The Agents Real Estate Guide for Gawadar
The real estate guide to Investing in Gawadar can be an excellent opportunity for you. The land of Gawadar has proved to be a game-changer for the entire Pakistan. Gawadar is known to become the next Dubai. Investment in Gawadar today can yield considerable returns in the future. Many developing projects would surely be profitable shortly like Gawadar Port, International Gawadar Airport, energy systems, railway tracks, etc. It would not be brilliant of one if they would not invest in Gawadar. However, the investment will grow in Gawadar, that is for sure, but it will take time. Before you invest in Gawadar, know that you will be investing in a long-term project. The following guide will help you make your decision to invest in Gawadar real estate.
Find Trusted & Authorized Agents:
When investing in Gawadar’s real estate, make sure that you choose the land wisely. Don’t buy from any private parties without any real estate office. Make sure that whoever you are purchasing from should have credibility. Ensure that whoever you are purchasing a property from must be approved by the concerned authorities and departments. You can even ask them to show you any registration certificates. After you find such a person, book the land you want to purchase by depositing a token of at least 20% of the total amount.
After you make that deposit, your real estate agent will identify and demarcate the land, and will accompany the local Gawadar DCO office representative and the seller party. Then the exact dimension of the land is provided with a site plan. At this stage, a Bina agreement will be prepared by your real estate agent, and you would be required to pay 30% of the total price to the seller. A transfer date is decided after the transfer of payment is complete. This transfer is followed by a registry document, which seals the ownership of your land.
Pick the Right Mouzas:
Choosing the right mouza is very important. If you have selected the perfect mouza to invest in, then you have kicked start your investment, and your investment in the future will be profitable. In the future, the mouzas will be ranked based on their connectivity with major road networks and highways. The Gawadar Real Estate Developers believe that the mouzas that would be closed to the roads and highways would be of more value, but this is just an assumption that is why do not haste into buying a mouza near the roadside as the Gawadar master plan isn’t released yet.
Additional Expenses on Purchase:
There are certain other costs that you would have to incur when purchasing a property in Gawadar other than the price of the land. A particular cost is allocated for the paperwork, demarcation, GPS, newspaper ad, DCO office fee, taxes, and your agent’s commission. These are some of the additional costs that you would have to incur in purchasing the land. However, this cost is bound to fluctuate based on the size of your land.
Stringent Verification Criteria:
According to the Gawadar development authority, the buyer must get a NOC (no objection certificate) issued before investing in the project. This instruction is vital as many projects in the past have been sold without acquiring GDA’s approval. If the buyer doesn’t confirm that the GDA land is allowed for resale, it can cause him a lot of trouble. That is why avoid getting scammed by buying land without approval from the Gawadar development authority.
Conclusion:
Investing in Gawadar is different from investing in other cities in Pakistan. Gawadar’s journey has just started, and it is high time that you can invest there to earn handsome profits in the future. This city will see a massive transformation in its infrastructure, and investors are looking forward to getting the most significant gain in the real estate industry. The investment in Gawadar is no doubt a slow process, but it is a guaranteed success.
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The Agents Real Estate Guide for Gawadar
Tips For Investing In Gwadar Property
For Investing In Gwadar Property, Gwadar is located on the southwestern coast of Baluchistan. It is a port city located on the shores of the Arabian Sea opposite Oman.
Gwadar has been developing its infrastructure at a rapid pace. It is known to be a pivot of China Pakistan Economic Corridor. The investment influx in Gwadar is unprecedented. Experts have marked Gwadar as a game-changer for Pakistan’s real estate.
Investing In Gwadar:
When investing in any business project, one should do a background check and be aware of the pros and cons of the investment. For a profitable investment, one should do research beforehand. In real estate, one should search the area before investing. Some profitable areas for investing in Gwadar are the Sangar Highway scheme, New World City, GDA Housing Scheme, New Town Housing Scheme, and Gwadar Industrial Estate.
Tips for Investing in Gawadar:
The investment area’s prominent features should consist of amenities including green areas, hospitals, education facilities, parks, entertainment facilities, fuel stations, and transport facilities.
One should invest in an area that is up and coming as it allows one to be part of the development before the prices rise. The idea goes well for Gawadar as it’s an up-and-coming project, and investment in its property will be profitable.
Gwadar has a location that is planned to be used strategically for trading purposes of the country. Gwadar is to become such that all exports and imports will pass through its deep-water port. The imports will be from China, and exports will be to and from Africa, the Arabian Gulf states, the Middle East, and Europe. There will be a facility of a floating liquefied natural gas facility built as part of the $ 2.5 billion Iran-Pakistan gas pipeline project.
Demand For Property:
The demand for property in Gwadar has been rising, and the indicator of it is the construction carried out in the special economic zones of the city. The inspiration for Gwadar has been taken from Shenzen. Shenzen is a zone of China. Before its development, Shenzen had a population of 30,000 and today consists of between 13 to 20 million.
