Tuesday Mar 01, 2016
KARACHI: Karachi property prices jumped 23 percent last year to a record high, outpacing other large cities and the national average of 10 percent, data from property website Zameen.com showed.
Rising demand for property in Karachi may not reflect the Pakistani economy as a whole.
It grew at 4.2 percent in the year to June 2015, against a central bank target of 5.1 percent and below the 6 percent-plus economists say is needed to absorb new entrants into a labour force from a growing population of 190 million people.
The central bank said in December that the economy remained structurally weak, with low levels of tax collection, low capital investment and a struggling export sector all posing risks to growth.
At least some of the money pouring into Karachi real estate is also likely to be illicit, property experts said, with some investors seeking to avoid paying tax.
Official data on total property spending are not available, but land prices and project starts show a surge in demand.
Developers launched 134 residential and commercial projects in Karachi last year, up from 106 in 2014 and 72 in 2013, according to Zameen.com.
The 2015 total includes 40 projects stalled during the worst of the violence when rival ethnic groups, Taliban militants and powerful gang lords frightened builders away, despite a severe housing shortage.
Recorded murders in Karachi fell to 650 last year, a 75 percent drop from 2013, while registered extortion was down 80 percent and kidnapping by nearly 90 percent, according to the CPLC, which collates official police data.
Still, some developers fear the property boom might turn out to be a bubble.