Scope of real estate business in Pakistan

Scope of real estate business in Pakistan

Scope of Real Estate Business in Pakistan

Real estate business introduction

The business deals with the buying and selling of land, property, or building. There is a group of people required to gather for forming a real estate company, some of these experts include civil engineers, architect designers, licensed directors, and so on. The real estate industry never gets out of fashion because it is always in demand of buyers and the development also keeps going on. Different regulations are followed in every country concerning their real estate industry rules. In Pakistan, this industry keeps immense importance as it has a great share of the GDP. The consultants involved in the activities of the real estate company in Pakistan are termed as real estate agents, property advisors, and sometimes called property dealers.

Scope of real estate business in Pakistan 

The real estate industry holds immense importance for every country in general. However, several benefits are specifically gained by Pakistan in all the years throughout. Some of the points that elaborate the scope of real estate business in Pakistan are mentioned below:

The increasing need

There is a great scope of the real estate business in Pakistan. Many other sectors of business rely on the expansion of the real estate industry. The growth of the real estate industry in that specific country is then again dependent on several other factors.

The money spent

There is almost around a billion of money spent on the development of real estate projects each year. The worth of the real estate sector in Pakistan holds immense importance, in numbers, it is stated to be somewhere between a dollar 300 to a dollar 500 billion.

PSB Analysis

According to the report analysis of the PBS also known as the Pakistan Bureau of Statistics, the account of construction output holds 2 percent of the overall GDP of the country.

Urbanization needs

The major need for expansion in the real estate industry is because the country Pakistan is in the development stage. However, the greatest need at this time is the boost in the work of every industry that supports a country´s economic growth.

Legal checks

The real estate companies may make sure that the dealings of the property are done by all the legal means. This check and balance are done via the authorities such as the development authority of that specific region.

Helping residents

The real estate industry has a lot of working companies working in the field. This is eventually helping all the residents who need the home. Not just the consultants are provided to guide the buyers well but the tax heavy residents are given the option of an easy payment plan so that they make the payments very easily.

The development of the country

The country is getting strong support from the work of real estate companies. This is done in such a way that rapid development is done all over the cities. This is return is increasing urbanization along with the benefits of being a tourist attraction.

Economic development

The real estate industry also directly and also indirectly helps in the economic development of the country.

 Investors are greatly benefited

The investors are making a lot of money by renting out their properties. The investors may also make a huge amount of money just by reselling their bought property. This way of making money is the easiest as there is not much hard work involved.

Stabled cash flows

One of the other benefits of the real estate industry that Pakistan gets is stable cash flows. These are some of the benefits of real estate businesses in Pakistan. However, there are several more to these depending on the kind of real estate kind and the time. Such as in the times of the novel coronavirus the real estate has flourished a lot in Islamabad and Lahore specifically.

Conclusion 

As explained above the real estate keeps immense importance in most aspects. The real estate industry is never getting out of trend as the development of societies and urbanization also keeps going on as a continuous process. Moreover, the demand will also always stay as everyone wants a house for their living.

 

Easy tips while Investing in a Property in Islamabad

Easy tips while Investing in a Property in Islamabad

Easy tips while Investing in a Property in Islamabad

It might be difficult to decide whether to invest in real estate in Islamabad, and occasionally doing so can be a horrible experience. In order to avoid problems, you need think about a number of factors before purchasing a property.

You should keep in mind that buying a smartphone or a car is not the same as buying a building lot or other type of property. When making a real estate investment, you need consider a number of factors. We have identified simple steps for you to follow and the best decisions to make before investing in homes after thorough study and analysis.

What are the things to remember while investing in a Property in Islamabad?

There are many factors to think about while investing in real estate in Islamabad, but we’ve narrowed it down to 7 in order to be more specific.

7 things to consider before investing

  • Your financial position
  • Transparency
  • Extra Payments
  • Location
  • Amenities and facilities
  • Hire a real estate agent.
  • Money back policy

Your financial position

You should assess your financial situation before making an investment in Islamabad real estate. The optimum moment for you to invest in real estate is when you can afford to purchase a property outright.

