No man’s land: Lahore’s fluctuating real estate market
It has been more than six months since the real estate market of Lahore is waiting for some gentle push at least for those whose livelihood depends on day-to-day transactions of land.
But the state of affairs in the market is a bit puzzling these days as in some cases land
prices are going down while in many areas they are going up. Still there are other areas where prices are stagnant. Such variations are recorded in popular localities where most of the property changes hands, causing frustration among many real estate agents and investors.We can attribute the slowdown to political and other factors, but the real blow comes from the levy of new taxes, which makes a simple land transaction more difficult and costly
In the budget for fiscal year 2014-15, the government imposed many taxes on real estate deals. Apart from this, the rate of land set by the deputy commissioner has also been increased up to 85%, pushing the tax ratio up by 100%.Depending on the value determined by the deputy commissioner, property transaction charges have risen sharply. In some cases, they have gone up 200% to 500%.This is not helping the government in generating extra revenues as the number of property deals has fallen markedly . This is the primary reason why the market is in turmoil.Earlier in 2013, the real estate market was rising above expectations, prompting many analysts to warn of a correction in prices of prime housing schemes.
According to property websites that monitors price movements, in the third quarter of 2014, a one-kanal plot in Lahore Cantonment, one of the most popular localities, lost 4.32% of its value.In the Defence Housing Authority, average one-kanal plot value increased only 2.74% and Bahria Town saw a rise of 2.65% in plot values after a drop of 3.08% in the second quarter.
The growth and decline in land prices should be attributed to the real buyers, who are now in majority .Housing needs were growing and the society which provided best infrastructure facilities was welcomed. However, many investors were still confused and were holding on to their funds waiting for the picture to get clear
There are some other factors that contribute to the sluggish property market.We should look where the money is going, investors need hefty profits, no matter whether they come from real estate, stock exchange or the overseas markets.A part of the capital is flowing to the real estate sector in Dubai, which is showing signs of improvement and indicating higher profits. Many other investors are injecting money into stocks as they are hitting fresh highs.Though many real estate agents were in trouble, this phase was helping them to expand their expertise by using latest marketing techniques and diverting attention to other residential societies.