A crippling currency decline and a worsening economy were not able to crimp Pakistan’s property market in the last 18 months. Now, with the political situation having cleared up with a new government in power, developers are building up some great expectations on the sector’s performance.
“Developers for the most part have remained aggressive with their launches, not only in the major cities but in Tier 2 areas of Hyderabad, Peshawar and Quetta as well,” said Furqan Hussain, who heads Quice Industries. “This trend is expected to continue because the depth of demand is clearly self-evident.” The developer currently has three projects in Karachi City, and is exploring the possibility of making an appearance in Islamabad within the next two three years.
Hussain’s optimism would have seemed misplaced just six months ago. At the time, the rupee seemed locked into a spiral, and had dropped more than 20 per cent since January 2017. (A dollar gets Rs124.12 based on the Friday exchange rate.)
There was constant chatter about the need for some sort of help from the International Monetary Fund to prop up a fast deteriorating situation.
But the recent elections and Imran Khan’s step up as Prime Minister seem to have brought the economy some breathing space. In the real estate space, developers say there aren’t any overt concerns about high supply getting caught out by muted demand.
Zeeshan Zaki, Director at Saima Builders, said, “Demand for offplan remains robust in Karachi and that’s across all income strata. We have not experienced an adverse slowdown despite the political climate prior to the elections.
“With regards to our immediate plans, we see no change to our pace of launches. In fact, we feel the pace might even increase given the optimism over the new government’s policies.”
Will non-resident Pakistanis come through in sizeable numbers? According to Hussain, apart from at the top end of the residential market, expect investment flow into Pakistan real estate hasn’t exactly being seeing a surge.
According to Sameer Lakhani, Managing Director at the consultancy Global Capital Partners, “Real estate values did remained muted over the last year — but this is not the same as saying demand is projected to fall. Pakistan faces an acute housing shortage across all income levels, and housing schemes that have thus far been announced will not fully address this shortage.
“While the overall picture remains optimistic after the elections, market participants are still waiting on the direction of economic policies by the new government and which will set the tone for 2019 and beyond. Should the government provide impetus for the affordable housing push — backed by mortgage reform and the offering of such products by the banking sector — property values can then enter a period of sustained growth.
“This optimism obviously needs to be tempered against the backdrop of rising interest rates, which is always a negative for real estate markets.”
But for the moment, developers are willing to get by on that optimism alone. After all, they have had to get through much worse in the recent past.