Achieving Heights
In Pakistan, no matter how unstable the economy seems, especially to outsiders, the real estate sector is minting dollars. So, before going into details, let us be straightforward… if you’re planning to invest in real estate in Pakistan, don’t wait further, INVEST NOW!
Not only for Pakistanis, but this $3.5tr sector is the most-preferred investment avenue for international investors.
Statistically speaking, the real estate sector of Pakistan is pacing up, contributing the highest share to the GDP of Pakistan.
In the fiscal year 2020-21, the real estate industry accounted for around 5.4% of the country’s GDP.
In Pakistan, the sentiment of securing future investments is highly predictable, thanks to real estate investors for securing this sentiment with flexible investment solutions.
The availability of easy installment plans and discounts does not make the real estate sector the most lucrative for investors alone. Even professionals are also attracted to the given propositions.
Here’s a detailed walk-through to make your real estate investment journey successful for years to come.
Why Invest in Real Estate?
Adequate knowledge and expertise are solely required. Investing is like running a business; you must be vigilant and highly critical. Just like any other industry, there are fears and risks attached.
But if one looks for the results and perks, which are mainly positive, then the interest will be multiplied; some of the numerous reasons/motives to invest in real estate are listed below.
The Value of Properties
Not only in Pakistan, but the value of properties also keeps appreciating, as it is located in a highly-demanded neighborhood across the country. We must recognize those several changes (mentioned below) in real estate policies, and of course, the value of property changes over time.
Earning Passive Cash Flows
There is a broad scope for passive income in commercial and residential investments. If you’re planning to smooth out your cash flow, invest in a rented property, preferably in a populated area, and start earning.
This incoming cash/earning can increase after every 11 months if invested in residential and longer if the proposition is commercial. You can also sell the property if the value increases over time.
Additionally, real estate investments offer controlled uncertainties.
Availability of Tax Relief in real estate in Pakistan
However, those who are willing to invest and have already invested in real estate of Pakistan. They are well aware of the tax reliefs being offered.
The regulatory body FBR increased advance tax to 2% for filers and 5% for non-filers. Only 1% of deemed tax on a property valued at 2.5 crores and above, while the Capital gain tax period is six years – 15% in 1st, 5% in 2nd, 10% in 3rd, and so on.
Factors affecting the Real Estate Investments in Pakistan
These are the factors that might change your scope of real estate in Pakistan;
- Location – here, the rule is simple… if you’re investing in a locality with the latest yet authorized developments and good infrastructure, like the Blue Area of Islamabad, the chances are that the results will be higher.
- Future Prospects – Here comes your previous real estate property knowledge and predictions about the value appreciation/depreciation of the property. You can take help from your realtor friend to judge the importance and future value of the respective property.
- Project Completion: The most important thing to consider before investing in real estate, especially in Pakistan, is to look for the project timelines. Often projects here take longer than the set completion dates. Our commercial project, Citadel 7, has definite timelines.
- Economic Factors: Consider macro-economical factors, like inflation, interest rates, exchange rates, tax policies, and other socio-political factors and economic shocks.
- Authority of the project: If in Islamabad so, the project should be approved by CDA, likewise for the projects located elsewhere in the country. Approved by legal authorities means your investments are safe and secure.
Likewise, we are well aware of why investment in real estate is appraised.
What type of real estate is for beginners?
We have to start somewhere, so if you want to be a real estate mogul. You need to focus on the trending factors that a beginner should learn and execute. A couple of them are here for you to skim through.
- Owning commercial property is the most lucrative way to begin your real estate career. You may ask why? Because they offer stable returns in the long run.
- Syndication of real estate funding (investors pool in) gives an individual limited investment power. As in this, a maximum number of investors, builders, and potential stakeholders group together and add their respective share of capital, experience, expertise, and efforts.
- REITs (Real estate investment Trusts) are organizations in the form of trusts that advise and guide beginners about different opportunities in real estate. These trusts have characteristics of a stock exchange market to gauge the variety of real estate properties.
Last but not least…
How to invest in Pakistan real estate?
When it comes to real estate investing, we should look into the pros and cons before investing in any project in Pakistan.
Here are a couple of factors that a risk-averse individual should keep on their finger when investing in real estate.
- Invest in authentic/legally-approved projects.
- Being a tax filer can help them earn tax benefits and other relaxations.
- Try to invest in commercial properties as they offer more promising returns and are less risky.
- Get to know the hacks of some clever scammers ruining the country’s real estate market.
FAQs
In Pakistan, we have;
Vacant Land.
Commercial Properties.
Residential Properties.
Agricultural Properties.
Industrial Properties.
State-Owned or Special Purpose Properties.
Mixed-Use Properties.
Some don'ts to practice in real estate are;
No planning before investing.
No or limited research.
Invest in unreliable projects. (only invest in CDA-approved projects)
Builder with shady records.
Don't invest in properties with unnecessary expenses.
The 1% rule, though unofficial, is a benchmark that helps real estate investors to opt for the most profitable investment opportunities. The law says that investors should invest in properties for which they can receive a gross monthly rent equal to or greater than 1% of the property's face value.
