What is Real Estate Investment?

Are you unaware of how, when, or where to invest? Then you are in the right place. Real estate investment is one of the most beneficial yet profitable investment opportunities in an entire country. Real estate investment is that you have to buy a property after consulting your real estate agent. However, it is more likely to get gain than to lose. The property market of Pakistan has come to light and become a major contributor to the socio-economic development of the country. This is considered as the best way to secure money for a long period and also being profitable, the outcomes are always in support of gaining-good in return.

Factors Affecting the Real Estate Market:

Before heading towards real estate investment, you definitely need to have knowledge about some factors that affect the real estate market. Here is the list of some important factors.

• Demographics
• Taxes and Budget
• Opportunities for Employees
• Overseas Pakistani’s Investments
• Interest Rates
• Regime Policies
• Belief in Market

Demographics of Country:

Demographics of a country play a main role in terms of buying, selling, or renting purposes. The real estate market is directly affected by some categories of demographic data like the socio-economic status of the generic population, it depends on the earnings of people likewise, whether they belong to middle class or elite class. You either be searching for a big house for a joint family or small house for just 2-3 individuals, it depends on the divisions of family systems.

The one is a nuclear family that possesses a small apartment or house, the second one is the joint family system which requires a huge house apparently. So in that case, Pakistan’s property has great value and demand which is affected by divisions. Hence, the Pakistan real estate market is directly affected by the demographics of the country.

Taxes and Budget:

Pakistan property market was in serious economic crisis for a decade but 2019 was a turn over for Pakistan real estate market and the economy as well. Eventually, the cost structure of property requires a budget and it depends on the increased or decreased prices of raw materials for instance; cement, bricks, or fixtures etcetera. The prices of the house can go down easily if the low-cost raw material is used. In that case, lower the cost of construction, lower will be the business. So if the budget is low, the Pakistan real estate market will fall.

Tax rate:

• Withholding tax rate has been decreased from 2-1% on rooted properties
• Withholding tax collection on buying property disregards of its market value
• Withholding tax collection on selling property, where the holding property is remained above or below 5 years

Opportunities for Employees:

Do you want to know how much the employees get benefitted by the opportunities they have been given when it comes to real estate sector? You probably need to know that the proportion of the country is directly related to the ‘employment to population ratio’. The financial independence shows the high employment ratio which means more employed people will be more financially stable. Hence, the prices will become affordable for them in terms of buying or selling house.

Overseas Pakistani’s investments:

Overseas Pakistani’s have always made handsome investments to our country’s real estate sector and surely played a vital role. Some major developments like the Naya Pakistan Housing Scheme where houses are being constructed in multiple cities around different cities of Pakistan.

How to make friendly-relation with investors?

The basic aim is to make investor-friendly relations and welcome the overseas Pakistanis in a world of real estate sector. The investments are highly profitable and whenever someone invests, they bring resources inside your country for instance; Money, technology, and machinery etcetera. So it is considered one of the biggest factors to bloom the real estate market.

Interest rates on properties

Interest rates on properties play a critical role in the growth and development of the real estate market. Well, you know in some ways interest is forbidden and people don’t really invest along with interest. The buying property depends upon interest rates, which means the slight change in interest affects the trend of real estate market. This major factor would let people find another business rather than investing on real estate market.

Due to the socio-economic and political situation of the country, Pakistan’s stock market varies quickly, which results in the up and down of the real estate market, eventually, the graph comes down in terms of high-interest rates. Lower the interest rate, greater will be the value of property in Pakistan.

Regime Policies

Policies made by the government play a main role in the development and growth of the real estate sector. The support in reducing taxes and subsidies can be beneficial for the investors and also for the betterment of the infrastructure of Pakistan. Moreover, foreigners might get attracted to invest here. So basically the relation should be friendly or else people will not invest in it here.

Belief in the Market

The most important factor is to create a better image in the market, real agents are supposed, to be honest, so that investors can fully trust them. As it is all about savings of people and they think twice or thrice before even investing so it is the duty of builders and developers to develop trust among people or frauds would not let people invest in the real estate market.

Conclusion:

These are the factors that greatly affect the market of real estate and in terms of any mishaps while buying or selling properties, the market will go down. You are required to have knowledge about demographics, taxes, and budget rates, the opportunities are given to employees, and government policies etcetera before investing. As we know that the real estate market is getting better and we can clearly see the bright future of this market, so do not hesitate or think twice or thrice because we care for your savings and future as well. So just find out a professional real estate agent and try to have firm faith. Happy investing!

As a matter of fact, investing money in a real estate would never be an easy task for beginners. But there’s nothing to worry about as you only need to avoid some of the mistakes that might lead to failure. Following are the ten mistakes, a real estate investor must avoid.

