pakistanis, as they think that investing in DHA Lahore is the best option for their savings,” he said.
“Investors as well as real estate agents are not worried about today’s market situation, unlike in 2006, when we were helpless,” said Shahid Memon, a realtor who migrated from Karachi and now has stakes attached to Lahore’s real estate sector. “In fact, we want a slight correction in prices of plots for an option to reinvest.”
“We do not think that prices will fall by more than Rs0.5 million for plots worth around Rs10 millions, as investments made this time round are genuine,” continued Memon. “People are now focussing on starting to construct houses; either for themselves, or to rent them out. As soon as the election drama ends, the market will again go upwards, as right now, no other sector of the economy is providing such wonderful returns,” he added.