Real Estate Blog, Latest Prices & Market Overview

Real Estate of Pakistan and US Dollar – Impact of Fluctuation

Let's take Gulshan-e-Maymar Karachi as an example

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We hear many times about the fluctuation in dollar prices affecting various industries in Pakistan. Today, we are going to analyze how the fluctuation in USD affects the real estate sector of Pakistan.

Pakistan’s real estate sector and USD has a very tangled sort of relationship. Even though dollar prices directly impact the expatriates, there’s no much information available about this currency to real estate link. However, once you understand this link, you will be able to perform much better as an investor. Usually, it is believed that the property prices are directly proportional to the USD. Back in 2018, when the USD gained a massive 35% gain, many people predicted the real estate prices to be boomed. However, it took almost a couple of years and a global pandemic for real estate to recover.

As of now, the real estate prices are firm at roughly 30 to 50 per cent higher than in 2018. In terms of USD, the prices are similar to that of 2018. Now, let’s find out if a similar pattern of correlation has existed in past or not, and if it existed, how does the market usually behave.

Let’s take Gulshan-e-Maymar Karachi as an example.

USD – PKR exchange rate in 2005 -2007 = 60

2008 = 70

2009 – 2011= 80 to 85

2012 = 90

2013 to 2017 = 100 to 105

2018 = 121

2019 to 2021 = 155

For this study, we calculated the average prices of Gulshan E Maymar Karachi.

Year 2005 

1 x USD = 60 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards in 2005 =  6 Million (100,000)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards in 2005  =  1 Million (16,666 USD )

Year 2011

1 x USD = 80 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards in 2011 =  7 Million (87,500)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards in 2011  =  1.5 Million (18,750 USD )

Year 2013-2014

1 x USD = 100 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards  =  10 Million (100,000)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards   =  2 Million (20,000 USD )

Year 2016

1 x USD = 105 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards  =  15 Million (142,858)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards   =  2.5 Million (23,809 USD )

Year 2019

1 x USD = 160 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards  =  24 Million (150,000 USD)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards   =  5 Million (31,250 USD )

Year 2021

1 x USD = 160 PKR

Avg price of Gulshan E Maymar Sector W 600 Sq Yards  =  29 Million (181,250 USD)

Avg price of Gulshan E Maymar Sector Q 120 Sq Yards   =  7 Million (43,750 USD )

Conclusion

Analyzing the above data, we can say that profits in USD are dependent on the cycle you’re looking at. This data also validates the fact that holding your property for a longer period is not a lucrative option. Instead, it’s more profitable to have smaller cycles with a stable USD-PKR span. Properties usually offer good returns during this tenure.

Additionally, it’s also clear that the USD-PKR rate doesn’t necessarily impact the property prices in isolation. For instance, from 2006 to 2011, real estate prices were falling while USD rose from 60 to 80 as compared to PKR.

USD and Pakistan Real Estate 2021

Although the real estate market is progressing in terms of PKR, the market still has a long way to regain the peak of 2016 in terms of USD.

Those investors who have invested in dollars in Pakistan for the last 10 years, and are consistent, have made money regardless of the circumstances.

In real estate, the major technique to generate wealth is rental income. And plots are also the most feasible options for ROI income.

Investors who invested in plots recently in 2019 or 2020 are now getting good returns against their investments. They are marking profits of around 30-40%. But the investors who invested in plots during the span of 2015-16 or before are hardly standing on break-even point.

However, investors who invested in rental properties during these times are already enjoying the rental income and growth of their assets regardless of the timespan.

Lesson to be Learned

It’s good to buy property when it’s down and the dollar is up. However, we still recommend investing in plot generating properties to enjoy evergreen perks regardless of time and other circumstance.

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