Hike comes as security improves, Lahore and Islamabad fail to match growth
LAHORE: The improvement in law and order has once again bolstered the confidence of the real estate market in Karachi.
The latest real estate trends demonstrate that along with increase in the price of land, growth in rental yields this year in Karachi has exceeded that of Lahore and Islamabad.
Experts insisted that there is a surge in demand in posh areas and those sheltered from conflict. They claim that the law and order situation in Karachi has improved drastically and Dubai’s depressed real estate has forced many investors and families to return to their native city.
Rents in Karachi
As per statistics released by Zameen.com, a property portal, average rental yields of Defence Housing Authority (DHA) in the first nine months of 2015 have increased around 13%. The average rent of Karachi DHA currently stands around Rs0.212 million per month for one kanal (4,500 square feet) bungalow.
The rental yield in Gulshan-e-Iqbal have shown a gain of around 6%, whereas the rental yields in Gulistan-e-Johar have improved by 14%.
The real hike in rental yields have been observed in Clifton, where average rent of one kanal house hovers around Rs0.3 million per month, said Khatwani Estates Chief Executive Officer (CEO) Ajay Khatwani, a Karachi based real estate expert.
He further said that rental demand is exorbitant and agents, if they manage to acquire significant units, can earn windfall profits. “People looking for rental houses don’t have much option these days,” Khatwani added.
The rental hikes in many areas of Lahore and Islamabad signal signs of recovery after massive hikes in the last few years. In many areas, like Lahore DHA, the rents are on the rise where the average rental yield gained 9% in first nine months of 2015.
However, the much in-demand Lahore Bahria town rentals have shown a correction. The rent of one kanal house show nearly zero growth in first nine months of 2015, and houses are available at around Rs98,500 per month. Same is the case with Lahore Cantonment and Wapda town rentals.
“We cannot predict a decline in average rentals of Lahore, however, in many areas, the rentals are likely to remain where they are right now,” said Ijaz Ahmad, a Lahore based real estate expert. “Lahore had witnessed huge urbanisation and migration from Karachi, Peshawar and Quetta in the last few years. However, as law and order situation is improving, people are going back.”
In Islamabad, the rentals have actually shown a decline. Average rental in
F-1 declined 5% in the first nine months of 2015. Similarly, in Bahria Town, average rental declined around 6%. The average rentals for one kanal house in Islamabad DHA also showed a decline of 18%.
Published in The Express Tribune, October 24th, 2015.
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