The ideal option for you, though, would be if some of your relatives agreed to lend you money without charging you any interest. But be careful not to invest in property if you don’t have any money or aren’t in a strong enough financial position to do so.

Transparency

Real estate investment is a challenging decision that requires extensive research and laborious formalities.

You should think about investigating the real estate company’s transparency before making an investment if you intend to use that money to purchase properties. Verify the company’s letter of authority. The NOC of the housing society or area where you intend to buy a residential or commercial land should then be checked. Invest only in reputable housing cooperatives.

Extra Payments

Many real estate firms will demand additional payments from you in accordance with some arbitrary and illogical fee structure. Hence, before making an investment, think about whether the real estate company is costing you more.

You should also take into account the local taxes in the Islamabad neighbourhood where you wish to purchase a plot. For instance, you should keep in mind that there can be taxes levied by the government on your land once you take control of the site. Thus, remember to account for these additional expenses while creating your budget.

Location

Consider choosing the ideal location before looking for investment properties in Islamabad, since it is crucial to the value of any property. The personality and value of your property might be affected by its location.

For instance, the fact that you live in a growing location may have a favourable impact on your way of life. Some factors regarding location, meanwhile, are unquestionably important. Be sure that all of the necessities of life are accessible from the location where your property is located.

Amenities and facilities

To live contentedly in the nation’s capital, people make investments in Islamabad real estate. However, before investing, you should visit the location to examine all the available facilities and services. Only buy the property if it meets the following criteria:

Standard schools and colleges are nearby, there are open entrances and exits to your property, the city retail mall is not far away, and all the health services are close by.

The finest area in Islamabad to invest in is one where you can find all these conveniences and facilities close to your home. You can find all these amenities and facilities in Capital Smart City and Lahore Smart City.

Hire a real estate agent.

Real estate agents are qualified individuals that help you choose wisely while investing in real estate. In Islamabad, if you want to purchase a home or commercial property, you should work with a real estate agent. They are knowledgeable about the current real estate market and can direct you towards a successful investment.

Money back policy

Some real estate businesses will not offer you the facility to resale your property if your purchased property does not deliver you the advantages you expect. Unfortunately, Islamabad has relatively few real estate firms with a money-back guarantee. Check the terms and conditions of a corporation before purchasing properties. Sigma Properties in Islamabad is the best option for real estate investment.

Conclusion

All seven of these factors should be taken into account while investing in property in Islamabad. One cannot, however, become an expert in real estate overnight. But, making persistent efforts will enable you to choose wisely whether you’re purchasing a site in Islamabad or elsewhere.

Should I buy a Rental Property or Invest in Stocks

Should I buy a Rental Property or Invest in Stocks

Should I buy a Rental Property or Invest in Stocks?

Are you confused about whether to invest in a rental property or stocks? Real estate can pay off, but claiming that it is a better investment than investing money in the stock market is naïve. While both choices have advantages and disadvantages, buying a rental property is highly suggested for investors for various reasons. Let us go through the benefits of investing in rental property vs stocks.

Rental Property Vs Stocks  

Many people who have traditionally invested in real estate do not trust or care to understand the realm of the stock market, while most stock investors are wary of real estate.

As a result, there are many different views on the stock market vs. rental property, making it difficult for beginners to make a straightforward and fair comparison. It’s not a “either/or” situation, and both options are equally valid. The best way to choose is primarily a matter of:

  • Personal inclinations
  • Risk tolerance
  • Return objectives
  • Current valuations

Thus in this article, we will compare and contrast real estate and stocks to help you know which investment method is best for you.

Why Should You Buy Rental Property?

To make an informed decision, let us take a look at the benefits rental property brings that stocks do not.

Cash Flow 

Cash flow is well-known for accounting for a higher portion of a rental property’s total return. Tenants pay rent every month and depending on the properties’ purchase price. This income may represent an unleveraged return of 5-10 percent.

The cash flow yields can vary greatly depending on the property’s quality and location. Still, most investors will seek out rentals with above-average yields (or capitalization rates) to have enough liquidity to cover their mortgage, maintenance and build cash reserves for vacancies while still earning a reasonable return. But that’s not all. Properties also appreciate over time.

