The continuous onslaught of bears pushed several stock players and investors back to the wall and, to settle their long outstanding positions, they offloaded their investment parked in real estate, resulting in decline in property prices ranging from 15 to 20 percent in different localities of the city. The lingering stock market crisis has caused as much as 20 percent decline in the open plot rates in select areas.
Real estate dealers said that the stock market disaster had impacted the overheated property market in Karachi, especially in DHA. For the time being, the shake-up in bourses has frozen the boiling real estate, and has failed to cause a major fall in the rates. "We have received a number of enquiries from buyers who after hearing that the prices have gone down wanted to buy plots, shops and some flats, but no deal was heard in the property avenue", a leading dealer said.
During KSE''s last trading session, the index nose-dived and lost nearly 27 percent, or 2,400 points, pulling the market down from the all time high level of 10,304 to 7,964.
According to a leading dealer, most of DHA areas, which is the hunting ground for investors, were affected where stock investors were involved. To cover their positions following the massive outstanding in the March Futures contracts, some of them sold their plots on available rates. Some of the plots saw a decline of as much as Rs 2.5 million from nearly Rs 10 million in the same vicinity, while flats and shops saw a fall ranging from Rs 0.5 million to Rs 1.25 million.
The DHA property market was abuzz with reports about substantial fall in rates since many investors have lost millions due to the recent stock market disaster.
According to the same dealer, the rates of bungalows in other phases have yet to feel the radiation of on-going stock market crisis where prices are still unchanged and daily business is going on at normal pace.
Analysts think that next week is crucial, both for stocks and real estate investors. Many market analysts say that it is hard to predict whether the prices of real estate have touched the saturation point.
According to a car dealer, following the stock market crisis the premium or commonly known as ''on money'' on vehicles has also faced the pinch and has fallen by Rs 5,000 to Rs 20,000. He said that car and real estate business are interlinked with the share market and investors are always in search of avenues when they could make a quick buck. The ''on money'' is down but business tone is still low and the prices would revert to their previous levels by the middle of next week.
The traders are minting money through ''on money'' and they do not want to reduce the margin of profit earning from trading new cars.
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