For a change lets get out of our visceral instincts and rather than talking about the current political situation, lets have a discussion about the real estate prices in Pakistan.

How come a plot in Pakistan is as expensive as a lot in midwest USA?

How come the prices have risen to these levels?

Normally in such a scenario anywhere else in the world, there would be a market correction or even a bubble burst leading to a sharp decline, but why does such a thing never happen in Pak?

In todays global economy the prices of everything commodities, equities, bonds and even capital are governed by economic or political shifts, but cannot be controlled by any one force for longer periods of time. Why does this not hold true in Pak prices of real state.

In case it is a bubble, how and when would the correction take place?

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After Monday and Tuesday even the calendar says W T F!!!!

It would be great if rather than having a polemic discussion bashing Mush we can have a more congenial and intellectual discussion in this thread.

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After Monday and Tuesday even the calendar says W T F!!!!

1. After 9/11, Pakistani ex-patriots in the US, Europe and several Middle Eastern countries were scared about their bank accounts. This scare resulted in a massive influx of foreign exchange in Pakistan and since Pakistan does not have the culture of local investment in industries (at least not within the general public itself), their only natural choice was to buy land. That's the main reason why land prices in Pakistan sky rocketed.

2. The bubble has already burst as far as I see it. And that's because although the market rates of property are still high, people are not willing to buy them at those rates. This usually results in deals on lowered prices. At least that's what I witnessed when I was in Pakistan the last time round.

so someone was planning to buy a plot in F-11?

Musharaf's government is responsible for it

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'Accept getting old or cease to exist' - My Wife | 'Who controls the past controls the future. Who controls the present controls the past.' - 1984 - George Orwell

Normally such a shift due to some international/local event would cause a shift in the prices, but such a shift would be a shift from the normal, and there would always be a tendency in the market to come back. In simple words, with the passage of time once most of the capital has been shifted back to Pakistan, there would be a considerable decrease in the no. of buyers and this would lead to prices coming down again.

In case as you mention such a correction has happened already, could you point out certain specifics or post some examples? How much of a drop did you witness during your last visit.

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After Monday and Tuesday even the calendar says W T F!!!!

yaar the thing is the price of a 500 yards house in Islamabad in f-6 is around 2-3 crore which is half a million dollars in USA. and you can buy the same size of house here in midwest with that amount of money. I fail to understand the dynamics over here. If it is artificial or hike or based on speculation how does it manage to stay there for such a long period of time?

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After Monday and Tuesday even the calendar says W T F!!!!

I don't think that the no. of buyers is coming down. Just take a look at the remittance amount coming to Pakistan. It's running at over a billion dollars, if I'm not mistaken.

I've little idea about prices of 'houses' but those of land have fallen by almost 500,000 to almost a million in DHA, Model Town etc.

Also, when taking into consideration the land prices, you've to keep in mind the Pakistani mindset as well. Normal Pakistani people do not invest in businesses, stocks, industry etc - they just go out and buy a piece of land. I guess that is whats keeping the demand up for land in Pakistan.

Also, if you're looking to buy a house in Pakistan, I'd suggest that you get one in that Bahria Town schemes (there is one in Pindi that I know of). It's usually less of a headache, specially for expats and those folks are quite good at their job.

I don't think he would like to buy in a sub development or township as is called in Pakistan.

Kilyas, tell me if I am wrong because if I think of buying land/house in Pakistan, it would have to be in Islamabad and not the out skirts of today but the areas we grew up in, which today is what you could call the old city. I decided a few years ago when I bought my house (which is a typical mortgage based US east coast house) that I am in no condition to buy a house in Islamabad and with zero savings, I don't think I ever will be. Surely an investment of $1 which could yield a over a $100 mil (and that would be lotto), there is no way in the world it is happening that in the next 20/30 years I can afford land/house in Islamabad, even though with the mercy of Allah statistics will show that I am in top 10% of household incomes in the US.

Such are the times.

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'Accept getting old or cease to exist' - My Wife | 'Who controls the past controls the future. Who controls the present controls the past.' - 1984 - George Orwell

Bahria town Islamabad will take ages to come to the market level of the rest of Islamabad. This is especially due to the fact that the Zone 1 areas of Islamabad itself are already in such good shape and well located. No one wants to drive 20 mins down Islamabad highway just to get into main Islamabad where all the main commercial, education and established residential areas happen to be.

So unless DHA Islamabad really kicks off (looking at the projects lined up has the potential to) it will remain a low demand area. And it will be especially low on rental returns in the medium term. A 4-5 bedroom house in Bahria town Isb goes for about 60,000 Rps/month. Something similar in F-8 Isb starts at atleast 100,000+. In the long run people might be driven out towards these projects if they kick off. But to be honest, if you've lived in Islamabad you would never want to live there at the moment.

To be honest unless that house is in demolishable condition that is a good deal, especially in F6! A 500 Sq Yards plot alone has generally got a starting price tag in that region.

So the real estate prices in Pakistan if converted from Rs to $, fall in the same neighborhood when compared to real estate prices in mid western united states? An ordinary person doing an odd job, say a gas station clerk or cashier, in mid western united states makes about $ 8.00 an hour, 40 hours a week will fetch him $1280.00 pre tax.. take 25% tax out of it and u end up with $1,025.00 to take home, lets convert it into Pak Rs and ask ourselves, does an ordinary Pakistani working an odd job in Islamabad make Rs 66,625.00 a month ??
No, its not fully Musharraf's govt's fault, however, the selling prices in Pakistan are equal to what they are in USA but the salaries in Pakistan are piece of $hit when compared to USA... imagine what kinda miserable life a hard working and an honest ordinary Pakistani lives, let alone dreaming about buying a house?

I have a feeling that economic theories like factors behind bringing a shift and change (upwards/downwards) in prices are a piece of crap in Pakistan. There is real estate mafia that has high jacked the real estate prices so high that ordinary personal can not even imagine buying a house. Eventually, a big chunk tries to find refuge in over crowded apartments so the landlords can suck on their earnings for as long as possible.
Personally, I have seen that once the real estate prices go up (in Pakistan the dont go up, they leap in light years), they NEVER come down.

and to add on to it the this person working at the gas station cannot afford to buy a home in USA, which as it turns out now is cheaper than in Pakistan. so how come he invests in Pakistan then?

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After Monday and Tuesday even the calendar says W T F!!!!

How smart for an answer??
I was comparing the US and Pak salary rate in correspondence to real estate prices between the two regions. Not to let your argument down(cuz its a valid one; however on a different aspect) but I've seen a few Pakistanis here working on gas stations not only buying a house here but becoming the gas station owners as well

^ On that I don't work at a gas station or own a gas station but at the same time I can't own a house is Islamabad too, so what does that tell you?

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'Accept getting old or cease to exist' - My Wife | 'Who controls the past controls the future. Who controls the present controls the past.' - 1984 - George Orwell

It tells me that you are probably earning a haq halaal ki kamayee (doesn't matter if its in US$, British Pounds, Kuwaiti dinar, Pak Rs etc)... otherwise, you gotta be a drug lord, a crook minister or his relative, big time rishwat khore contractor, a daku, smuggler etc to be able to buy a house in F-7 or F-8 sector in Islamabad.

^ Oaye tusi wee picheyoon Islambadoo daay oo

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'Accept getting old or cease to exist' - My Wife | 'Who controls the past controls the future. Who controls the present controls the past.' - 1984 - George Orwell