Factors That Govern the Real Estate Market
Pakistan’s real estate market has gained momentum over the past decades now. Investors see it as a great new horizon to invest and make profits, making the market more attractive to new investors both medium and long term. Investing in the real estate market is not easy. There are many factors that affect the market, and it is essential to gain knowledge before making any move to invest. To understand the fluctuation, we need to study the factors individually. Although there are many elements including, demographics, economic growth, affordability, laws and policies, and so on.
Here are a few that mainly change the game.
The first and most essential element is the location of the property. The better the place the higher the price. Therefore, the real estate in the city center is more expensive than the real estate in the surrounding area. Location controls many other factors including, commuting, and access to facilities. Proximity parks, schools, facilities and proximity to the city are all great additions; therefore control the price of the property.
If you are buying property, the location should be very considerable. In Karachi, the most notable regions are, DHA, Clifton, PECHS and SMCHS and so on. Similarly, if you are shopping in Islamabad, places like DHA, I8, Bahria etc should be considered. Lahore on the other hand is famous for Cantt, Model Town and DHA.
No matter if you are investing in a business or buying a house, location is the first consideration. Although this will cost more than the others, this is a factor that needs serious consideration before making any decision.
2. Physical state
The second in line is the state of the property. Sometimes the state of the property is zero and the only money involved is for the location and size of plot. To invest in real estate, conditions play a vital role. If you are interested in buying a newly built house, you may have to pay more than buying an old building. It is always preferable to buy a well-maintained or new property instead of investing in a property in a poor state.
The condition of the property includes interior and exterior. Critical and intentional inspection of the property is essential. Before concluding the deal, check
for everything from murals to appliances and furniture arrangements; each plays an important role in access to the state of the property. You don’t need a house that needs a lot of repairs and maintenance if you pay a quick sum of money,
You can negotiate the price once the condition of the property is accessed. The price is negotiable if you find problems with the condition of the property. Anything damaged or broken can help you in negotiation. This negotiation will save you some money to raise the status of the purchased property.
3. Limit Appeal / Surroundings
The main element that adds value to the physical condition of the property is the quality of its surroundings. If the property is surrounded by low valued shops like mechanics etc, the value will be low. The surroundings can be improved and this improvement will add value to the property price. The overall appearance of the property makes it more expensive.
A good car garage, a plantation outside the property, a decorative driveway and lights can multiply your profit. This is one aspect that can be worked on at any time. If your house looks good from the outside, you can always ask for more price resulting in more profit.
4. Government Laws and Policies
Policies about where you live or intend to purchase property also have a big impact on its valuation. A change in policy causes a price fluctuation. For example, the recent change in the law on share buying has caused a decline in the price of shares.
When buying any property, you need to check the policies currently in force.
5. Facilities and Installations
Ease of living in the new standard of modern society and place. And usually, all newly built properties, whether apartments, built-in communities or corporations, all compete to provide customers with everything that can be arranged.
Generators, elevators, community halls, gyms, swimming pools, parking, electricity, water supply are all part of facilities and facilities. Most people
prefer PECHS instead of DHA only because of the constant water supply. Older communities and properties where such high-tech facilities are lacking often cost less.
Access to Public Transportation is another advantage to property taxes. Other facilities include, supermarkets, hospitals, parks, all add value to the properties in the vicinity.
No one is willing to buy property in an area where security is an issue. Everyone expects a safer and safer environment. Location and security go together. Because security primarily depends on the location of the property.
Inbound communities and societies are a new cart. The 24/7 security of these built-in communities is a valuable addition that cannot be ignored. The addition of guards, CCTV, a high-tech security alarm further enhances the property.
7. Demand and Supply of Property
As the world changes, so do the choice of people. The trend to buy an apartment with a picturesque view in a tall building has increased the demand for such kind of property and therefore the prices are higher.
Most people are interested in buying property in urban centers, creating a superior demand. According to the economic rules, the higher the demand the higher the price. Meanwhile, in places where property abounds available and less demand the prices are lower. On the other hand, if prices are too high, demand falls resulting in an imbalance of supply and demand.
It is imperative to study the demand and supply of real estate before buying one.
