DHA Lahore Phase 1 2 3 4 5 6 7 8 9 Bahria Town Map Plots For Sale Property Prices

Gayari Siachen Pakistan A large scale operetation needed to dig out Shuhda of Gayari Siachen Pakistan Click on image to see a much larger and more clear image C

Approval of unexpectedly low bids by the cash-strapped Capital Development Authority Islamabad (CDA) for commercial plots in prime areas has raised many eyebrows, and real estate experts even see some ‘underhand’ deals between pre-qualified bidders and civic authority’s bosses.

Although some courageous CDA officials dared to challenge the low bidding and managed to get the auction of three plots out of four cancelled, bid for only plot in Diplomatic Enclave was approved at far lower than the market price.

One of the bidders on condition of anonymity said he was asked to pay Rs300 million commission for a commercial plot in Blue Area.

“Some middlemen contacted me and offered me a plot on much less price, but after paying the amount,” he revealed.

Instead of holding open bidding, the CDA, for the first time pre-qualified some 18 interested bidders for the auction.

The real estate experts were of the view that much higher bids would have been offered, had CDA held open auction.

Some of the bidders raised objections over reserve price of the plots set by the authority and called it “low” to favour ‘some’ bidders.

According to the CDA rules, the highest bid of last plots’ auction in same area is declared as reserve price for the next one.

However, the civic body’s member planning Aziz Qureshi termed the auction ‘transparent’ and successful.

He was of the view that the reserve price was set keeping in view the market condition. “You can’t compare price of plots in 2005 and 2006 with the present real estate rates because at that time the market had reached record high,” he said.

“It is not necessary that we should set asking price of any plot from the price or bid given in the last auction because the present
real estate market has been hit by an unprecedented recession and one should not expect that in the current scenario we will fetch same amount by auctioning a plot at the price received in the last auction,” the CDA member said.

The plot in Diplomatic Enclave measuring 7708.32 sq yard was auctioned at Rs1.04 billion.

Another plot in Blue Area measuring 4,888 sq yard was sold at Rs1.275 billion and two more plots in Blue Area extension measuring 2666.67 sq yard each were auctioned at Rs669 million each.

It was observed during the auction that not more than three bids were offered for all four plots auction on April 4. The attitude of bidders was quite lethargic as they did not go for a neck-to-neck or tough competition.

“I observed that the market price of a plot in Diplomatic Enclave was Rs350,000 per sq yard to Rs400,000 per sq yard but it was auctioned at Rs135,000 per sq yard,” said a builder Ch Anwar.

Similarly plots of Blue Area were auctioned at unrealistic price that was far lower than the market price causing huge loss to the national exchequer.

The CDA wanted to auction three more commercial plots including that of Margalla Towers, the ill-fated and the first high rise apartment building of Islamabad that was partially collapsed during October 8, 2005 earthquake killing 72 of its residents.

The reason behind the cancellation of the auction was bidders reluctance to make deal with the CDA’s lords.

Another real estate expert Ch Munir said the CDA should have auctioned its plots through open bidding.

It is common practice that the CDA sets reserve price of any plot in auction at which a plot had been sold in the same location in the last auction. But that practice was ignored in this case, as the reserve price was much lower.

According to the CDA’s chairman, Farkhand Iqbal, the CDA has planned to auction most of the plots in extension of Blue Area that starts from PIMS Hospital and goes to Sector F-10.

It is feared that if once any unrealistic and low price of plots in most expensive Blue Area (in terms of price of land) is set, the entire extension of the commercial centre will be sold on cheaper rates that will cause billions of rupees loss to the national exchequer.

On the other hand the starved CDA in dire need of money to meet its non-development and development expenditure.

A view of Bahria Orchard Lahore. Improving lifestyle trends dictate that multiple facilities be available within one housing enclave

Middle class homebuyers in urban Pakistan are increasingly demanding better facilities and real estate developers are increasingly competing not just on price but also on the quality of communities they can build.

“The living standards of people are changing in cities like Lahore,” said Mian Ayaz Anwar, president of the Zaitoon Group, a real estate development company. “That is forcing us to bring what is called ‘lifestyle real estate’ to the market, and add value to the communities, including improving the architecture.”

Anwar is referring to the increasing trend in Pakistani cities of suburban developments where entire neighbourhoods are built by a single real estate company, similar to the Levittown developments that were built in the United States after the Second World War. People are increasingly demanding that these neighbourhoods have amenities that were once considered luxuries.

“Homebuyers want security, community centres, hospitals, cinemas, parks, and even golf clubs all within their own neighbourhood so that they do not have to commute long distances,” said Anwar. “Real estate companies that offer these facilities – like Bahria Town Lahore – see their developments get sold out in no time. Bahria Town Lahore offers virtually a mini-city inside its developments.”

It was not always so. There was a time when the real estate developments in Lahore were based purely on providing housing units, with little regard for any other facilities. The military-owned Defence Housing Authority began offering a few improvements in infrastructure but the trend did not catch on until the late 1990s, when Bahria Town began offering ‘lifestyle real estate’. From then on, a trend started that has continued since.

The intense competition by real estate developers to offer such services seems counter-intuitive in a country that has a severe housing shortage. Experts in the real estate sector say the country is currently short by about 8 million units, a requirement that goes up by about 7.5% a year.

Cities like Lahore are seeing population increases upwards of 6%. Lahore’s population is expected to double from the current 11 million by 2025. But that is not the only driver of demand. Many of the residents within the city who used to live in joint family dwellings are moving into their own housing as the youth bulge increasingly comes of age and starts earning.

“Around 80% of the growth in Lahore has been along the Canal Bank, with the rest largely in DHA Lahore,” said Anwar.

That trend, however, is likely to change once the Lahore Ring Road is completed, which will provide much faster access to the heart of the city from its outer suburbs. “Many people are booking plots in projects [in these outer suburbs], in anticipation of the completion of the Lahore ring road, which is causing prices in these areas to rise,” said Anwar.

Real estate is becoming an increasingly important sector for the Pakistani economy, employing well over 5% of the country’s labour force directly in construction and much more in related industries. Yet a key hindrance to the development of the sector is the availability of housing finance. According to the State Bank of Pakistan’s latest available figures, the total value of home loans in Pakistan’s banking sector was Rs50 billion in December 2010, or about 1.5% of all loans outstanding.

To overcome the lack of housing finance, most real estate developers offer financing to their buyers themselves, offering instalment plans for the housing units they sell.

Published in The Express Tribune, April 22nd, 2012.