Commercial Property Expectations in DHA 2019
Various phases will witness different highs and lows in the commercial arena. There are a number of options which are below par and can give fruitful returns in times to come. Then there are some options which are and have been upward trending previously with little or no chances of going south. People have previously lost capital especially in highly speculative areas. That is the risk one should be willing to take in speculative areas.
It is highly recommended to make an informed decision while purchasing a commercial plot as high capital investment is involved. One should study the history before taking a decision. The history shouldn’t be based on purely speculative prices but comparable areas with possession in case of non-possession plots. As mostly speculation is done on non-possession areas.
Always keep in mind it is the residential area which drives the commercial prices upward. It is the number of potential customers for any retail which will drive the prices of commercial plots. The potential of opening up banks, retail and most offices depends on the residential clientele. Only potential buying options will be discussed in the article. The reason being different phases have different connotation. Mature phases will show little growth with good rental expectations whereas, newly developed areas will depict a steep rise in prices if well encapsulated by residential potential.
Phase 5 has seen an 8% growth in the past year which is healthy compared to other mature phases. It is a mature phase which has witnessed a rise in residential as well as commercial prices. Commercial plot price in CCA 1 which is next to Pentasquare has seen this growth. Other phase 5 commercial areas such as B and D block have witnessed negligible growth.
Phase 6 has various commercial connotations. From an investment perspective it is recommended to buy a CCA 2 plot as there is a huge difference between the prices of CCA 1 and CCA 2. Now that there is possession to the majority of plots in CCA 2 as well, it would be wise to get aboard the ship right now instead of delaying it.
Main boulevard plots on the main road have seen a steep rise in prices. It is recommended that buy at the back of main road as there is an extra 17% growth potential minimum. Plus if you build on it you can also enjoy rental returns from the commodity. Although rental will be relatively on the low side but it would certainly give you a monthly return while your property value increases. As of today it’ll cost 20 milliion PKR on top to build a plaza.
Phase 7 CCA 5 is bound to give a good return as it is nearing possession. CCA 4 has possession and prices are on the higher side compared to CCA 5. The difference will be squeezed and CCA 5 might eventually surpass CCA 4. CCA 4 however, has a different perspective as it is boasts one of the lowest possession plot prices in DHA. This would grow but with the increase in population.
Phase 8 Broadway has been one of the highly anticipated growth area in the past. However, it did live up to its expectation until the burden of taxes increase which effected the whole real estate market. It has come down and it is the right time to buy. The reason for increase the planning of commercials as well as giving a vast commercial market after a long time by DHA, especially after Y and Z block. This means a buy right now would be fruitful but it might take up to 5 odd years. The return would be hefty nonetheless. CCA 1 and CCA 2 would pick up but it is highly dependent on the surrounding populous. Broadway is already picking up from the back log and would continue to do so in the future.
Phase 9 and Phase 9 Town commercials are two different categories. Phase 9 has seen a dip in prices and people are exiting as it is a long term strategy. Phase 9 town on the other hand has witnessed an increase in prices of CCA because of possession whereas, E block commercials are on the low. Phase 9 town CCA is a good option but we’ll have to wait until there is enough population for rental returns. It is expected to give as high as 0.5-0.6% rental returns per month if we buy now which would be the highest rental return in today’s market.
DHA commercial files are on the low. This would be a good time to buy especially DHA Rahbar Phase XI file as the ballot is expected in 2019. Phase 7 file from an investment stand point could be good as you would probably trade it as a file once the price goes up. Phase 8 Park view file will be fruitful but on possession, it is uncertain when the ballot would take place. Once it takes place we could expect as much as 40% returns on our investment.
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MBA Finance (Cardiff University, UK)
Managing Director at Imlaak