Real estate business suffers lean times amid govt's revision in valuation

Real estate and construction sector has been nearly paralyzed in the country.

KARACHI (Dunya News) - A potential decline in real estate prices has been observed in Karachi, Lahore, Islamabad and other urban cities of Pakistan.

Former Association of Builders and Developers (ABAD) president Arif Jeeva expressed his views on the matter when contacted by the media.

He asserted that 20 to 25 percent decline in property transactions has been observed.

“A significant reduction up to 15 percent in rents of rental homes and apartments has further deteriorated the situation,” Jeeva said.

“While policies are being modified on a daily basis, we do not know what is going to happen on the following day,” he said.

The FBR’s decision to enhance properties  value is likely to further depress the property market that has seen a severe cut in the transactions after the ban on non-filers to buy property above Rs5 million.

Experts have informed that a property worth Rs30 million in Karachi’s Gulshan Iqbal or Gulistan-e-Johar could not be even sold for Rs25 million while a plot or property worth Rs100 million in Defence area could not be even sold for Rs75 million.

Regarding Lahore, they maintained that a 10-marla plot or property worth Rs 20.37 million could not be even sold for Rs 10.90 million.

Hence, real estate and construction sector has been nearly paralyzed in the country.

Moreover, they informed that property market costs are analysed by three methods using values from the Federal Bureau of Revenue (FBR), DC and market, and termed these methods ‘hindrance’ in real estate businesses.

Real Estate Agents Association President Raja Mazhar strongly lamented recent change in policies by the federal government and said if taxes were not reduced; the seizure of businesses would result in decline in payment of taxes to the government itself and consequently investment.

He further added that since no properties were being sold, people have been renting their properties that have resulted in increase of rental houses and properties, and consequently a decline in rents of properties.

Mazhar stated that people, who have been living in rental houses, have started to purchase their own plots and homes after they have gotten cheaper.

He expressed grievance that the government did not consult or discuss such matters with stakeholders before implementing the concerned policies.

Real estate prices in Pakistan have increased indefinitely in the past decade, while one of its reasons being inclusion of black money in the sector and actual price of property is usually kept hidden to avoid taxes.

The strict measures by the government to curb corruption and black-money in the real estate sector will definitely affect the businesses. However, it is anticipated to bring fruitful results in the long run by allowing a common man to also participate in the sale and purchase of real estate businesses.