If a fraction of what happened with Shenzen takes place in Gwadar, the demand for real Estate in Gwadar will skyrocket. The statistics show that in 2014 Gwadar consisted of a population of 85000 inhabitants, and its current population is estimated to be 250,000.
Documentation Of Property:
Scams have been common in all parts of a business; one should be cautious when investing. CPIC helps with providing all required documents on time after the completion of the purchase. Faulty or non-existent paperwork may be provided as original to scam the investors. To ensure that the documents are original, CPIC comes in handy.
Budget:
Real estate requires making the right choices as an investor. It requires knowing one budget; how much an individual needs to spend, including extras and not just the purchase. The extra pay may include legal fees, tax fees, and other payments. The best idea is to keep extra cash on hand for expenses one may not have calculated or even thought of.
Once details are collected, one can get an idea of how much one can afford. One method to make a purchase at the best price is by being assisted by consultants and being transparent about one’s budget and costs throughout.
Reliable Construction:
The first step of investing in Gwadar would be buying a plot of land. The next step is to actually start the construction of a home on the plot of land bought. The reliable move would be to hire tradesmen who can get done with the construction on time at a reasonable price.
Make A Flexible Investment:
Investing in land is a secure asset and won’t wear out, or get broken, stolen, or destroyed. A finite amount of land is available in Gwadar, and prices are rising per investment; invest in land to rent out or to use yourself.
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Tips For Investing In Gwadar Property
- Published in Investing In Best Deals, Investment, investment property, Investment Tips, Investments, News & Updates, property, Property In Pakistan, Property News, Real Estate, real estate business, real estate financing, Real Estate Guide, real estate investing, real estate investment, real estate market, Real Estate News
10 Most Commonly Asked Questions About Real Estate Investment
To answer the most commonly asked questions about real estate investment, understanding various factors is essential.
Real estate investment seems overwhelming to beginners because of the significant financial growth linked to it. In Pakistan, it is one of the most lucrative and highly-profitable investments. Construction projects across the country are attracting investors to secure their assets for a better future.
However, investing in the real estate industry is a complex process. Many new investors fail because they are unaware of the factors that can influence their investments. They tend to repeat common mistakes and lose their investments. So, a solid knowledge of the industry is essential before pouring money into real estate.
One way to predict the ups and downs of the market is to ask questions from experts. Real estate market analysts keep a track of key factors over time as it helps them predict market dynamics accurately. Gaining their insights can give you direction when investing.
Feeta.pk, Pakistan’s smartest property portal brings you answers to the 10 most commonly asked questions about real estate investment.
10 Most Commonly Asked Questions About Real Estate Investment
Familiarity with answers to the most common questions of real estate investment can help to avoid the most common mistakes during real estate investment. Here are the questions that every new real estate investor asks:
- What are the ways to determine the value of an investment property?
- How can one finance real estate deals?
- What is the best real estate investment strategy?
- Where can one find profitable investment areas?
- Can investments in real estate begin with no money?
- Are real estate agents essential to buy or sell any property?
- How can one predict rent charges for their property?
- How can one find the right tenant for a property?
- Who handles the basic repair value of a property?
- What should be the financial goals?
Let’s dig into the details of these questions and find out the answers.
What are the ways to determine the value of an investment property?
As a beginner in the real estate market, it can be difficult to find out the prices of properties. When it comes to selling or buying a property, both sides involve different factors. So, what are the ways that can help determine the value of a property?
Comparative market analysis (CMA) is one of the best methods to solve this problem. While working in a market with many properties on sale and many investors involved, it is easy to predict the rates of a property according to the area. An in-depth analysis of the most recently sold properties can give you the best estimate.
CMA reports are set by the real estate agents in the market, which helps new sellers and buyers with listing prices and estimates for investments. CMA compares one property to another with the same features, area, and facilities.
Another way to predict a property’s value is to get help from government officials. Land record offices have all the properties listed according to their locations. Moreover, they set a base price per sq. ft. of each property. Hence, it can help a lot in predicting the overall price of the property.
How can one finance real estate deals?
For most beginners, financing a real estate deal is the biggest problem. With no stable income sources, they fail to invest in any property and eventually fail to get started. However, proper awareness of potential sources that can generate finances for investments can be helpful.
There are two ways to generate finance: selling an old, self-owned property or acquiring conventional property investment loans. The first method can become a source of positive ongoing cash flow. Selling a home and then buying a new property can give you hefty annual returns on your initial investment.
Most people living in rural areas of Pakistan own a large number of properties. But, due to remote locations, these properties are considered practically worthless. So, these days, people from rural areas are selling their properties and investing in real estate projects in major cities instead.
