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DAILY NEWS LETTER, 21-February-2017.

A 25% price upsurge is anticipated in Clifton Property Market in 2017.

Outline
This report provides a detailed analysis of property price variation over the period of preceding 3 months including the factors that has led the market towards rising trends, after the declining shock it has received in budget changes 2016 – 2017.

Background
A brief explanation is required here to grasp the overview that has led the property market in downward trend, first of all government has introduced FBR Property Valuation Table which became the main cause for its downturn and secondly the amplifying of taxes to 100%(advance tax), these two factors played their role for the downturn of property market and almost makes it stagnant for a period of about 3 months from July to Sept 16 where market has seen a significant decline in property transactions resulting in declining of property prices.

Main body
Realizing the fear of collapsing of this market government took the initiatives to give it a push, as being about PKR7 trillion in size and equal to stock exchange or may be higher the government couldn’t afford to drop revenue from this sector, other risks associated with this sector involved the flight of capital, halt of construction activities, non-investment of capital and others, all these fears became the factors which played from realty side and forced the government to open the doors for realty market and has provided following factors;

  • “TAX AMNESTY SCHEME” which has resulted in a win-win approach for both real estate and government. Launched on December 7 and up to December 26, 2016, 1919 transactions have been made under the scheme, Associated Press of Pakistan (APP) reported. Rs 1.4 billion had been made so far and the FBR had collected Rs 50 million taxes under the scheme.      
  • Higher valuation rates by FBR and 20% increase in DC rates had made the property prices so down and attracted long term investors to invest in downtime which in turn increases the prices. Below mentioned chart shows the increase in DC Rates from 1989 to 2016.
Year Change in DC Rates
1989 10-20% increase
1990 5-10% increase
1993 8-15% increase
1995 25-15% increase
2000 36-50% increase
2001 7-10% increase
2002 (Feb) 10% increase
2002 (May) 23.5% increase
2006 10% increase
2011 49-250% increase
2012 No Change
2014 20% increase
2016 20% increase
SOURCE: AURORA, DAWN NEWS

  • Another reason for the property boom being the implementation of joint disclosures and exchange of tax information by the G20 and Organisation for Economic Cooperation and Development (OECD), in accordance with the Foreign Account Tax Compliance Act (FATCA), from 2018. The UAE which is the hub of real estate investment joined the Global Forum on Transparency and Exchange of Information for Tax Purposes following the UAE Cabinet’s decision in 2010 which approved the ministry’s membership to the OECD committees for the exchange of information. This implies that, to avoid heavy questioning by tax and other law enforcing authorities investors will pull out their investments from property market and will be investing in safe heavens like Pakistan which is an attractive market to invest black money and make it white, below table will show the level of drop in Dubai real estate market by Pakistanis and other nationals,

news 210217

  • Other International factors include CPEC which is above $57 Billion project involves multiple countries is a charm for real estate sector especially in Gwadar and along all the western route and ultimately all over Pakistan as construction activities will boost this to sky rocket and also impacting Karachi and especially major posh areas such as Clifton & DHA.
Clifton Market (Apartments)

Below mentioned chart shows an up-rising trend that Clifton property market has witnessed in recent months mostly due to above mentioned factors. Linkers Realty have complied data through in-depth research to show what had happened in previous 3 months and forecasted that Clifton property market rates might increase by 25%,

news 210217b
This data has been compiled by Linkers Realty and can only be used for information purpose. However this can be different from various market analysts as several other market factors affect property rates.

Graph Explanation.

To summarize the data, limited fields have been selected for comparison. Months includes October, November & December 2016, Blocks include 1, 2 & 3 having Apartments sizes 1600, 1800 & 2300 sq.ft. It is observed that percentage change following rising trend as price of a 1600 sq.ft apartment in block 1 from October to December 2016 increased by 19%, similarly an increase of about 6% in the price of a 2300sq.ft apartment in block 3 in the same period as above making it a total increase of 18%.

New Bookings

Clifton being the ideal location for residential and commercial projects is fascinating the attention of skyscrapers, as recently launched new bookings have pushed the prices sky high, these newly launched high-rises are tabled below

New Bookings Location 3000 sq.ft 4 BED 2610 sq.ft 3 BED Front 2610 sq.ft 3 BED Back
Palm Marque(COM 5) Clifton Block 4 21,667/- 22,031/- 21,072/-
New Bookings Location 2800 sq.ft 4 BED 2480 sq.ft 3 BED  
Clifton Icon Clifton Block 9 16,714/- 15,240/-  
New Bookings Location 2900 sq.ft 4 BED    
Machiyara Tower Bath Island 21,000/-    
New Bookings Location Front 1,349 sq.ft Back 1,074 sq.ft  
Marine Tower Clifton Block 4 22,000/- 21,000/-  
Conclusion.

Based on above stated facts and figures linkers Realty suggested that property market will continue to rise, however every business faces bottoms and booms so does the realty sector had, and will be facing but an overall assessment is giving an impression that realty market especially in Clifton will follow its rising trend as shown above and might exceed the 25% mark rise and may be even more in the year 2017.


Ramiz Imtiaz
Linkers Realty
For any query contact +92-335-1369927 | 021-35639700-2

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