1. Improper research and planning:

A real estate investor is likely to make this mistake more often. Without proper research about property and real estate agency one shouldn’t consider to buy or invest. Don’t get over excited before or refrain from trusting your real estate agent so early, inquiry is highly required about the area, neighborhood, and location etcetera. It is important to research about builder’s history, civic facilities, upcoming projects and value of that area. You can also research about it on internet as there are different websites which might help you get the best with no regrets.

2. Being effected by ‘The Market’:

Everything comes down your knees if you don’t get affected by the market more than your requirements. Real estate market rotates in a cycle of ups and downs where there comes a good time for buyers or sellers when the prices of market on the boom. So it is better not to wait for the right time, you are definitely gambling with the future of your family if you do so.

3. Underestimating your budget:

Every homebuyer is always looking for a house that fits their budget because an expensive property can be better but appealing also which questions your expenses. It is a human nature to look for something a little more attractive which may exceeds limit, yet some banks provide loans as per your finances and ability to repay. Before even investing you need to check out the expenses for renovations, furnishing, and painting etcetera. Better make a list of expenses including tax, or insurance so that decision could become easier for you.

4. Not opting for a professional real agent:

This is the most common mistake a real estate investor should avoid while not opting a professional agent. Whenever you plan about doing an investment in a real estate market, you should choose a reputed yet experienced agent who might charge you a bit more, as it is quite difficult to trust strangers so you are supposed to look out for someone who has a perfect knowledge about ins and outs of real estate market. For instance; rules and regulations, and current market trends as well. The best way to find out who is an experienced real agent is to look into his past performance so you can get freed from types of scams.

5. Not executing an investment strategy:

Not every investor comes with plan or strategy about what and where to invest and they don’t have even knowledge about the outcomes. Hence, the requirements depend upon experience, age, and income level etcetera. Likewise, young generation looks for trending styles while retired would prefer a stable cash flow. So never come up to invest without making strategies.

Lahore:

Pakistan’s real estate market is developing with every passing day. The emergence of new real estate groups is changing the investment trend from long to short term.

Though many cautious investors park their money in the construction of housing units or simply purchase completely built units to rent them out for income generation, still a majority prefers to invest in land for a better or sometimes quick return, experts say.

The charm of better and instant return has increased the flow of liquidity in the property market and most of the people are not hesitant to invest their savings. In the past few years, the unstable law and order situation and a high cost of doing business had forced many to sell their business and put money in the real estate market.

The diminishing agriculture income is another reason for many small and medium-sized landlords to sell rural land and go for pumping money into urban property.

Though there are some rules and regulations and state authorities to deal with matters pertaining to the sale and purchase of land, they are not helping to build investor confidence. Apart from some private housing schemes, fraud and land-grabbing is the norm and state laws fail to offer any relief and solution to the problem.

As a result, experts say, money keeps on circulating among few particular housing schemes, which are marketed as a safe haven for investment with better infrastructure and other facilities. Nevertheless, the developers of these private housing schemes often fail to hand over possession to the buyers on the announced date.

Price manipulation

For the past few years, the game of investment starts with the issuance of registration forms of a housing society, then these are converted into files and at later stages plot numbers are given after balloting. Between these processes, a lot of money flows as the investment is not huge and anyone with a few thousand rupees can enter the arena to fetch a handsome return.

Almost in every case, according to experts, the management of a housing society is accused of releasing registration forms or plot files more than the actual number of plots.

The ultimate beneficiaries are the real estate groups and some big investors. They work as a cartel to set high prices for the project’s popularity and at later stages they weaken the market and buy plots at much lower rates to fix the issue of excess files.

Every time this happens, but whenever the same group announces plan for developing another housing society, investors rush again to buy the property and the same old story is repeated. Perhaps, they have not many investment choices available.

Experts say there is a dire need to regulate and document the real estate market and put in place a strong check and balance mechanism as investor’s numbers are increasing due to rapid urbanization. Only strict rules and an independent authority could put a check on such developers in order to force them to deliver what they have promised.

These measures will help in limiting the unexpected hike in land prices and slowly turn this scattered but an important segment of the economy into an organized sector. This will also help in boosting investor confidence and once things are streamlined, real estate could prove to be one of the most lucrative sectors both for investors and the government.

LAHORE: 

Pakistan’s real estate market tends to ignore broad scale macroeconomic indicators, posting growth even as foreign direct investment falls or infrastructure spending remains stingy.

Data from an online property portal, Zameen.com, shows the country’s property market has posted a phenomenal growth of 118% in the last five years. This high growth rate can be attributed to robust demand from seasonal investors, genuine buyers and an overwhelmingly better security situation.

Karachi: 

Karachi has led the way in terms of growth with the strongest figures coming from the port city’s residential plots. In Karachi, an average residential plot price in January 2011 was at Rs2, 276 per square feet but amounted to Rs8,089 by January 2016. The city posted a growth of 255% in the last five years.

Lahore’s case is not that different. Data revealed that average prices of residential plots have observed a 149% growth in the last five years.  Average price in the city soared to Rs3,339 per square feet in January 2016 from Rs1,336 in January 2011.