On the other hand, for most investors with no previously owned property, loans are the only way to start real estate investments. However, these investments are not desirable as annual returns are not too high.
What is the best real estate investment strategy?
Without a proper strategy, a real estate investment is bound to fail. According to real estate experts, most beginners lose their investments because they do not strategize beforehand. Beginners are under the false impression that possessing a sufficient amount of money is all that is required, and it will give them profitable returns straightaway. However, the reality is pretty much the opposite.
Successful real estate investors formulate a strategy based on their investment goals, which helps them in their next venture. It provides them with a timeline to hold on to their assets and then invest at the right time. So, tuning investment strategy to goals is essential.
Generally, there are three main strategies that successful investors follow: opportunistic, add-on, and core. Moreover, factors such as types of property and location can also influence the decisions. For example, commercial properties are profitable as compared to residential properties.
How can one find profitable investment areas?
A very important factor to consider before investing in real estate is to choose the right area. Pouring money into properties with no real value is not a good strategy. With the recent widespread development of residential and commercial projects around Pakistan, property prices have skyrocketed.
Commercial properties have a higher value as compared to residential properties. For an investor who is looking to grow assets in a relatively short time, investment in commercial areas is recommended. Houses need repairs and time to increase their value.
Moreover, the availability of water, gas, and transport systems near a property also influences its value. If it does not have such facilities, it is not desirable for buyers.
Can investments in real estate begin with no money?
The state of one’s finances is the most important factor to start a real estate investment. However, in cases where investors do not have enough money to pay for down payments, investors need to be more creative. Funds can be generated in several ways to finance a real estate deal. However, these cannot be guaranteed every time as the market keeps changing. Some of these ways have been listed below:
- Real estate partnerships
- Wholesale dealings
- Conventional property investment loans
- Home equity loans
Are real estate agents essential to buy or sell any property?
One can start investing in the real estate market without any external help. However, the process will be time-consuming and rigorous as the market is much more complex to understand. The presence of a real estate agent can help a great deal as they are aware of all the complexities of the market as well as the processes that are involved in a property deal.
From evaluating markets, finding an attorney, and getting pre-approved loans, to negotiating and closing the deal, the real estate agent makes everything smooth and easy. However, with hundreds of agents in the market, scammers get the chance to target investors. So, choosing the right real estate agent is also important.
How can one predict rent charges for my property?
For investors who purchase properties to rent them out, a basic awareness of the right rent charges is essential. Proper rent estimation helps in advertising the property. An over-estimated property may remain vacant and a low-rented property might end up in negative cash flow.
An analysis of how tenants navigate the competitive rental market gives the best estimate of a property’s rent. Local market conditions and rates can also help you in advertising your property with the right rent charges.
How can one find the right tenant for a property?
If you have rented out a property, you would want to ensure that it is kept safe and protected. A good tenant takes care of your rental property and also makes rent payments on time.
When choosing the right tenant, proper screening is important. Check the references they have provided you with for a more thorough screening process.
Who handles the basic repair value of a property?
While purchasing any property, buyers are concerned about the expenses of basic repairs. Hiring professional teams can cost you a lot of money and affect your profits. If you are a new buyer, you should preferably do all the minor repairs yourself. It will help you keep the cost in control.
However, if you are a potential real estate investor, then you can hire a team to carry out all the repair and renovation work, as this helps to enhance the overall rates of a property.
What should be the financial goals?
Just like the right strategy, the right financial goals are also important. Whether you are a part-timer or a full-time investor, you need to have everything figured out. Should you hold on to the property until prices appreciate to make a profit? Or should you buy a commercial property to start your own business?
Before you start investing, also try to make an accurate calculation of whether you might end up losing money in the first few months, the point at which you may break even, and how much you can expect to make after three to five years.
Factors Influencing Real Estate Investment
Apart from all the above questions, new investors must also be aware of the factors that can influence their real estate investments:
- Demographics of the country
- Government policies
- The annual budget of the country
- Employment opportunities
- Interest rates on loans and property
- Market trust
- Tax policies
To get more information about real estate investment in Pakistan, visit Feeta blogs.
10 Most Commonly Asked Questions About Real Estate Investment
The best real estate investments in 2021-2022
Best Real Estate Investments:
The real estate investments has shown phenomenal growth in the year over the past 14 months. Most people seem confused because prices in most areas have already gained 60 to 70% and in some places even more than 100%.
Investing in the same areas that have gained so much lately seems like a risky investment and this raises the question of what are the best real estate investments you can make in 2021-2022?
While diversification is important, diversification is not. I don’t agree that in order to make money, you have to invest in every new property that appears on the map.
No one really has the time to study and analyze dozens of societies and observe them all the time. It is best to choose two or three best options and keep your focus.
This will eventually help you manage your assets in a better way and earn much more profit than investing anywhere and anywhere.
