Islamabad, the capital of Pakistan, has become the most expensive city of this South Asian country of 168 million majority Muslim population.
Investment in real estate guarantees spiral growth though the city itself is not expanding. The deliberate stunted growth of the city by the local property “mafia†ensures that demand is always high for housing.
Most of the residential land had been allotted to public servants in the past, most of whom sold it to private persons or rented out their properties to supplement their meager salaries during the 1960 and 1970s. Till early 1980s, the government had sufficient accommodation for its employees and diplomats used to live in houses rented by locals.
The first major shock to Islamabad's tranquility came when a large number of Afghan refugees came in the city after fleeing Soviet invasion of Afghanistan in late 1979.
The sudden influx of Afghans jacked the demand for housing and rentals sky rocketed making the life for difficult for the low and middle income government employees who did not get official residences and had to hire private houses under government's house requisition scheme.
That was the story of rentals. Afghans could rent houses here, though it was illegal, but bribes do work in Pakistan more than anything else, but they could not buy or own property. So the pressure remained on the house rents. But the first massive increase in property prices of Islamabad was witnessed during late 1980s, when a lot of wealthy families moved out from southern port city of Karachi to Islamabad after a prolonged ethnic and linguistic strife and lawlessness.
Since then city has never looked back and every bit of dust in this leafy city has turned into gold. Owning a house or two in Islamabad is enough to make oneself millionaire.
Another major boom, the real estate and property sector came in the wake of 9/11 attacks in the United States. A large number of Pakistanis from all over the world transferred their savings to Pakistan, fearing confiscation by the US authorities who were wantonly persecuting Muslims, particularly of Pakistani origin in a massive witch hunt for Al-Qaeda members.
The dollars estimated to be in billions have been mostly absorbed by the real estate and automobile sector of Pakistan. This has resulted in phenomenal rise of land, houses and car prices. The banks had excessive liquidity and liberalized car financing making it possible for even those who could not buy a new motorcycle to buy a brand new sedan.
Coming back to rents in Islamabad, many people have to move to underdeveloped suburbs as salaries individuals are not able to keep up with the fast growing monthly rentals of even modest portions of houses.
The rents range from500 dollars per month, for a portion with two-three bedrooms, up to 4,000 dollars and more for different sizes of detached houses. For the owners it is a good income. International organisations, multinational corporations, diplomatic and UN missions can afford to pay any amount, but for average income earners, Islamabad is becoming unaffordable to live in.
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