Guide to Real Estate Investment in Pakistan

real estate investment in pakistan

According to recent statistics, Pakistanis spend around $5.2B on construction and real estate every single year.

Now, this is a huge number!

Have you ever thought about why so many investors are interested in real estate?

If your answer is no, do not worry because this is exactly what this article is about.

Real estate is one of the most lucrative investment ideas in Pakistan and for all the right reasons. Unlike other investment and business opportunities in Pakistan, real estate comes with multiple benefits. 

In this article, we will be discussing all the major things about real estate investment that you should know.

So, let’s get started!

How to earn money in real estate?

Real estate is an excellent opportunity for people who want to safeguard and grow their hard-earned money. Real estate investors can also enjoy a handsome salary. This section will also help you understand how To Start A Real Estate Business and grow it by leaps and bounds.

Following are some of the ways which you can adopt to earn money in real estate. 

1. Real Estate Appreciation:

In real estate, appreciation is an event when your property’s value increases over time. One of the easiest ways to earn money in real estate is through selling off property. In the Pakistani real estate market, the demand for real estate is increasing by leaps and bounds. As a result, the sales prices of real estate also increase. In short, you can demand a higher sales price for your real estate product and handsome profits through it. 

Appreciation occurs when a property rises in value due to a change in the real estate market. For example, a lot of people renovate their houses. They add new features to their home, which in return, increase the overall value of their property. However, it must be kept in mind that real estate appreciation is tricky, and one cannot accurately predict the rate of appreciation. 

Real estate appreciation is a tricky game because it is not easy to predict. For instance, the land around your property could become scarcer or busier (for example, if a significant shopping center were built nearby). Or, perhaps you made upgrades to the property that make it more attractive to buyers. It is riskier than investing for cash flow income

2. Cash Flow Income:

Everyone linked with real estate in any way should know how to Invest in Real Estate. Cash flow income is generated in real estate when you buy a real estate property and manage it for money. You then collect a stream of cash from tenant rent. Rental Property Investment is an excellent source of passive income.

 Cash flow income can also come from other real estate types besides apartment buildings, such as storage units, office or retail establishments, and rental houses. You can even rent out your agricultural land and generate a high income.

3. Real Estate-Related income:

This income stream is standard among specialists in the real estate industry, such as brokers and real estate investors. A significant chunk of the money is made from commissions on properties they have helped a client buy or sell in this income stream. Also, many real estate management companies get to keep a portion of the rent to manage the operations.

Ancillary Real Estate Investment Income:

Last but not least comes the ancillary Real Estate Investment Income. It is considered to be one of the most practiced real estate categories and is known for the massive source of profit that comes with it. Ancillary real estate investment income includes vending machines in office buildings or laundry rooms in rental apartments. 

Why invest in real estate?

Real estate investment is considered one of the most lucrative business ideas in Pakistan and for all the reasons. This section will take you through all the advantages and rewards that come with real estate investment. 

So let’s get started.

Real estate is a very stable investment idea because prices are less volatile in real estate, and there are fewer chances of losing your hard-earned money. It is safe to say, real Estate Investing Is one of the best ways to secure capital. 

With real estate investment, you can build equity for the future. This, in return, will help you grow your portfolio. It is essential to know how to succeed in real estate investing and private equity real estate investment.

There are many reasons to Invest in Real Estate, and tax relaxation is one of them. Real estate is an excellent option to generate tax-free passive income. Plus, it can also provide cash flow for retirement. So, if you want to secure their money in the long run, real estate is perfect for you.

It allows you to diversify your portfolio. When your portfolio is diversified, the chances of losing your money decreases because the risk factor diminishes gradually.

Real estate acts as an inflation hedge. For example, the rental income also increases when prices go up. It is seen that even when inflation in the country rises, the sales of real estate projects stay stable.

Real estate is a reliable way to build wealth as it offers tax benefits through depreciation. Such real estate investing tips may aid in your investment. 

Instead of keeping your money in the bank, investing your money in real estate is better. When you keep your money in the bank, your money does not increase. Whereas, when you put your money into real estate, you enjoy higher returns and a tangible asset with high liquidity.

Things that are Essential for Real Estate Investment

Here is a list of things we think are absolutely essential for a successful real estate investment in Pakistan. 

 1. Real Estate Investment Knowledge

Adequate real estate education is a must for real estate investors.

You must have sound knowledge of the ins and outs of real estate investment. Spend a good deal of time understanding every nitty-gritty detail of real estate.  It is a growing industry in Pakistan which means it has a fast pace.

Construction of a real estate asset needs to be top-notch and without any defects. To keep up with this volatile pace and to be a successful investor, it is crucial to have hands-on knowledge of all the latest trends of the real estate market

There are so many media from where you can learn about real estate for free. Some of the most common media are:

All these media are convenient and easy to access. Make use of them and try to learn as much as you can from these mediums.

 2. Have a Strategy

It won’t be an exaggeration if we say that lifetime cash flow through real estate investing is certainly possible. All you need is a practical and workable strategy. Get to know why you should invest in real estate.

Before investing your hard-earned money, spend a fair amount of time in devising a holistic strategy for your real estate investment. 

 

invest in real estate

 

For example, do you want to invest in all kinds of RE properties or you want to stick with one niche only? Do you want to invest as a sole proprietor or you want to go for a partnership? Do you want to build your portfolio locally or want to expand your investment to other cities as well?

These kinds of strategic decisions make or break your real estate investment. You should know what common real estate investment mistakes to avoid. If you have a good strategy at the place, you can get good returns in a short duration of time. 