Real diversification is not about buying plots of land in different societies, but about investing in different types of real estate. Plots, Buildings and rental properties are the main areas you need to diversify your investments.
DHA Multan
While just like other areas DHA Multan quite a bit has been gained in the last year, yet the prices of the plot have not yet reached their peak. Although it may not show big gains in the coming year, the possibility still exists.
A realistic estimate of 1 Channel plot in DHA Multan should be 17 to 20 Million and in the coming years DHA Multan will slowly move to its target price.
It’s only a matter of time, as prices continue to rise wherever DHA Much begins to develop.
Keep your focus on blocks that are less developed and you will gain a good amount. The problem is that you will have to pay development costs amounting to 2.3 Million, let’s see how it will most likely play out.
The example below is just an expectation of an average transaction and a return on investment in DHA Multan.
Price of plot since October 2021: 110 Lacquers
Transfer expenses and commissions: 5 Lakes approx
Development costs: 2.3 Million approx
Total investment: 138 Lacquers
Expected Plot price in 2 to 3 years: 200 Lacquers
Sales expenditure and commissions: 3 Lacquers
Return: 59 Lacquers
ROI: 14.25% per year approx
Although it is more likely that prices will remain stable for a year or more, it is one of the best and safest investments for a 2 to 3 year cycle in the real estate market from now on.
Construction Projects
Over the past few years, construction projects especially luxury apartments have been hugely successful in Lahore property market.
This is the evergreen segment of real estate and has shown very high gains even between 2016 to 2020, when most people thought that real estate is declining, but in fact, only Plots, files etc have declined. Learn more about construction opportunities here
One thing to consider is the choice of the construction project. That’s why you need to study, analyze and carry out all the research just as you do when you invest in societies.
Projects are much easier to analyze and research and do not involve complex and lengthy procedures. In addition, if you search, you will easily find a cost-effective and valuable project that will give you very good profits over the years.
To make a forecast we will use an investment in the Sixty6 Gulberg apartment building. Imlaak did all the due diligence on the said project which was analyzed and recommended for investment.
Expected investment and return on Sixty6 Gulberg will most likely look like this:
Apartment size: 556 square feet
Price per square foot since October 2021: 23000 per square foot
Total Price: 128 Lacquers (Paid in installments in 3 years)
Transfer expenses and commissions: Zero
Development costs: Zero
Total investment: 128 Lacquers
Expected price in 3.5 years: 40000 per square foot
Total price after 3.5 years: 222 Lacquers
Sales expenditure and commissions: 5 Lacquers
Return: 90 Lacquers approx
ROI: 20% per year approx
DHA Gujranwala
DHA Gujranwala announced the Election on October 8, 2021, the file price of 1 Channel plot has already increased by 1 crore. Although this could be a bit of a risky game if purchased at a higher price.
However, if prices do not rise after Election, it may be a good time to look for an opportunity to buy. Although much will depend on DHA Gujranwala’s master plan and how it continues its future development, the market will respond positively to the vote due to overall positive market sentiment.
There are two possible scenarios, or the prices will jump immediately after voting, as the market sentiment is very positive and this is the most likely scenario or the prices will remain stable or crash a bit.
The second scenario, where prices remain stable or slightly crash due to selling pressure, is more suitable for investment. I believe the plot prices will reach between 17 to 20 Million in the next 2 to 3 years.
In many ways, the gain is similar to that of DHA Multan. However, DHA Multan remains my first priority from now on as it is ahead in the evolutionary progress.
If you are stuck between both DHA Gujranwala and DHA Multan, I would recommend DHA Multan and if you have the investment for more than 1 plot, then 1 each in both will be a good choice. However, a detailed analysis is only possible after a vote and it is not very far off.
Gwadar
Last but not least on this list is Gwadar, it’s like a wild card that can be played at any time. The risks are great but also the rewards, if you are one of those who like to double or triple or quadruple their money, then you can look at it.
The next two years may offer you a very good time to buy at very good prices, if the prices don’t go up earlier, they will eventually do so in the next 2 to 3 years.
The possibilities are endless, but I will only offer to invest in Sangar and New Town and strictly refrain from investing in other societies. We have all seen this happen in the last investment cycle.
The next cycle can take place anywhere from 2021 to 2024 and you may see at least a 100 to 150% gain. This makes it very difficult to predict the exact ROI so I will not go into that detail.
Conclusion
In the end, it all depends on your personal preferences because one size fits all.
However, overall, I feel that because plots and files have increased by almost 100% in about the last year or so, construction projects are the best available option offering the highest yields in the next two years. The investment priority would be as follows:
- Construction Projects
- DHA Multan
- DHA Gujranwala
- Gwadar
Stay tuned to Feeta Blog to learn more about Pakistan Real Estate.
