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Real Estate Crisis in Pakistan

Real estate prices went out of common man’s reach in Pakistan as dollar influx increased after 9/11. But the current recession has not only stabilised the prices but might also bring them down in near future, says Vicky Agha in this vlog.

* Real estate sector in Pakistan has come to a point of stagnation

* How did this recession develop?

* First we discuss how real estate developed into an industry in Pakistan

* Before 9/11, if a family planned to build a house,

* they would be able to do so within 8-10 years of hard work

* That’s because the forces who took the prices

* to an unnatural level, hadn’t come into play as yet

* Then 9/11 happened and there was massive inflow of dollars

* Historically, every time there was influx of dollars into Pakistan,

* our real estate sector took a new turn

* But after 9/11 especially, there was an extraordinary change

* Dollar inflow increased, banks’ liquidity increased,

* new consumer markets’ models were introduced,

* the economy turned consumption-based

* expatriate Pakistanis started investing in the country,

* then corporate world jumped in and turned it into a commodity

* Industrialists pulled their money out of other industries

* and started developing housing societies

* because the return was quick,

* and convinced investors to invest into this industry

* Within years, property prices went out of common man’s reach

* This 15-year cycle took real estate prices to unnatural heights

* The genuine components of this entire activity started getting removed

* Some people think that taxes imposed on transactions are

* the cause of recession in real estate sector

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* But the point to which property prices have risen,

* even if govt revokes the taxes,

* business in the sector might not get restored

* though there can be exceptions of course

* Currently, it seems the recession in real estate will continue

* for another ten years

* and property prices will not only remain stable

* but might also see a drop of 5-10%

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