The Pakistan Economy Watch (PEW) said on Monday realty sector is showing some signs of improvement as investors disappointed with Dubai downtrend have started shifting capital to Pakistan. Many traders, industrialists, agriculturists and investors have lost their investments in the property slide in the Gulf and Middle East. The bust has relieved many mediocre Pakistanis of their lifetime savings, said Dr. Murtaza Mughal, President, Pakistan Economy Watch.
Some were fortunate enough to get part of their money back while others are still running from pillar to post. Many brokers have gone underground. “Those who invested in financial institutions, banks, carriers, tourism, transport, hospitality, and stocks are finding a way out as the 6-year unnatural boom has finally ended,” he said. Those who were fortunate enough got some of their money back; they are now investing in Pakistan which is a good omen, he said. Major investors have realized that the economic models offering extraordinary profits ultimately ends up in a burst. Prices of property that used to climb by hours are now declining to pre-realty boom levels.
The real estate crisis that hurt big financial institutions in the US, EU and developed Asia etc has also infected wealthy Arab countries. It is bound to hurt almost everyone in 2009, said Dr. Mughal adding that majority will not be able to escape the effects of the slowing global economy. Apart from investors from Pakistan, India, Bangladesh, Iran and west, 50 richest Arabs have already lost $25 billion in 2008; losses in the 2009 may be more stunning.
However, Pakistan will continue to escape a big blow due to its little international market integration. These facts have undermined investor confidence and pushed them to cut their investment plans and withdraw remaining money from markets. There is less doubt that Dubai has emerged as one of the most vulnerable investment destination. The city-state is now dependent on federation for survival and thinking to tax everything.
Property business in Pakistan is trying to hobble back on track but we should learn the lesson from experience of other countries. Banks should not be very exposed to this sector to avoid any possible ramifications.
Sorce: Pakistan Observer
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