 3. Select Rewarding Properties

Getting the perfect property is not the luck of the draw. You need to be vigilant and well informed to get the perfect property. Before investing in real estate, ask around about the property, prices in that area, types of property like whether to invest in apartment or house, or whether to buy a shop or a house, information about amenities, and the neighborhood. 

Most importantly, make sure it is approved by the development authorities of your region.

Inspect the property thoroughly and keep your eyes open for any kind of defects and make sure all the documents of the property are valid and complete. 

To stay away from financial loss and high risk, it is crucial to follow all these steps.

 4. Work on your Real Estate Financing

Unlike other small investment opportunities in Pakistan, you need a fair amount of finances to invest in real estate. The healthier the finances, the healthier the returns. The method you choose for your investment can make it a success or a failure. 

Some people use their savings for investment whereas some people take loans to finance their real estate project. The options are many, it is better to do a SWOT analysis of each option and come up with the best possible alternative that suits you.

 

saving vs investment

 

Advantages of Investing in Real Estate

So, now that we have a fair understanding of the major components of real estate, it is time to understand why you should be investing in real estate.

There are many advantages to real estate investment. 

  1. Less Volatile
  2. Better Returns
  3. Tax Benefits
  4. Ownership
  5. Double Benefits

Real estate Investment is a great way to secure and multiply your hard-earned money. There are many types of investment opportunities around us like each having their own set of pros and cons.

Some investments yield good returns but they are very risky. On the other hand, investments that are safe and secure, usually end up generating fewer profits. In short, the benefits of investing in property are versatile. Zakat on an investment property is dependent on the income you are getting from it. Get to know the difference between zakat on property and property tax.

We analyzed certain investment opportunities and it is safe to say that real estate is the most secure and stable source of passive income.

   1. Less Volatile

Real estate investments do not face abrupt changes like other investments such as investing in stocks and shares. The real estate market is quite stable and the prices appreciate at a smooth pace. It means the chance to incur a loss is lower in real estate.

If you are a risk-averse person who wants to grow his money at a smooth pace, real estate investment is perfect for you. 

   2. Better Returns

Real estate gives you good and consistent returns. On average, you can earn up to 20% return every month. For instance, if you purchase a piece of property for RS.500,000, you can sell it for Rs.560,000 next month, that too without doing anything. You are earning an extra Rs.60,000 by sitting at home.

   3. Tax Benefits

Investors usually get tax deductions on the property. For instance, you can get deductions on mortgage interest. Governments usually do this to invite more investments in the country. Get to know a tax on property.

 

tax on property in Pakistan

 

   4. Ownership

One of the most important and appealing factors in real estate is the full ownership of the asset. When you purchase a property, you get full ownership of your asset, and nobody can take it from you because you have all the legal rights to it.

In other forms of investment such as stocks, mutual funds, and vice versa, you do not get the tangible asset and its ownership. That being said, real estate allows you to have control over your assets. Get to know plot or plot file where to invest.

   5. Double Benefits

If you have a house or a flat, you can reap multiple benefits from it. You can rent out/ lease out your house, you can put up your spare space on Airbnb, you can use it for your own residence and when the property prices go up, you can sell it. How amazing is that?

If you are looking for an investment opportunity in Pakistan that is packed with many benefits, real estate is the perfect option for you.

These are some of the major advantages associated with real estate investment. If you are looking for a secure long term investment, do consider real estate investment. Do your research, try to get familiar with the best real estate investment cities in your region and invest accordingly. Get to know construction cost of 5 marla house

This was a comprehensive guide from us to you. We hope now you have a fair idea of how to invest in real estate. Get to know top insurance companies in Pakistan.

Happy real estate investing!

Also Read:

About Narmeen Taimur

Comments

  1. Mohammad Khan says

    Great article. Very insightful. I’m thinking about investing in a new a housing community near sectors I-12 to 14. Do you know of any projects in that area with a good return on investment?

    Reply
    • Graana Blog says

      Some of the projects where you can invest are Mall of Arabia, Amazon Outlet Mall, Florence Galleria and Imarat Builders Mall that are starting from as low as 17 Lac. If you are looking for secure investments with guaranteed returns, you should check out these projects here https://www.graana.com/projects

      Reply
  2. Muhammad Din U K says

    Dear sir
    I can not find your E mail i want to know how to invest in real estate in Pakistan
    i do not want to buy property because i live in u k from 50 years who will look after that
    is it possible the famous building which is under construction now can i put my money in this but government not private because i know i can lose money anyway not many people honest in Pakistan
    this is my family trust money which will give profit to poor relatives and needy person in my life and after my death
    please guide with honesty thank you Muhammad Din U K

    Reply
    • Graana Blog says

      Some of the projects where you can invest are Mall of Arabia, Amazon Outlet Mall, Florence Galleria, and Imarat Builders Mall that are starting from as low as 17 Lac. If you are looking for secure investments with guaranteed returns, you should check out these projects here https://www.graana.com/projects

      Reply
  3. Mudassir Abdullah says

    I want to know the islamic validation of investment in florence Galleria along with guaranteed rentals. Would be really a favor.

    Reply
  4. Taimoor says

    Pls advise which real estate investment is fruitful either buying small house, shop or plot for better return on investment.

    Reply
  5. aliza khan says

    Best digital marketing company in Bahria town Rawalpindi Islamabad. We are provide so many information about real estate and much more join us for more details or visit our site.

    Reply
  6. Mahsoo Mahsud says

    Nice post! the article is very good and comprehensive. it was systematic and covered all the necessary information. the perfect one which I was looking for. thanks for sharing such a great post.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *