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DHA Gujranwala Installments Plots Prices , higher than DHA Multan.,

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   K.Saab
Wednesday, October 31, 2018 07:48 PM 
Reply: >
Hello!
Today 01 November 2018, DHA Gujranwala announced installments plots (and commercials) as per attached picture where prices are much higher than DHA Multan and DHA Bahawalpur.
1) How much possible Own are expected on DHA GWA prices ?
2) To equalize prices with DHA GWA, do you think that Own/Profits on DHA Multan installments plots prices should increase immediately ?
3) Plot Ballot of DHA Bahawalpur has been announced on 25 December 2018, should there now be any impact on its files rates after the announcement of DHA Gujranwala Prices ?
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Expert response is anticipated by respectable Ch Mujahid Yasin.
Investor replied on Thursday, November 1, 2018 07:02 AM 

I still remember in year 2015 price of 1 kanal file is 26 lakh and 10 marla price was 16 lakh. And nobody willing to buy at that price. This project got huge potential. As it's quiet near to lahore. Plus no more land available in lhr for dha. So dha gujranwala will definitely boost.
KSA BankerŪ replied on Thursday, November 1, 2018 08:36 AM 

In my humble opinion, both the processing fee and the file prices are way to excessive. To illustrate my point, i did some simple mathematics. They mention in the form that after ballot, if a successful applicant wants to pay the full amount upfront, they will give a discount of 5%. This means that if a person got one kanal file in the ballot and wants to pay full amount upfront, he will pay 70.3 lacs. Now considering that fully paid one kanal cash files (allocation) are currently available in the market at 43.5 lacs (LRE rate of today), then who in his right frame of mind would opt for the one kanal being offered under this payment plan.

Another way to look at the overpricing magnitude is that if you discount all the future payments for a one kanal file under this payment plan to calculate the present value of those payments, then the discount rate should be 53% per year to make their present value equal to 43.5 lacs which is the price of cash file today. In other words, the embedded interest rate in these prices is 53% per annum. I am not sure if any bank in pakistan is charging that kind of interest rate on personal finance loans.

Both these approaches indicate the prices to be excessive. Although some people might argue that not all people have cash upfront and can only buy on installments. I would say to those that they would be much better off saving every month till they have enough to buy cash file instead of these installment files because project is in very early stage and cash file is unlikely to rise too much over the coming one year or so. I personally feel this installment offering will be a massive failure. Rest, God knows the future.

I am just trying to help my fellow investor brothers as not all may be able to analyse the opportunity as stated above.
Khan88 replied on Thursday, November 1, 2018 09:11 AM 

Bravo@ KSA Banker- very good analysis , but in Pakistan there is no shortage of people who dont think before spending money on property.
Predictor replied on Thursday, November 1, 2018 09:38 AM 

Some people might not agree with the prices. But if we look at some other industries like car manufacturers increase their prices. Cement price increase means cost of construction increase. Inflation overall increase in pakistan. So real estate is the only industry which remain static. Comparison of rates with respect to inflation will definitely need some correction. And all these calculations will go wrong whenever correction is made! I means how can this be possible? when everything in a country is getting expensive day by day our land is getting depreciate. Not possible at all.
K.Saab replied on Thursday, November 1, 2018 09:49 AM 

Its not about that if everything is getting expensive then how property/lands prices remain static or down. Remember that if Costs of everything gets increased, it lowers the purchase power, ultimately demand gets lower, buyers gets disappeared from market. This is what we are experiencing since last year.
This is about if same DHA GWA cash prices are available much cheaper than Installments rates, why people will go mad for installments file?
Same issues we experienced from DHA Bahawalpur and DHA Multan.
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DHA Multan 10marla Cash Available Rate: 37.35 Lacs.
DHA Multan 10marla Installment File Rate: 35.00 Lacs + 5.35Lac Own= 40.35Lac. (3Lacs higher than Cash File)
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DHA Multan 1Kanal Cash Available Rate: 47.00 Lacs.
DHA Multan 1Kanal Installment File Rate: 68.00 Lacs - 1.50Lac Own= 66.50Lac. (19.5Lacs higher than Cash File)
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DHA Gujranwala 10marla Cash Available Rate: 29.50 Lacs.
DHA Gujranwala 10marla Installment File Rate: 44.00 Lacs. (14.5Lacs higher than Cash File)
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DHA Gujranwala 1Kanal Cash Available Rate: 43.50 Lacs.
DHA Gujranwala 1Kanal Installment File Rate: 74.00 Lacs. (30.5 Lacs higher than Cash file)
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It appears that Installment plot prices of DHA GWA are kept to lift up the rates of its Cash files. Its another point of view. Let's see how market reacts to new launch of DHA Gujranwala.
Khan88 replied on Thursday, November 1, 2018 03:59 PM 

K.Saab hugely impressed by you, your views are quite valid - the funny thing is that cash prices might actually fall (if somehow people buy/put money in installments) as a result of less demand.
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