The best real estate investments in 2021-2022
- Published in real estate financing, real estate goals, Real Estate Guide, real estate industry, real estate industry of Pakistan, real estate investing, real estate investment, Real Estate Investments, real estate market, Real Estate Market Analysis, real estate market trends, real estate marketing, Real Estate News, Real Estate Trends
Gold Crest – Time to move in
Introduction:
Gold Crest is the height of luxury shopping and entertainment, right in the heart of DHA. It’s more than a collection of stores. It’s a lifestyle choice; a ‘shopping entertainment’ experience where you can browse the latest clothing, chat over coffee, dine with friends, grab the latest craze and let the kids explore their own fun area. With 252,000 square feet of retail space, its air-conditioned luxury creates a cool and peaceful oasis of indulgence in our contemporary world.
Gold Crest Mall DHA Lahore is an optimal opportunity for real estate investment in DHA, Phase 4, Ghazi road, Lahore. Offering high-end luxury apartments for sale according to a flexible part plan. To further enhance the investment benefits in Gold Crest we offer a lot of investor friendly contract terms that very few real estates in Pakistan can bring to the table.
- DHA Joint Venture Project
- 24/7 Power backup
- Flexible payment schedule
- 7-8% Annual rental production
- Parking – 4 floors
- Al Fatah store
- Shopping shops – 2 floors
- Multilevel – 2 floors
- Gymnasium
- Luxury cinemas
- Restaurant
- Children’s play area
- Grocery stores
- 2 Separate Prayer Areas
Main Place
1- Gold Crest Mall DHA Lahore offers an ideal location for brand stores to attract customers
2- Located in DHA, the commercial center and chic area of Lahore
3- In close proximity to all phases of DHA, Lahore and Phase 3 DHA commercial
4- Fast and easy drive to Cantonment, DHA, Model Town and Ferozepur road
5- Great place to live for shopkeepers and socialites
Apartments are ready to move.
As our commitment to our valued customers, we always deliver on what we promise.
Apartments on 5th and 6th floors are almost ready. you can see the updated details in our recent video.
7th and 8th a floor will be ready in the next month and another floor will be ready very soon. So pack your bags to enjoy a new lifestyle at Gold Crest.
Apartments and Shops are available for resale.
For more information on the real estate sector of the country, keep reading Feeta Blog.
Gold Crest – Time to move in
Avoiding the Real Estate Wealth Trap in Pakistan
Beware, this article will change your mindset and real estate investments, so read it carefully while we reject the false rich trap of real estate in Pakistan. Read this carefully and if you have any questions please comment and ask.
After nearly 10 years of going through various cycles of real estate myself, I’ve realized that most of us don’t create any real wealth. Do we live in a paradise of fools and amass false wealth? This prompted me to do some research and analysis of the previous 15 years of investment cycles to find out what exactly we are doing wrong.
During our search for the truth about real estate, we learned that there is a huge difference between returns in USD and PKR. While you may think you made money in PKR, this may not be true for USD. Eventually, almost every other thing in your life and your purchasing power depends on the USD and not on PKR. This means that if your wealth does not grow by the USD, then you are not actually getting richer.
USD is therefore one of the most important factors of wealth creation. This is especially true for foreigners who invest in USD and expect to take their returns in USD.
The Dollar vs. PKR and Real Estate Investments
Just to understand how important this aspect was, we will choose Phase 6, 1 Channel plot in DHA Lahore as an example and compare its price in various years since 2005 in USD. Most real estate investments follow a similar pattern with small variations.
Year 2005
1 x USD = 60 PKR
Average price of DHA Lahore Phase 6 in 2005 = 9 Million ($ 150,000)
Year 2010
1 x USD = 80 PKR
Average price of DHA Lahore Phase 6 in 2010 = 6.6 Million (USD 82,500)
Year 2013-2014
1 x USD = 100 PKR
Average price of DHA Lahore Phase 6 in 2013 = 15 Million ($ 150,000)
Year 2016
1 x USD = 105 PKR
Average price of DHA Lahore Phase 6 in 2016 = 24 Million (USD 228,571)
Year 2019
1 x USD = 160 PKR
Average price of DHA Lahore Phase 6 in 2019 = 28 Million (USD 175,000)
Year 2021
1 x USD = 172 PKR
Average price of DHA Lahore Phase 6 in 2021 = 42 Million (USD 244,000)
Long Term Business
Looking at the USD chart for Phase 6, 1 Channel plot is very clear that long-term trading is almost worthless. I know a lot of people who have kept plots in these phases for over a decade and although you may have overcome inflation or PKR depreciation, you have not created significant wealth.
Most people have this idea that the longer they keep a plot or file, the more fruitful it is. Unfortunately, I hate to report this bad news, which is not the case. At least the property in Pakistan does not adhere to that law. In 2005 the plot which was at USD 150000 is only USD 244000 today. Even buying it in 2019 gives you a much better ROI instead of buying it 14 years earlier in 2005.