The above mentioned factors are the basic ingredients of real estate, but not limited to these. There are many factors that govern the price of the property. It is important to study every factor before making a big decision to invest in property. This article is written to educate people about property valuation. We intend to help everyone for future property issues.
What Does It Take To Be A Successful Real Estate Investor?
Real estate investing is always one of the most lucrative businesses in Pakistan. The real estate business provides many ways to make money fast and increase your wealth significantly in a short time. However one should never forget the fact that this industry is very competitive and you need to be extremely efficient to achieve lasting success in real estate. No matter whether you are a novice or an experienced real estate guru, learning and adopting the habits of a successful real estate investor is an ongoing process and it can be very effective at any stage.
Unquestionably investing the hard-earned capital in any new venture is a very risky task. But with regard to real estate, always remember that the greater the risk, the greater the success. By comparison, over time, making a profit against your real estate investments becomes easier once you find out about the market trends, clear up about your goals, develop a niche, and build a network.
There are currently various well-known institutes that offer real estate in Pakistan. Obtaining a degree in this field may be one of the important steps to becoming a successful real estate investor, but it is not a prerequisite for becoming a successful real estate investor. If you really want to continue your career in this domain, you need to learn and follow the habits of successful real estate investors, their stories, their vision, and try to embrace their characteristics.
5 habits of successful real estate investors
Today we have collected some of the very effective habits shared by successful real estate investors. Let’s move forward.
1) Make a Plan & Paste it
Most beginners don’t realize the importance of having a plan before investing in real estate. To achieve success in real estate, you need to have a solid investment plan and the ability to adhere to your plan.
As a novice, you need to be clear about where you want to buy real estate, how much you want to invest. What is the acceptable return, and what is the time frame for your investment. How fast do you want to earn a profit and what is your target market. Moreover, you also need to research whether you need to invest in residential or commercial real estate.
Once you become unambiguous in your plan, set your short- and long-term goals according to your plan. Stay disciplined, and be prepared to face small setbacks and always think from a broader perspective.
2) Notoriety With The Market
Reading carefully about the market situation is one of the main skills needed to become a successful real estate investor. This includes knowing the changing trends of the market and analyzing the demand of buyers, means where and what actually buyers are looking for. You need to be well aware of the kind of properties that serve as a hot cake in the market. You need to be able to predict the locations for high capital gains and an impressive rental yield.
Deep knowledge of target markets, getting the traps and acquaintance with the trend prices is as essential as knowing the consumer’s spending habits, priorities, the inflation and unemployment rate, middle income and other factors that influence the buying and selling power. .
Smart investors always have this information. Being aware of the market trends also allows them to predict future trends. And this skill can create very lucrative opportunities both in the short and long term.
3) Build a Niche And Focus
Building a niche is very essential to becoming a successful real estate investor. Many large tycoons in real estate investors have a certain niche. Therefore, it is highly recommended for beginners to choose a particular market, build a niche and focus on it. This practice takes a long time to master, but step-by-step learning will make you understand the market and a specific type of property, neighborhood, or area of interest. However, we always recommend focusing on a single market if you want to be a successful investor in the long run.
In Pakistan’s real estate market there are many options for new investors like poor or cheap housing, mixed-use developments and high-rise housing. Similarly, the country is also witnessing a significant increase in the popularity of hotel apartments, which is yet another possibility in the growing real estate sector.
4) Brainstorm and Risk Calculations
As we always say, the greater the risk, the greater the gains. Risks are the essential element of any investment or business. To be a successful investor, you must have the ability to assess, calculate, and understand the risk associated with your transactions. Recognition and prior risk analysis will not only help you discover a property that is worth your investment but also help you avoid the related risks before the point when they lead your investment to a loss.
Compulsory diligence is inevitable in real estate to avoid any major loss. It is highly advisable to analyze the situation itself, seek expert advice where necessary, refer to facts and figures, understand the legal implications and always rely on credible sources to form a course of action. This practice will minimize the risk and increase the probability of success.
5) Make Relationships
A network consisting of a competent, professional and reliable team is very important to achieve lasting success in real estate. You need to build your network with peer professionals and successful investors. These gurus in your niche will help you accelerate in your domain. One has to be very careful when choosing business partners and customers.