The country’s capital city also posted an average growth of 143% in residential plots, where prices reached Rs2, 699 per square feet in January 2016 from Rs1,108 per square feet in January 2011.

Zameen.com Chief Executive Officer Zeeshan Ali Khan said that it is likely that the growth trend will continue due to increasing urbanisation and demand for housing.

“Pakistan’s economy is expected to grow and with the China Pakistan Economic Corridor (CPEC) coming up additional opportunities for the economy will open including the real estate sector.”

Khan said that the effect of CPEC is already evident in Gwadar, where average property prices have risen up to 70%. In some areas of Gwadar, a growth of around 200% has been recorded over the last few years, said Khan.

While many real estate experts believe that prices have reached a peak and a downfall is imminent, Khan said the slide is unlikely. “Majority of the dealings are carried out in cash and there is less dependence on mortgage loan facilities. The market remains a safe bet.

“There is little or no concept of mortgage finances in Pakistan to buy land or a housing unit. We mostly deal in cash. Hence, in stagnant markets, people have the much-needed holding power.”

New government and its economic reforms could bring about that reason to cheer

Dubai 

A crippling currency decline and a worsening economy were not able to crimp Pakistan’s property market in the last 18 months. Now, with the political situation having cleared up with a new government in power, developers are building up some great expectations on the sector’s performance.

“Developers for the most part have remained aggressive with their launches, not only in the major cities but in Tier 2 areas of Hyderabad, Peshawar and Quetta as well,” said Furqan Hussain, who heads Quice Industries. “This trend is expected to continue because the depth of demand is clearly self-evident.” The developer currently has three projects in Karachi City, and is exploring the possibility of making an appearance in Islamabad within the next two three years.

Hussain’s optimism would have seemed misplaced just six months ago. At the time, the rupee seemed locked into a spiral, and had dropped more than 20 per cent since January 2017. (A dollar gets Rs124.12 based on the Friday exchange rate.)

There was constant chatter about the need for some sort of help from the International Monetary Fund to prop up a fast deteriorating situation.

But the recent elections and Imran Khan’s step up as Prime Minister seem to have brought the economy some breathing space. In the real estate space, developers say there aren’t any overt concerns about high supply getting caught out by muted demand.

Zeeshan Zaki, Director at Saima Builders, said, “Demand for offplan remains robust in Karachi and that’s across all income strata. We have not experienced an adverse slowdown despite the political climate prior to the elections.

“With regards to our immediate plans, we see no change to our pace of launches. In fact, we feel the pace might even increase given the optimism over the new government’s policies.”

Will non-resident Pakistanis come through in sizeable numbers? According to Hussain, apart from at the top end of the residential market, expect investment flow into Pakistan real estate hasn’t exactly being seeing a surge.

According to Sameer Lakhani, Managing Director at the consultancy Global Capital Partners, “Real estate values did remained muted over the last year — but this is not the same as saying demand is projected to fall. Pakistan faces an acute housing shortage across all income levels, and housing schemes that have thus far been announced will not fully address this shortage.

“While the overall picture remains optimistic after the elections, market participants are still waiting on the direction of economic policies by the new government and which will set the tone for 2019 and beyond. Should the government provide impetus for the affordable housing push — backed by mortgage reform and the offering of such products by the banking sector — property values can then enter a period of sustained growth.

“This optimism obviously needs to be tempered against the backdrop of rising interest rates, which is always a negative for real estate markets.”

But for the moment, developers are willing to get by on that optimism alone. After all, they have had to get through much worse in the recent past. for Pak Real estate Jobs.

Dubai: The World Expo in 2020 has the potential to stimulate Dubai’s downhill real estate market, US credit rating agency Standard and Poor’s (S&P) said Tuesday.

Rents and prices of the real estate market fell 5 percent to 10 percent in 2017 and will continue the trend until 2019, said S&P in its study titled “Dubai’s Real Estate Slump Is Set To Persist, With Only Expo 2020 Offering Any Hope.”

However, how much stimulus the world expo, which will run from October 2020 until April 2021, could provide for Gulf Arab sheikhdom with 2.5 million inhabitants “remains to be seen,” it added.

“In 2020, the sector could well start to benefit from the potential increase in economic activity and positive business sentiment attached to Expo,” the rate agency noted.

Dubai 2018 budget foresees $15.5 bn expenditure ahead of Expo

“The expected 25 million or more visitors and floods of new residents to Dubai should support the market,” it explained.

But it also warned that a speculative surge in prices, devoid of any demand and supply mismatch, could be a negative side effect of the boom.

Earlier in January, real global estate service firm JLL said approximately 575,000 new real estate units could enter the market until 2020.

The Expo 2020 venue will be held near Dubai’s newest free zone Dubai South, wedged between Dubai’s free port Jebel Ali and the 2010 opened Al Maktoum International airport, which is poised to become the world’s biggest civil aviation hub once expanded and completed by 2025.