Rents on existing property have been stable and move in 5 year cycles. 5 years ago when I came back you could get good location commercial and residential properties (for office use) at 10 – 15 rupees per sqft. For new high profile projects it went all the way upto 100 -120 rupees per sqft but should come down now.

I guess the way housing has gone high in Karachi, the rental yields were never proportional to the property prices. I do not think [I could be wrong here] the people who were paying 10K as rent are paying 40K for rent in 2008 for same place. My assumption is that house prices have gone 300% up since 2002.

Why it did this is another story for another post, but it goes to push the old trader lore “Bulls make money, bears make money, pigs get slaugthered.”

You are on the money again. But there is one area where we differ – investment horizon.

If I own real estate as an investment, then yes you are right. But if the office property I own is also being used as an office by my business, then I continue to received a rental yield against it. In real terms, value has gone down but the rental yield has gone up. if I am based here in Pakistan and expect myself to be based here for the next five – twenty years, I see this as a blip. No pundit on the street gives the current government more than 2 years in office.

As an outside investor, my outlook would be very different. My primary worry is capital loss and the opportunity cost of missing out on investing in assets in other economies where the risk return trade off is better. That leads to only one rational outcome – liquidation.

As a local resident and business owner my pimrary outlook is riding the current storm and surviving in better shape than the competition. In that outlook the only irrational outcome is liquidation.