A Comprehensive guide for all property related services in Pakistan


By Gibran Bham

A lot of hoopla has been floating around about the "bubble" theory of real estate – and of chickens coming home to roost – that the Pakistani real estate market is down & OUT. That is, the theory that the real estate market is going to burst. In my opinion, the theory has no merit.

This theory is probably based on the fact that the real estate prices shot up 300-400% in the past five odd years, and the market has entered a period of stagnation or correction. But has the real estate bubble burst? Is there a bubble in the first place?

First, understand that there are three basic premises that undermine the discussion of a real estate bubble:

There is no national real estate market The real estate market doesn't explode or crash The market has limited relevancy to the shrewd investor

The real estate "market" is based on local economies

The stock market is based on the national, even the world economy. The real estate market is based on local, and, in many cases, micro-local economies. What's happening in Karachi does not directly affect what's happening in Gwadar.

True, certain factors such as political stability & even interest rates do affect all the markets. There really is no broad barometer to measure the entire housing industry in the Pakistan. Average prices, average new homes sold, and average homes built nationally have little relevance to your market.

And, within a particular city that is doing well, there may be certain neighborhoods doing poorly for a variety of reasons, such as over-building of new homes – take for example Islamabad.

So while statistics, calculations, and economic factors are relevant, so is common sense: Take a look around and see what's really happening. Talk to real estate agents, investors, and lenders in your area for a better picture of what is going on.

Don't look at broad nationwide, statewide, or even city-wide statistics. Be concerned with the average prices in the particular neighborhoods in which you buy houses, the average time on the market, and the changes in sales prices from last year to this year.

Real estate markets do not "crash"

We all remember February 19, 2005. The Karachi Stock Exchange lost 200% of its value in one day--what investors call a "crash."

There have been times when real estate values have taken 60% hits in certain cities and in pockets within cities. However, no real estate market dropped 60% in one day, one week, or even one month. In fact, the real estate "crash" of the early-mid 1990s took several years to bottom out in most markets.

At its core, the housing market, like the stock market, is all about supply and demand; when more people want to buy than sell, prices go up, and vice-versa. However, the stock market is much more whimsical than the real estate market. People often buy into stocks at the top of the market based on future potential, not inherent value.

True, people are buying some properties in some markets for top Rupee hoping it will go even higher, but real estate still has inherent value because you or someone else can live in it.

If the neighborhood in which you live goes down 10% in value, are you going to move? Not likely, you'll just be bummed about it. The transaction cost and headache involved in moving is not worth it for most people. Contrast the stock market where a zillion investors can sell off in minutes by a click on their computers.

Supply and demand also work differently in the housing market. Right now, demand outstrips supply in some hot real estate markets like Islamabad and Gwadar. But, people are starting to realize that even if they sell for top dollar, they will have to pay top dollar to stay in the same market, so why bother?

This phenomenon is causing limited supply and even HIGHER prices. In other words, the price increases are not necessarily about "irrational" demand, but rather limited supply. While the old expression, "Trees can't grow in the sky" is applicable, so is the old adage, "They ain't making any more of it."

Likewise, if your city has limited space and more influx than out, prices are likely to stay where they are.

Finally, there's the possibility that the traditional economic theories of bust and boom are simply flawed and no longer applicable. In other words, just because things have been going up in the housing market for so long, doesn't necessarily mean they will drop accordingly.

Economic trends causing the market to remain strong

Overseas Pakistanis: thousands of Overseas Pakistanis are moving back to Pakistan every year. More demand, means higher prices.

Marriage Trends. People are getting married earlier, younger people are buying or investing in homes together.

Easy to get a loan: spurred by the State Bank, Commercial Banks are more willing than ever to finance your home. The market has limited relevancy to the investor

If you buy and hold for the long term (ten or more years), you aren't likely to lose. Real estate values generally go up in the long run, with few exceptions. The same is probably true of the stock market in the long run, but there's one problem: There's no guarantee any company you invest in will be in business in fifteen years--not even PSO.

If you buy and flip properties quickly, the market appreciation or decline is not all that relevant to your profit.

If the local real estate market is "hot," you can sell a property quickly, but you can't buy it as cheap. If the local real estate market is weak, you can steal properties, but you have to account for a longer hold period when you resell.

It is relevant to know where your market is currently going (up or down), but don't worry too much about the "bubble" bursting; real estate markets DO NOT collapse in 3 to 6 months.

For further information, contact:

Contact CDA


CDA would welcome suggestions and comments for improvement of Islamabad.

Postal Address:

Executive Block-V, Khayaban-e-Suharwardy G-7/4, Islamabad.
Junction Line : 9208301-4 & 9203049-51
Fax No : 9207075 & 9219413.
Telex No: 54039 PK

Public Relations Directorate:

Executive Block-V, Khayaban-e-Suharwady G-7/4,
Telephone No : 9209989 Ext (250)

Computer Directorate

Director Computer,
Executive Block-III, Khayaban-e-Suharwady, G-7/4, Islamabad.
Telephone No: 9208301-4 (279)


To undertake and Promote best practice standards & methodologies into a Realestate Marketing Services for locals & specially overseas Pakistanis.


The mission of CCOL Marketing to provide Realestate expertise for safe and sound realestate deals & investment.

Advertising Solution:

Reach highly desirable audience through innovative advertising opportunities with a small size of advertising budgets. Step into e-marketing with the right partner today...Find more

Get Property Updates:
Enter your email below:
Where it's Happening:

1st Floor, CH Center, Near ABL, Lehtrar Rd, Islamabad
Tel: +92 (0)51 2241418, 2241390, 0322 5157887