LAHORE -  The third quarter of the calendar year 2016 proved to be slow for the real estate sector and this sluggishness continued to prevail even in fourth quarter of September-December despite announcement of amnesty.

Amid tax-related equivocalness, the property sectors of Lahore, Islamabad, Karachi and Gujranwala failed to do any better. In Lahore’s real estate sector, the activity was mostly steered by genuine buyers, while investment activity remained at a standstill. Islamabad’s realty market was no different, where prices in all major localities languished with less-than-impressive numbers during October 2016, data shows.

DHA Estate Agents Association President Tariq Mahmood Bhatti said that uncertainty in the property market has caused the closure of more than 500 property agents’ offices because of lack of sale-purchase activity in the market. “I believe that the imposition of these new taxes is completely unfair as property buyers and sellers have been paying taxes all this while. In fact, the real estate sector contributes heavily to the national exchequer. The tax amnesty scheme alone cannot help reverse the damage done to the property market,” he said.

According to a sentiment survey conducted by Zameen.com, 82 percent real estate agents believe that the market situation has worsen after the implementation of the new tax mechanism, while 70 percent are of the view that the number of buyers has dropped to one-fourth.

“For several months, the real estate market of Karachi has seen no investment activity. The limited activity seen in the market is due to genuine buying and selling. In response to this drop in real estate transaction volume, property rates in all major areas including DHA Karachi and DHA City Karachi have seen major drops. Real estate agents operating solely in DHA’s projects are currently very disappointed,” said M Ali Syed of Heavens Deal Real Estate & Builders.

According to data compiled by Zameen.com, Karachi felt the blow of the new tax regime, property prices in all major localities of the city by the sea dropped in the near-complete absence of investors. Property prices in a couple of localities in Gujranwala exhibited favourable trends in October 2016, while the overall situation of the city’s realty sector remained unimposing.

All investor-focused localities in Lahore remained on the rocks in October 2016. Prices of 1 kanal and 10 marla plots in DHA Lahore’s Phases VII to IX dropped 1.72 percent and 1.56 percent respectively. Average property prices in Bahria Town registered moderate drops, while in Bahria Orchard, the 10 marla plot lost 7.99 percent in value and the prices of the same-sized plots in LDA Avenue-I dropped 4.27 percent over the course of one month.

Islamabad’s property market performed marginally better in October 2016 than the property markets of Lahore and Karachi. Nevertheless, this does not mean that the federal capital’s property market fared exceptionally through the month.

Property prices remained stable in Sector F-11, Sector E-11 and Bahria Town, while the average price of 1 kanal and 10 marla plots in DHA Islamabad dropped 2.37 percent and 1.23 percent respectively. Gulberg Residencia’s performance was worst during the month, as the value of 1 kanal and 1 marla plots in the locality dipped 6.19 percent and 6.94 percent respectively.

Pakistan’s real estate sector has been on the ropes since the implementation the new tax regime. The government has recently approved an amnesty scheme, allowing property investors to whiten their untaxed money. However, the outcome of this development has yet to be seen.