Does Size Matter in DHA 9? (i.e. Plot Size)
Comparatively which size is a better buy for 5 years investment in
DHA Lahore Phase 9?
Currently:
5 Marla DHA 9 file is at 11.80 Lakh
10 Marla DHA 9 file is at 19.30 Lakh
1 Kanal DHA 9 file is at 31.25 Lakh
In DHA and other housing scheme generally there is a multiplication factor (for price) of 1.4 to 1.6 for a double sized plot with an average MF of 1.5:
i.e. generally
Price of Average 10 Marla plot = 1.5 X Price of Average 5 Marla plot.
Price of Average 1 Kanal plot = 1.5 X Price of Average 10 Marla plot.
Based on anticipated price of 5 Marla @ 40 Lakh (excluding development charges) and the MF (multiplication factor) of 1.5, after 5 years
prices of average plots in
DHA Lahore Phase 9 will be:
5 Marla at 40 Lakh
10 Marla at 60 Lakh
1 Kanal at 90 Lakh
40
40 X 1.5 = 60
60 X 1.5 = 90
Please note there are EXCEPTIONS based on skew in supply relative to plot size and demand of end users for particular sizes. Example: price of 2 Kanal > 2 X Price of 1 Kanal in DHA 6 and 7 due to very little supply of 2 Kanal plots and relatively high demand from home makers with deep pockets.
And currently this general rule does not apply to 5 and 10 Marla plots in DHA 9 where price of average 10 Marla plot is almost double of the price of average 5 Marla plot. But based on the anticipated supply (a large number of 10 Marla and one kanal plots be sold to public on installments) and demand of small to large sized plots it is safe to assume that after balloting this general rule of 1.4 to 1.6 MF will hold likewise in DHA 9. Keep in mind however that despite MF of 2 in DHA 9 plots, the MF for the
files is 1.62 to 1.63 at this time (11.80, 19.30 & 31.25).
31.25 / 19.30 = 1.62
19.30 / 11.80 = 1.63
As mentioned above, it all depends on supply of smaller sized plots compared with the supply of larger sized plots, and demand from the potential home makers. Small sized plots (5 and 10 Marla) in large numbers are relatively a new phenomenon in DHA 9.
So, assuming average price of 5 Marla at 40 Lakh (excluding development charges) after 5 years, the anticipated prices (in Lakhs) and Price Appreciation will likely be as follows:
| Plot Size | Current Price | MF 1.4 | 1.5 | 1.6 | 1.7 |
| | | | | | |
| 5 Marla | 11.80 | 40 | 40 | 40 | 40 |
| 10 Marla | 19.30 | 56 | 60 | 64 | 68 |
| 1 Kanal | 31.25 | 78 | 90 | 102 | 116 |
| | | | | | |
| | Price Appreciation | MF 1.4 | 1.5 | 1.6 | 1.7 |
| | | | | | |
| 5 Marla | | 339% | 339% | 339% | 339% |
| 10 Marla | | 290% | 311% | 332% | 352% |
| 1 Kanal | | 251% | 288% | 328% | 370% |
BOTTOM LINE: If the MF goes above 1.62 the larger size wins and if MF goes below 1.62 smaller size wins (very likely to be around 1.4 or 1.5) especially 1 Kanal Price will very likely be equal to 1.4 X 1.4 X 5 Marla Price, since there will be so many one kanal files compared with smaller sizes. The uncertainty about 10 Marla price will remain till announcement or lack thereof of more 10 Marla plots.
(Sorry for being too hypothetical about baseline price. No one among us knows the future, but there is some essential tadka of currently verifiable facts applied to possible future scenario of that baseline price)
Observer replied on Thursday, November 29, 2012 09:20 PM PST
1. I have clearly mentioned above that there are some EXCEPTIONS even in DHA, especially for 2 Kanal plots which are few compared with demand from the home makers with deep pockets. There are other exception in other sizes too (in different DHA phases), but in general this rule also applies to DHA. And BTW the exception also apply just like DHA to all other housing schemes too. Neither this Rule, nor the Exceptions are unique to DHA only. So you will likely get lost in this Rich/Poor, Superior/Inferior theory while trying to create some special DHA factor here.
There are variables other than plot size (especially # of plots, i.e. demand and supply for potential buyers) which equally affect DHA as well as other societies. In fact I believe the desire to live in DHA for the middle class in much stronger than any imaginative inferiority complex, otherwise why would they buy a 10 Marla under development plot in DHA 9 for 45 Lakh when they can easily buy a 1 Kanal under development plot in DHA 7 for 45 to 50 Lakh. It only means that there is definitely very strong desire to live in DHA from the middle class community AND DHA 9 definitely has much better location and potential than DHA 7.
2. Even with the exception, your comparison is totally unfair, where instead of comparing average plot at similar location, you are comparing worst plots in one size category to best plots in the other size category. This is not fair and does not hold logic for the sake of accurate comparison.
3. I also mentioned above that 5 and 10 Marla in relatively large numbers and with even better treatment than one Kanal, at least so far, is a new phenomenon in DHA. This is not the case in most previous phases. Still you can verify the ratio or MF in most cases with few exceptions.
4. You need to visit again the localities of small size plots (5 and 10 Marla) in Phase 5 and Phase 3, verify the actual going rates and the sentiments of their residents towards proudly living in and being part of DHA. You will rarely find any inferiority complex, unless you have one in yourself. It is you who matter, not the size or your house. You feel inferior ONLY if you think others are superior. DHA has nothing to do with that.
5. Here are some examples for you:
In DHA 1 to 4 reasonable and comparable plot prices are (for 5, 10, 20 Marla): 48, 75 and 110. That is MF of 1.6 and 1.47
In DHA 5 reasonable and comparable plot prices are (for 5, 10, 20 Marla): 43, 68 and 110. That is MF of 1.58 and 1.62
In DHA 6 reasonable and comparable plot prices are (for 10, 20 Marla): 58 and 85. That is MF of only 1.47
In DHA 7 reasonable and comparable plot prices are (for 10, 20 Marla): 30 and 50 in same incomplete blocks. That is MF of 1.67 which is gradually going down with time, and will likely touch 1.50 level at possession time
In DHA 8 Parkview reasonable and comparable plot prices are (for 10, 20 Marla): 55 and 80 (see prices in C and C Extension). That is MF of only 1.45
In DHA 8 Air Avenue reasonable and comparable plot prices are (for 10, 20 Marla): 49 and 70. That is MF of only 1.43
In general the real MF (of comparable plots with variation in size only) goes down with time, approaching below 1.5 at maturity, with few EXCEPTIONS here and there.
BTW, I am very happy if MF in DHA 9 goes above 1.7 and always remains above 1.7, but I find it next to impossible for the long run. Something around 1.5 is more likely to happen in the long run, just like other DHA phases. |