Stocks, on average, provide relatively little in cash flow (or dividends) to shareholders and rely on capital appreciation for the majority of their returns.

Better Management Control 

One of the most compelling reasons consumers invest in rental properties is the ability to live in, touch, and feel them. It’s tangible. They intend to renovate these homes to boost their worth and rentals. To put it another way, they want complete control over their investment.

With stocks, you’ll have to rely more on intermediaries and management teams to run the business on a day-to-day basis. It generates a “primary agent” risk, which many people are hesitant to take.

It all depends on your personal preference:

  • Earn passive income, but you’ll have to rely more on other parties.
  • You will control your finances, but you will be required to do more managerial duties.

If you have the passion and expertise, you’ll probably do better with the second option.

Building Wealth through Leverage 

It is easier to secure a long-term fixed-rate mortgage with a low interest rate to fund most of the rental operation. Rental investors frequently use this strategy to optimize returns, and it can involve up to 4-to-1 leverage. It can lead to excessive risk-taking; but, even with a more appropriate 2-to-1 leverage.

If you can finance your rental property at 2-to-1 leverage, pay a 3-4 percent mortgage rate, and acquire a 7-10 percent yielding property with a 3 percent annual appreciation potential, you will have annual returns that considerably beat the stock market indexes. The average annual returns in this situation would be closer to 15 percent.

Stock investors can also use margin to leverage their stock investments, but this is a much riskier strategy because,

  • Margin debt does not have the same favourable terms as mortgages
  • Stocks are not as consistent as rentals
  • The underlying companies are already relying on debt to fund their operations.

Taxation Benefits

It’s difficult to deny that rental properties are more tax-efficient than stock investments when it comes to taxes. Rental investors can depreciate their properties from the first year onwards, lowering their revenue with a non-cash charge. They can also deduct all other property-related expenses from their income, including interest. The amount of taxes a rental investor pays will vary depending on the circumstances, but many investors can earn cash flow thoroughly tax-free.

Stock investors will not benefit from depreciation and may face a higher tax burden, but they can take advantage of tax-deferred accounts.

Purchasing a Rental Property vs. Stocks: What’s the Risk?

Risk is highly subjective, and how one assesses it will differ from one investor to another. According to stock investors, rental properties need a lot of effort, tenants may damage the property, rents may go unpaid, and you may even be sued.

Read More:Real Estate Or Stocks Which Will Make You Richer

On the other hand, Rental investors will warn you that stocks are exceedingly volatile, that you have little influence over them, and speculators dictate that market performance.

Both of these are essentially right, and it all simply comes down to the investor’s personal preference. However, from a risk standpoint, rental investors have two substantial benefits versus stock investors:

  • Rental revenue is reasonably steady and reliable. Because it is vital to have a roof over your head, rental investors are likely to profit even during the recession.
  • Rental properties are particularly effective inflation hedges. As replacement costs rise, the property’s value is connected to inflation, and the tenant’s rent is increased upward.

Stocks can also deliver these benefits, though usually to a lower degree or in a less direct manner. So you know now that you should buy a rental property instead of investing in stocks.

Conclusion

We at Sigma Properties advise you to take this decision exclusively based on your risk tolerance and the expected return on your investment over the next ten years. Not everyone is suited to rental investment. They necessitate more significant effort and accountability, as well as being less liquid. However, there is no doubt that more entrepreneurial investors who are prepared to put in the work have an ultimate chance of earning more superior returns.

2021 is one of the few times in history when the conditions for holding both stocks and real estate at the same time have never been more vigorous. The real estate sector in 2021 will flourish because of the after-effects of the pandemic, so if you own properties, you’ll be in a great position to own an asset that will always be in demand for many years to come.

Services

Our Services Developed And Enhanced Services to Provide a Hassle-free Real Estate Experience Sigma Properties offers services designed to be broader in scope and are highly flexible to be able to meet all your real estate needs. Our dynamic services include: Sales...