Many people prefer to work alone if you are one of them. Please remember that expanding your professional circle, making connections and building a network is the habit of highly successful real estate investors.
In addition, always keep in touch with the people involved. Do not hesitate to ask for help when needed. Encourage referrals, always be ready to learn new things and keep yourself aware of the changing dynamics of the market. Hire competent resources to manage your finances.
Things to consider before purchasing a property
When choosing a house, you must take into account the physical condition of the property to the legal aspects that will allow you to know if the home of your dreams compares to or is identified with your lodging needs and spending plan.
Purchasing a house or condo is speculation that ought not to be trifled with. For this reason, it is so necessary to take into account certain aspects before becoming the owner of your own house or apartment.
So here is the list of things that you should keep in mind before buying a property:
Be minimalist when choosing a home
The process of looking for a house is very exciting; it is easy to get carried away by the most significant properties, those with the best decoration, the best floors or the best furniture. Those shine a lot brighter than small properties with simpler finishes.
The fact of the matter is, you will pay more for that additional room and for the conveniences. The proposal is that you begin visiting houses with costs that are near what you have saved. If you prefer to see it differently, start from the bottom and work your way up in case you can’t find something that stands out or, as the properties meet your needs and fit your pocket.
When you start your search in reverse, that is, visiting and idealizing the largest and most luxurious houses, those that are often out of the budget of a first-time buyer, you run the risk of biasing against tiny houses or apartments. Your base of comparison will be that dream home that is not necessarily a good investment since buying it would mean a tremendous financial weight and not a step in the formation of your wealth.
Keep an eye on the mortgage you take
Buying a house or apartment through a mortgage loan is the best option, but paying it off before 15 years is ideal. Choosing to finance for a term of fewer than 30 years allows you to pay less interest in the financial institution. This is because the 15-year mortgage is not only much shorter (which means you will be paying more principal each month), but you will also have a lower interest rate.
Do not exceed 40% of your salary in the payment of a property.
This is a good rule of thumb for financial health when buying a home or apartment. The first thing you should consider is the monthly payments of your existing doubts; then, you will have to add the monthly payment of a mortgage with a term of 15 years. If the total adds up to more than 40% of your monthly salary, then you are risking living on a tight rope, financially speaking, so you will have to reconsider or discard the purchase of that property.
If you exceed that percentage, we suggest you continue saving to buy that property or try to find properties with a lower price. Do not forget that there are expenses when buying a house or apartment that you must pay on your own even when you are granted a mortgage loan, for example, the deeds, the payment of taxes, the fees of the notary public and the real estate agent.
Furnish with the basics
Unless you buy a semi-furnished or fully furnished property, you will have to spend a good amount of money to purchase basic furniture and appliances.
One of the first things you will discover in the first days you spend in your new home is that it can look a bit empty and austere. The temptation to fill it as soon as possible will be latent. However, it is best to cover those gaps with second-hand or cheaper furniture. That way, you will meet your needs instantly, and you can update them eventually.
Doing this little by little will protect your pocketbook. Of course, avoid buying furniture on credit so as not to increase your debts and, much less, risk your savings or your emergency fund.
It is essential that you buy a house for the right reasons.
It is expected that if you reach a certain age, get married or have your first child, family or friends begin to ask you when you will buy a house? Social Pressure can be solid, and the assumptions for others can impact your choices. Make sure that it really is a personal desire and that you live the circumstances that make you feel secure about that vital acquisition.
To become the owner of your own home, you need to be financially and emotionally ready. Not only can home provide you with security and a sense of accomplishment, but it can also help you be financially successful.
Define how much of what you have saved you can use, since banks or housing support institutions only lend on average up to 80% of the property’s value, so you must have that 20% previously to give the down payment and 5% more to cover the initial costs (appraisal, insurance, deeds, notary, the opening of credit, etc.).
If you are going to invest in a property, look for you to have the communication channels or services that you require, such as education, health, shops, security, transportation, recreation and supply. Avoid risk areas! What’s the significance here, that the property isn’t under high voltage lines, gas tanks, underground pipelines, close to gorges or territories in danger of flooding?
Are people preferring High rise constructions over plots?
The skyline of Pakistan’s major cities is currently one of modern high and medium buildings. The rapid demand and development of luxury residential towers and commercial skyscrapers essentially reflects the passing of the times when living in a separate house was considered a sign of prestige and honor. Are real estate in Pakistan changing from plots to tall buildings? let’s discuss it today.
Over time, the construction of mixed-use and residential buildings has increased dramatically in the metropolises. These skyscrapers and residential towers not only enhance the beauty of outdoor buildings throughout the city but also offer all the modern amenities and facilities.
If we delve deeper to find the cause of this change in real estate trend, we will find that there are many reasons behind this sharp demand for high developments in Pakistan. The first and most important reason is the rapid growth of the population in urban areas. The massive influx of people migrating from rural areas to urban centers has forced developers and investors to focus up construction. The lack of land and high prices are some of the key factors behind the real estate investment shift from plots to high and medium towers. The government has also taken strict steps to prevent the horizontal expansion of major cities to prevent any urban sprawl, which is yet another factor that has contributed to this trend.
Demand for Housing and Houses
If we look at the statistics of just the past two years, we can say that the demand for houses and apartments in Pakistan has grown en masse.
The rough analysis of the user records reflects the demand for plots in Federal Capital Islamabad fell from 26% in 2018 to 21% in 2020. Over the same period, the demand for apartments is growing from 15% to 17%.
A similar pattern has been observed in other regions of the country as well. For example, if we look at Punjab’s statistics, the demand for plots has fallen to 20% in 2020 from 22% in 2018. However, the demand for apartments rises from 15% in 2018 to 17% in 2020.
Real estate in Sindh has also shown a more or less similar trend. Where the demand for plots decreases from 15% to 12% and demand for housing has increased from 23% to 25% over the course of two years.
Real estate trends in KPK have also shown a decrease in the demand for plots from 22% to 20% and an increase in the popularity of housing from 17% to 19%.
The Recent Trends of Real Estate Market
The growing trend of high development in the country has attracted the attention of real estate investors as well as developers. At present, about 85% of newly launched projects consist of high-quality housing complexes, while the remaining 15% of the newly launched mixed-use and residential projects in major cities have plots for sale.
Considering the demand for apartments and houses, some of the most prestigious builders and apartments have started launching villas, town halls, marquees and apartments. Easy delivery plans have been introduced to attract more buyers.
Loans, Mortgages and Construction Financing
The government is also working to facilitate home loans for investors. Commercial banks have also been instructed to use 5% of their total lending to finance housing while the State Bank of Pakistan has also introduced steps to encourage construction financing to developers.
The government is trying to develop a mortgage financial structure in Pakistan. It has reduced the tax on bank income generated by cheap housing finance from 39% to 20%. This will serve as an incentive for banks to provide mortgage and home loans to middle and low income earners.
Pakistan Naya Housing Program (NPHP) has also launched a plan for home loan purchases at lower markup.
Please note that we never recommend our readers to choose any funding option that implies an interest in any form.
How This Change In Real Estate Trend Affects The General Sector
The growing demand for high and medium construction is directly proportional to the construction activities in the real estate sector. This will result in generating more job opportunities and more economic growth for the country. This will also grow the trade of hundreds of industries associated with the construction sector.
Additionally, the development of high and medium buildings is a realistic solution to deal with urbanization with a smaller plot of land. Horizontal expansions of cities not only cause urban sprawl but also cause the disappearance of agricultural land, threatening natural resources and environmental peace. From that perspective, we can say that vertical expansion reduces these problems by a significant margin.
Another effect of the real estate investment trend of plots to high towers is that this practice allows investors to raise capital gains and enjoy rental income as opposed to plots.
However, Urbanization is still the biggest factor that has caused the vertical expansion of cities. The need to accommodate the massive influx of people in major metropolises has led the government and builders to choose tall buildings to serve the purpose.
Considering the aspects we discussed above, we can conclude that this shift from real estate trends from plots to medium and tall buildings will not only benefit the construction company across the country but will also provide an affordable living option for people who want to settle in. urban cities. areas.