PKR Depreciation, Interest Rates & Real Estate

PKR Depreciation, Interest Rates & Real Estate

PKR Depreciation, Interest Rates & Real Estate

Before you continue with this article I will request you to read our 2018 real estate forecast. Real estate in Pakistan is one of the biggest and foremost sector where not only expats but also the locals invest. For decades it has formulated the base of our economy and one of the biggest sectors to attract investments. Imlaak has always brought to you a realistic and unbiased analysis which is at least 90% correct in predicting the future.

Real estate is one of the basic economic indicators and is entangled with over all policy financial health of the state. In this article we are going to see how these policies in conjunction with record PKR depreciation of more than 28% will effect real estate sector in the upcoming days. 

Following has changed since Dec 2017 

  1. PKR has depreciated from 108 to 138 in one year. 
  2. Interest rate has been increased to 10% by state bank of Pakistan.  

Effect of PKR depreciation on real estate 

Depreciation in PKR actually means that real estate has gone down as well in terms of dollar. A plot which has not increased in value in last one year and was available in 50 Lacs or $ 46296 in 2017 Dec is now available in $ 36231. This accounts to a decline of  28% in terms of real estate prices in one year. 

Technically even if you have made a profit of 28% on real estate in last one year that means you are actually just at par. 

However we are actually looking at a narrow window and if we really want to calculate if $ is a better investment than real estate we may need to make our analysis on a much wider time range.  

Ten years PKR vs USD and Real Estate 

In Dec of 2008 1 USD was only at 78 against PKR , today it stands at 138. This shows a deprecation of 76% in ten years or 7.6% annually. 

In the same time frame real estate sector has given great returns. 1 Kanal file in DHA Lahore 9 Prism was roughly between 13 to 14 Lacs and is now a plot with an average worth of 100 lacs. This shows a significant growth of more than 700%. 

It is also important to note that interest rates on foreign currencies has remained very low in last 10 years and would not have given you any significant profits even if you kept that money in a savings account.

Interest Rates

Now coming on to the interest rates hike by the state bank of Pakistan recently. As per the latest interest rates if you keep your money in the bank, you will probably double it in 7 years and grow it 400% in 14 years. That is if you do not take any profits out of it in 14 years. 

Like any other investment the interest rates may increase or decrease in coming years and can also significantly effect your profit ratio. 

However it is clear that even if the interest rates remain stable, real estate which has offered 700% growth in last 10 years has the promise to offer you at least 1000% growth in next 14 years considering past trends. All you need to do is make the right choice at the right time and we can help you achieve that. 

Increase in interest rates should be harmful for the rental properties, however in Pakistan this does not happen because of the presence of black money which is more safe in a property than in a bank”

One year performance of imlaak investment

I am the man of the future yet we need to look at the past to predict the future. If you have read our forecast for 2018, which was published on 1st Jan 2018, you will have a clear idea that we have achieved our objectives set in 2018. 

Although we had no idea of such sharp increase in the value of USD, yet our investments have given us 30 to 40% returns in one year and we were able to hedge against depreciating PKR. 


Moving on to the future

Now it is time to compare what might be best for you in days to come between keeping your money as USD , keeping it in a bank or investing in real estate. 

Firstly USD is not expected to move any further high and thus will not offer you any returns in the next year. If you have USD, I will suggest that you get them exchanged into PKR and either invest in real estate or put it in bank for interest. 

If you are conscious about taking interest from banks than real estate is the only sector where you can safely park your money for profits. In addition investing in real estate offers you a chance to grow your money many times over as compared to taking interest from the bank. 

If you are a fan of monthly income it is best to invest it in rental properties as you will achieve 5% rental per year and an appreciation of at least 10% per annum. Thus making it more feasible than putting it in a bank. 

Making wise choices

Those of you who have not made enough money in real estate need to look back and see what they did wrong”

While some may worry about the risks involved in real estate sector and prefer a more secure and safe investment option like keeping your money in a bank. I will like to suggest an alternative, you see like any other thing in life, while investing in real estate you need to make a wise choice and that is what our plans are all about: helping you make a wiser investment choices in real estate. 

I do have a few suggestions if you are failing in making your real estate investments profitable:


  1. Find a great consultant, good is just not good enough any more, you need to be with the market leader if you want to succeed. 
  2. You need to invest safely in  projects all across Pakistan launched by safe and reliable developers. 
  3. Avoid investing in Bahria town in 2019 and wait till things settle down.


A lot of people are still uncertain regarding dollar and some are still planning to buy more or holding on to what they already have. Let me give you a word of advise, this depreciation we experienced last year is unprecedented and will probably not happen again any time soon. I do get involved in forex and stocks so I am completely certain that USD is not a valid investment at this point of time.

Those who have not purchased USD earlier have missed the band wagon and those who did have gained profits. It is the right time to get your profits and reinvest some place else. 



Captain (Retd) Shahnawaz Yaqub Bhatti

Investment Consultant and CEO at Imlaak

Mob : +92 333 1717170 ( Whatsapp)

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This is a very dumb article and comparison. You recommend buying for short term in some society. Why can’t you say dollar was a very good short term investment? OR a way to retain value for money.

I mean rather then showing one side of picture, stay unbiased. Fake picture and fake way but in reality very low deals.

PS- I have already left this website. This is my last visit to your web.


Dear Captain Sahab, I tend to disagree with you on certain point while calculating dollar vs phase 9. Going back to 2006 when phase 9 file was 40+ and dollar @ 62-65 rs.would make more sense. People lost the money when they invested in phase 9 at that time around. In 2006, file price of phase 9 in dollars was in the bracket of 66-68K $. Which in 2018 makes around 94 lacs rupee plus 19.5 lacs development charges would make a plot worth 1.24 crore rupee. Now if you hold a good location plot in phase 9 only then… Read more »

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