The average rate of property in Karachi has been declining after the implementation of the new tax regime. The downfall in property values that started from July 1, 2016 has, reportedly, resulted in a 60% drop in property transaction volume. The remaining 40% of trade activity is being steered by genuine buyers and occasional investors seeking long-term gains.
Genuine buyers are often more interested in flats in Karachi, as not only does the market value of these units increase steadily, their demand among tenants is also reasonably high. Furthermore, the timely delivery of these small-scale projects is also an attractive factor for home buyers.
For plots in Karachi, the data compiled by Zameen.com, shows a gradual and consistent drop in rates recorded between July 2016 and September 2016. The price drop is higher for plots with a higher price tag, which means all prime localities in the city have majorly felt the blow of the increased property taxes. Similarly, the percentage drop seen in the value of commercial property is also huge.
Due to the general standstill in the market, many Karachi projects that were launched recently have also been at a halt. The Association of Builders and Developers (ABAD) has also been highlighting this fact time and time again, and demanding the FBR address the concerns of real estate builders and developers. Nonetheless, the crisis prevails at the moment, leaving many property owners uncertain about the future of their investments in the Karachi real estate sector.
In DHA Karachi, Zameen.com recorded an average price drop of 4.03% and 1.70% for 500 yard2 and 250 yard2 plots. Compared to the decline seen in DHA City Karachi (DCK), the plunging rates in DHA proper seem rather benign. In Q3 2016, the average value of 500 yard2 and 250 yard2 plots in DCK declined 7.22% and 8.18% respectively. At the moment, the society is not witnessing much sale-purchase activity.
Property rates in Bahria Town Karachi (BTK) have also dipped but, interestingly, this price drop is higher for 250 yard2 plots than their 500 yard2 counterparts. According to Zameen.com’s stats, average asking price of 500 yard2and 250 yard2 plots in the locality dropped 1.77% and 4.15% over the course of Q3 2016. Despite the fact that possession of properties in almost 80% of the area of BTK has not been granted yet, investors have similar concerns over taxes. Thus, this is keeping sale-purchase activity slow in this particular locality as well.
Gulshan-e-Iqbal, which is not an investor-focused development, has also seen negative effects of the new tax mechanism. The average rate of 500 yard2 and 250 yard2 plots here in the locality recorded a drop of 3.55% and 2.86% respectively between July 2016 and September 2016.
Some real estate experts believe that property trade might resume partially by the end of the year but they all agree that reversing the damage caused by the new taxes will take many more years.
Thanks for this in depth analysis :)
ReplyDeleteIrfan