There is a disagreement amongst experts regarding the state of the property market in Karachi. While some experts believe the property sector is on a growth trajectory, others claim the market is stagnant. Although there are many factors that affect the prices of real estate, some like the cost of construction, land prices, and the state of the economy play a larger role in affecting the market.
Remittances from overseas Pakistanis have observed an exponential increase, with more than 50% of the remittances directed towards real estate investments. Rigorous investments in real estate from overseas Pakistanis caused an uptick in the property prices of Karachi.
The cost of construction is another major factor that contributes to increasing property prices. The cost of construction includes the cost of labour and the cost of raw materials. There has been a marked increase in the cost of labour, a 30-40% increase in the daily charges of plumbers and painters in the past three years. On the other hand, there has been a notable increase in the prices of steel bars and cement bags. Besides steel and cement, raw materials like sanitary tiles, wood, and paints have observed an inflationary trend adding to the total cost of construction of the property.
The state of the economy and foreign exchange reserves can also negatively affect the property market. The recent decline in rupee devaluation against the USD has created an inflationary trend in all the imported raw materials used in construction.
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