Sit-ins clip real estate prospects

The ongoing political deadlock in Islamabad may or may not have cost the economy Rs1,000-1,300 billion. But one thing is more certain: housing and real estate business has been knocked really hard. And while the real estate market has weakened across major cities of the country, the capital territory has been hit the hardest by the ongoing sit-ins and protests.
This is reflected in the data from Zameen.com, one of Pakistan’s premier property websites. Its search trends show that while home seekers in the market have continued with their dynamism, investors remained inactive during August 2014. It must be noted here that Islamabad is a hub for real estate investment unlike other cities where genuine buyers capture most of the market. Also, the top investment spot in Islamabad rests with plots. The latest city wise data from Zameen.com shows that the web portal witnessed around 9.7 percent drop browsing for plots in Islamabad by investors, while in Lahore this fall was around 2.9 percent.
Talking to BR Research, Zeeshan Ali Khan-–Co-founder and CEO at Zameen.com-–drew attention to the fact that the website’s traffic is largely fuelled by the overseas Pakistanis who account for around 40 percent of the sector’s transaction.
Khan further emphasised on the polarisation in Islamabad’s real estate market where investment not only pours in the high-end localities like F-10, F-11, E-11 and mid-range DHA and Bahria Town, but also the more affordable areas in the vicinity of the airport. Where most investment in the high and mid-range residential plots come from expatriates and investors in USA, investment in areas like B-17, PECHS and other localities come from the huge population living in UAE, Qatar and Saudi Arabia.
Within locality searches, as a percentage of Islamabad’s total searches, DHA and Bahria Town lead with 9.36 percent and 8.03 percent average share, respectively, in the first eight months of 2014. In terms of worth of these areas, the prices of one-kanal residential plots generally fell or remained stagnant in August except for a few areas.
So, while demonstrations and protests have affected the capital’s real estate market, there is no reason to lose hope; unlike developed countries where the property market is mostly rental and mortgage-based, Khan points out that real estate market in Pakistan is a strong cash-based investment avenue and thus more buoyant to such vulnerabilities.