Actually buying the phase 6 plot in 2010, then selling it in 2016 and buying it again in 2019, and selling it again now in 2021 would be really quite lucrative.
The reason that devalues a long-term business is that someone who has held the same property for 15 years earns much less money than someone who has held the same property for 10 years. This same aspect makes long-term trading riskier, which can eat away at your wealthy creative endeavors like a termite.
Business Plots and Files in Speculative Cycles
The speculative trading cycles are the next option that most investors choose. It’s a really good choice but with just two big problems:
- You never know what the future holds. So everything you do is based on either guesswork or information that may not work exactly the way you want it to. It’s much easier to just look at the past data and see where you should have invested but planning it for the unknown future is not for everyone.
- If you can’t execute or the market doesn’t work as you hoped, you may be sucked in for a very long recession period.
Speculative trading is much easier said than done and it wasn’t until 2016 when the recession hit the real estate that investors realized what they were doing wrong. A considerable portion of investment has stalled in some areas because some investors felt it was worth trying to wait and hold on. These areas included Broadway Phase 8 commercial, residential plots in various places such as Phase 7, 8, and 9 of DHA Lahore, Malikpur, Shivpur 4 marl commercial files of DHA in Phase 8 ex Park View, and later on Gwadar.
As a result with a huge share of investments stuck in recession, investors have failed to seize new opportunities that have emerged from 2017 to 2020 such as indigo highs, Goldcrest Mall, DHA Peshawar, Downtown Mall and DHA Multan.
Although the return on investment was much better than long-term trading, but still not very impressive, as it included long periods of recession with zero to negative growth.
What does the data say?
For an argument, let’s assume that everything went well and being the smart guy who is Mr. X, he kept money safe in the bank from 2005-2010 and then invested in phase 6 plots in 2010, then took an exit in 2016, and then took entry again in 2019 and has taken an exit now when the average plot price is at 42 Million.
To achieve this, Mr. X needed to make seven decisions during these 16 years. These included selling in 2005 and then investing in reliable locations to earn at least 10% a year. Taking an exit from wherever your money was and then reinvesting in 2010 in real estate. Repeating the same thing again from 2016 to 2019 and then finally taking an exit in 2021.
The location for an error is almost nil, if Mr. X had taken an exit in 2013, it could have gone awry. Similarly, if Mr. X could not take an exit in 2016 the results would be different.
Finally, it was also important to carry out a profitable business during the recessionary periods between 20015-2010 and then in 2016 to 2020. Timely exit from these investments and regaining entry into real estate should be surgically accurate.
How many of you are confident that you can read the market and do this type of business in the future?
The Good Old Rental Income
Rental income has always been considered a very essential and important source of income. However, not many people believe that it can enrich you as a speculative business. Some general problems you may encounter with rental income are:
- If you do not invest in the right rental property, your capital gains may suffer.
- Houses in Pakistan are the worst form of rental income due to huge depreciation and only 3 to 4% rent per year.
Choosing a rental property that would give you at least a 6% rental yield and some good capital gains over the years can be a challenge, but it is much easier to execute than a speculative business. In addition, you now have the option to invest in real estate that can offer an 8 to 10% return on annual rent above your initial investment.
Rental cash flows may seem minimal when you start, but over time they build up and give speculative traders a run for their money. It won’t be wrong to say that slow and steady wins the race because you have a much better chance of being rich if you invest in rental properties instead of plots of land.
What does the data say?
Now for the sake of argument let’s say, Mr. A, who is not as wise as Mr. X and was not sure if he can pull off that miraculous 16-year cycle with such precision. That’s why he decided to buy a property that gave him regular cash flows and average capital gains.
Mr. A has invested € 9 million in wolf ownership, which has given him an average of 10% in annual capital gains and 6% in rental income, which has increased by 10% a year. Ultimately, he invested his rental income in assets similar to where Mr. X kept his money during recessions to make 10% profits a year on them and the results will surprise you.
YES, it is quite true that Mr. A made almost the same amount of money as Mr. X and without ever having to go into the complications and risks that Mr. X took.
The magic actually happened because of the compounding effect on the rental income, this is one factor we never consider when we discuss rental properties.
The 16 years of rental income, which started at just 540000 a year, ended at 4 crores when accumulated and put together at only 10% a year. This is where most of you do your math wrong and only calculate the rental income and do not consider the impact of profits on your rental income.
The way forward
The speculative business cycles of real estate and rental income are almost equal when creating real wealth. Renting is an easier and more stable way to secure your success compared to speculative trading. You can certainly mix them both or opt for rent alone, but I would never recommend just opting for a speculative trade.
Lesson learned
- Rental projects are always green investments that will give you good profits in almost any market.
- Rental properties are the backbone of your real estate investment.
- Plots and files should be invested only for speculative business cycles.
