By Khadija Aslam
KARACHI: Though the beginning of 2014 was marked by slow economic activity, yet the majority of the Pakistani business sector was expected to pick up the pace later in the year. However, the ongoing political unrest in Pakistan is adversely affecting the economy, causing investors to shy away, which serves to isolate the country from the global investment stage.
The friction between the government and opposition seems to have put Islamabad, the federal capital, under siege, creating economic & political instability as well as security issues. Political stability and regional security are two fundamental concerns for any investor. Therefore, the protests and sit-ins in Islamabad do not seem to benefit the current economy.
“Pakistan’s real estate sector has a lot of potential, in which investment can be made,” stated Yaseen Anwar, Governor State Bank of Pakistan, during a recent seminar in Singapore. It is a fact that Pakistan’s real estate sector has always shown some form of activity throughout the year.
However, the ongoing political unrest in the federal capital has diminished the confidence of potential investors, forcing many to hold off on their investments till the political situation in Pakistan stabilises. Due to the political situation, a steep decline in the prices of properties has been recorded in Islamabad. To a lesser degree a similar decline has been observed in the prices of properties in other cities such as Lahore and Karachi.
“The sit-ins have apparently barred the daily-life activities in Islamabad but have virtually paralysed the real estate sector throughout the country,” said Asad Mirza, Director of Homespakistan.com, the best property portal in Pakistan. The year 2014 began with a slow activity in the real estate sector but it was expected to pick up later in the year, especially after annual budget announcement by federal government. “It is seen that the mid-year budget announcement always acts as a huge catalyst for the entire investment sector, but it specifically affects the realty sector,” he further said.
Expatriates and wealthy investors generally gear up activity in the market by aggressively investing in Pakistan’s real estate sector. However, this year the market did not mark a roaring come back or show stellar performance due to the recent political turmoil.
“Homespakistan.com noted a significant decrease in the property prices not just in Islamabad but in Lahore and Karachi as well and decline in the property investment queries,” Asad added. “On our portal, Lahore, Karachi and Islamabad are the three most popular and most searched locations, for real estate investment. Local as well as international investors leave their queries at our portal for investment advice.”
However, the current statistics drawn from Homespakistan.com indicate that the search queries for these leading locations showed a downward trend, in the second half of 2014. “One can confirm this trend from any authentic source such as all legitimate real estate agents in our network, operating in Lahore, Karachi and Islamabad endorse the fact,” he said. It is because investors want some kind of surety and political stability in the region before investing their hard-earned money in Pakistan’s realty sector.
Though every sector seems to be affected by the recent happenings, the three major business hubs are being directly influenced by these events. However, Karachi’s and Lahore’s real estate markets seemed to have warded off these effects to some extent, but not completely.
A slight decline has been noted in the search queries related to investment in these both cities on Homespakistan.com. However, the effect is not as devastating as it is witnessed in Islamabad’s realty market. One thing is common in all these cities that potential investors are hesitant to take risk with their investment and even sellers are also not willing to sell their properties in these circumstances.
From the statistics and available information, it can be concluded that the progress of Pakistan’s real estate sector is directly related to the region’s secure condition and political stability. Simultaneously, one thing is for sure that PML-N is considered as a pro-business government in Pakistan and since general elections of 2013, positive investor sentiments have been observed. Based on this fact, real estate investors say that no matter, how long it takes to settle down the political issues between government and opposition, its impact on Pakistan real estate sector will be short-lived. The sector will bounce back immediately, as potential investors are just waiting for the right time.
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