In May 2018, the Supreme Court of Pakistan banned buying and selling in Bahria Town Karachi. Bahria Town Karachi is one of Riaz’s many projects across the country. The court ruled, however, that the land was bought at throwaway prices from the Sindh government. Now it has said that Bahria Town must buy the land back at the proper rates.

After the court orders, there were reports that claims that the real estate bubble have been deflated. However, doing some data science, shows that there has been no panic selling impact of the order. In panic selling, investors starts to sell their investment properties all at once. This will cause a big drop in the prices of these properties. In the investors’ minds, it is worth it to get out from under the properties. They don’t take into consideration the fundamentals of their businesses. For example, they are simply wanting to sell and walk away instead of taking into consideration the assets they own. The investors are panicking and selling property instead of looking at the whole picture. In the previous blog post, I have analyzed the Bahria Town projects in details with respect to price and listing trend.

Keeping track of the prices, the prices have remained stagnant in July 2018 from January 2018. In January 2018, the average price of Bahria Town Karachi Property was Rs. 9.37 million while in July 2018, it was Rs. 9.45 million, an increase of mere 1%. It is pertinent to mention that Governemnt introduced Finance Bill 2018 in April 2018, which includes scheme where the government will have the right to take over the immovable properties by paying double the declared amount from the next fiscal year.

The other salient features of the Bill include: no purchase is possible for non-filers of tax returns of property over Rs 4 million, CNIC will be the tax number, reduced tax incidence, maximum 1% tax (local & provincial), for registration of property is being recommended. At federal level Advance Income Tax would be reduced to 1% adjustable. All of these features were to have negative impact on the real estate sector.

Another way to gauge market value of the value is through calculating the average price per Square(sq.) Yard. Analyzing, the average price per Sq. Yard shows that property prices have inflated in the last half. While comparing the average price of Bahria Town Karachi property per square yard the increase is of 6.7% from Jan 2018 to July 2018 as shown below.

If we now compare the average price per Square yard, 500-100 sq. yard category are most highly priced with the price tag of more than Rs. 70,000. With respect to price appreciation, the 125-200 square yard category has witnessed the highest change with 20% during last half. The prices of other size categories have remained flat except for 500-100 sq. yard category which has declined 3.5%.

There are currently five major schemes in Bahria Town Karachi. These includes Paradise, Sport City, Bahria Heights,Bahria Homes Karachi and Bahria Apartments. Bahria Paradise are the most expensive project while Bahria Apartments and Bahria Homes were the most economical. Bahria Paradise plot sizes are larger than other projects resulting in high prices. There has been price appreciation of Bahria Apartments(4.5%), Bahria Heights(16.5%) and Bahria Homes Karachi(21%) while the average price of Paradise(-9.5%) and Sports City(-9%) have declined during the last half

Looking the above statistics and keeping in view that the Supreme Court of Pakistan allowed Bahria Town Karachi to resume development work, Bahria Town projects are still safe bet for real estate investors.

Looking at the current Bahria Town karachi dynamics, its feasible to invest in:

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