- Long-term keeping of plots and files is counterproductive in general and has not rewarded investors in the last 15 years.
- For better chances of success, rent is much more effective than any other investment in real estate.
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Avoiding the Real Estate Wealth Trap in Pakistan
The Ultimate Guide to Selling Property in Pakistan
Selling and Transferring Property in Pakistan is a regular occurrence in the country, where hundreds and thousands of people sell and transfer property. For those familiar with the process, the transferring procedure might just be a piece of cake. But for people who are new and confused about where to start, you’ve come to the right place.
Before we jump into the tricky aspect of this process, let’s clear the air about what exactly transferring property means and why it is an essential aspect of buying and selling property in Pakistan.
What do we mean by transferring property?
As per the law, any individual who owns a property should have the land or property verified under their name. The land should be under the designated ownership; only then can they sell the property to themselves. This is the basic requirement of selling a property.
In Pakistan, the transfer of any property generally consists of the owner transferring the title of the land from one person to the other. Transferring property can occur in multiple ways for various reasons, such as a mortgage, gift deed, inheritance, lease, exchange, etc. All such explanations are why transferring is an essential legal procedure.
Who is eligible to transfer property?
All individuals who can sign a contract are authorized to transfer property ownership in Pakistan. According to the Contract Act 1872, a contract is claimed as a binding agreement between two parties, meaning that it is a legally binding document for any sale and purchase of land in the country.
There are a few exceptions for people who are not eligible to transfer a property:
- Minor: Anyone under the age of 18 is a minor and therefore cannot carry out the process.
- Unstable Individuals: Someone who cannot understand the consequences of their actions, for instance, that of a mentally ill person. Other reasons can be permanent or temporary physical disability such as a Coma etc.
- Legally Barred Individuals: Someone barred from signing contracts cannot transfer property in Pakistan.
What are the steps involved in transferring and Selling a property in Pakistan?
The transferring process, although time-taking, is a simple and easy process with not many legal proceedings. We’ll break down the process into different steps to help you better understand.
Token (Bayaana)
This is the very first step of selling after you’ve successfully secured a client. This involves the buyer giving approximately 1 / 4th of the total price. If not the exact percentage, there is an agreed amount between the buyer and the seller to indicate an agreement from both sides of the party.
The Token (Bayaana) is given by the buyer with a series of negotiations and based on a contract, in which all details are specified. After this, the seller holds negotiations with any other potential buyers.
Usually, a specified period is set and written in the contract for the full amount to be paid. If the sale falls through, the token is returned. But if the full amount is not paid in the specified time, the seller has no obligation to return the token, even if the sale doesn’t go through.
What is a Property Sale Agreement and how can we get it?
A sale agreement contract is a set of required documents that include all information related to the seller and buyer involved in the transfer process. In Pakistan, these are the required documents that are attached with the Bayaana form:
- Complete details of the property with the property owner’s verified name
- Terms of sale for the property
- The total amount of money which the property is being sold for
- Final date for the buyer to pay the remaining sum of money
What is the complete list of documents required?
To carry out the transfer process smoothly, you need to collect the following documents organized. You’ll need:
- Recent Passport Photos of both parties involved (Buyer and Seller)
- Photocopies of National Identity Cards of both parties
- Original Purchase Deed of the Seller (From the time they purchased the property)
- The original ‘Sale deed’ which is the agreement contract between both parties
This list of documents can also include some more documents depending on the province, region, area, etc. (A lot of documents, we know, but verified property takes tough measures!)
- A ‘Record of Rights’ also known as Fard-e-Malkiat, is a form that can be obtained by the seller from the property registration office. This guarantees that the property is under the name of the seller.
- You’ll need a Non-Demand Certificate (NDC), a document that shows you don’t have any fine due on the property. Depending on the location, you can get this from the local development authority’s office.
- For properties in private housing schemes, there is the need to request a letter from a particular society to carry out the property transfer. This can be used in place of the Fard-e-Malkiat document.
Possession of Stamp Paper and Tax Payment
Source: Pinterest
This is one of the essential and final steps of the transfer process. You’ll need a stamp paper to draft the deed for the sales; that will be the contract for the sale. You can choose. Buyers; will be required to pay stamp duty and taxes during this step.
Let’s take a look at this easy breakdown of the tax duty involved:
- Stamp Duty 3%
- Capital Value Tax 2%
- District Council Fee 1%
- Fixed Registration Fee PKR500 (Can differ as per govt. Order)
Drafting the Sales Deed
In Pakistan, the sales deed is usually recommended to be drafted by a property lawyer or a property agent aware of the bylaws and the rules involved in the process. This is a particularly safe option to avoid any complications that might arise in case you are doing it yourself.
Although, people who are selling and buying property as a business have become familiar with constructing the ideal draft for this deed, which can be done easily with the help of the internet. However, the common practice and recommendation are to take the help of a lawyer to avoid any future complications that may occur.
What do we do after drafting the Sale Deed?
Source: Freepik
Finally, after a long process, you’ve reached the last step. You can take the sales deed (inscribed stamp paper) along with the required documents to the registrar’s office. From here, the sub-registrar will call both parties simultaneously and hear their verbal agreement for the trading of property.
You’ll need to sign the documents and put in your fingerprint to verify the final sale and complete the transfer process. Once this is done, the official will register the sale deed successfully, then the transfer process is complete, and the property is now successfully transferred to the buyer.
How much is the Commission for the Property Dealer Involved?
If you’re wondering what the person who helped you secure a client and help you proceed with the sale and transfer of the property is, there is a commission that the dealer/agent gets from the client. Although there are no specific laws to govern and record the work of real estate agents and dealers in Pakistan, the general practice remains a constantly changing variable and experiences changes from time to time.
Usually, the commission of property agents comes to around 1% of the total value of a property. This 1% of the value is each from the buyer and seller as the commission to the dealer. If the buyer and seller both have different agents, then both agents get to keep a 1% commission each from their own clients. Sometimes, property agents will ask for as high as 2% of the property value, or even lower than 1%. The amount varied according to the success, reputation of a property dealer, or property value.
Suppose you’re looking to learn more about the legal aspects and procedures involved in property buying and selling. In that case, you can stay connected with our blogs at Feeta.pk, where you can easily find comprehensive information to guide you through the real estate market.
The Ultimate Guide to Selling Property in Pakistan
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World Bank: Punjab Real Estate’s Rs400 Billion Tax Capacity
In a recent report published by the World Bank, the international body has identified potential in two out of three major areas of tax revenue collection. The major areas are mainly Services Sales Tax, Urban Immovable Property Tax (UIPT), and Stamp Duty, among which the latter two are exclusively related to the real estate sector. As per the report, these two areas can collectively bring Punjab’s real estate sector to generate revenue of up to Rs400 billion if it is incorporated with the modern techniques of digital mapping.
UIPT is duly gathered by E&TD (Excise and Taxation Department), whereas the BoR is responsible for collecting the stamp duty. Improved and digitized land records assist in improving system analysis and coordination of the two main land-related tax authorities ie E&TD and BoR, in addition to implementing Stamp Duty and UIPT. Because of this integration between the two land tax authorities, Punjab real estate has shown the prospect of generating the highest revenue in tax.
As per the WB report, Punjab’s urban housing gap is expected to reach up to 11.3 million units by the year 2047. This gap is being generated by the rising population, migration of people from rural to urban areas in the country, unnamed and abandoned lands, and a decline in the existing housing stock. An estimated 2 to 2.5 million units are being constructed in Punjab under the Punjab Housing and Town Planning Agency.
Mainland records in Pakistan currently fall under the responsibility of provincial Boards of Revenues (BoRs). All Register of Deeds, Mortgages and Property Transfers are maintained here, as per person-based records, along with the facility of cadastral maps. BoRs typically stemmed from only rural records initially. With the unplanned expansion of urban areas around the city center, eventually, city centers were also included in this. For private housing agencies and cantonments, the responsibility of keeping records of plots and properties is on their end.
The World Bank reports the effect of the absence of standardized systems in keeping records of property rights in urban areas, and there are significant challenges that are keeping the revenue at par. These challenges include lengthy dispute resolutions, overlapping records of registries, inequitable taxation and a lack of property rights information for authorities to perform their responsibilities. Women from urban areas face extreme marginalization in their property rights and loss of inheritance due to a lack of transparency in property ownership, cultural restrictions, forceful property transfers etc.
Federal and provincial governments have come to the realization that such challenges may hinder the possibility of achieving the goals of the Naya Pakistan Housing Program of constructing about 2.5 million low-cost homes in Punjab. To resolve these issues, the World Bank has proposed an amount of $ 150 million on their behalf to develop and improvise the ‘Punjab Urban Land Systems Enhancement Project’.
This expense breaks down into four components; $ 103 Million for cadastral maps for Land Records Management and Information Systems (LRMIS) and digitization of records, and another $ 3 million for Land for Housing, to make the process of identification and evaluation easier. LRMIS proves to be extremely beneficial for keeping track of property and land rights and combining it with cadastral mapping systems such as PropSure bringing authenticity and transparency to the digitized land record systems.
Digital cadastral mapping assists in the integration of multiple registrations of a land area and designates it under a single and unique identifier. This process helps in enabling a seamless process that allows clarity and authenticity in the real estate sector
The remaining amount of about $ 35 Million is designated for the establishment of Land Information Systems to combine the rural and urban land records. The project risks environmental damage posed due to mass construction. Still, it is the solution to the current housing and land record issues in the system.
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