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
Real Estate Strategies for beginners
Real Estate Strategies, Suppose you want to join the real estate investment community to grow your assets and plan your future to live on income. In that case, you must first evaluate the different alternatives to participate in the sector. Some require a more significant investment of time or money than others and experience or knowledge about the industry. In this blog, we bring you a list of real estate strategies for beginners that they can use to excel in the real estate industry of Pakistan.
To know more about these strategies, keep reading.
Vacant spaces:
Vacant spaces, including land, are among the few assets in the world whose price appreciates over time. This type of investment gives value to areas of your property that are not occupied or of little use, such as guest rooms, parking lots, basements and ceilings. It works for both seasonal and long-term leases. It is ideal for beginning investors unfamiliar with market values or the practice of leasing entire properties.
In short, one of the best strategies to increase your real estate portfolio is by investing in vacant land.
Leases:
It is the most common earning mode. In this case, you buy a property to lease it, either in the short term (temporary or vacation) or long term (more than six months). You can focus on having multiple tenants for a property in different periods (winter or summer, vacations, holidays, AirBnB style) or opt for the traditional lease to a single person for a specified time.
Buying and selling:
In this strategy, your focus is on acquiring and reselling residential properties in areas of most significant demand, close to high-traffic public spaces (supermarkets, metro stations, bus stops). It requires you to study well the prospects before investing and the regulatory plans of the target zones.
Manage properties:
Under this strategy, you buy and lease properties and offer administration services, from paying everyday expenses to technical maintenance checks, such as plumbing and electricity.
Renewals:
In this strategy, you buy houses at a low price and need repairs; you completely renovate them and then sell them at a higher price. The challenge here is to manage knowledge and values of masonry, design and architecture work.
Real estate funds:
The investor invests in real estate indirectly through a private fund dedicated to buying or developing properties for sale or rent. The profits of the projects are distributed among the contributors of the fund as dividends. The industry initially began focusing on corporate buildings and offices, but later expanded into the housing sector.
Invest in auctions:
In this case, the investor acquires the real estate in an auction process with the sole purpose of reselling it later at a higher price. This type of investment is attractive because the property went through the bank first. Therefore the property’s papers and debts are up to date.
Keep in mind that all these investment alternatives have natural limitations, such as the location of the property, its accessibility, and current demand, as well as artificial ones, such as co-ownership agreements for office buildings and apartments and condominiums debts associated with real estate.
Be informed:
Although it is not necessary to have studies or a degree to dedicate yourself to investing in the real estate sector, it is essential that, when you are in the business, you know basic concepts of the industry, such as the price/cost differential, capital gains, generation value, the profile of the investor and the type of property. The fact that you do not master the vocabulary of the world in which your company operates can lead, at least, that people distrust you.
In this sense, a fundamental behavior to be more and more informed about the business is to listen carefully to people associated with the company. In this way, you will not only be able to access privileged information about your clients, but you will also gain more and more confidence in your expertise.
This same practice will affect your pricing method. Whether you are based on margins, target prices, demand, competition or the highest possible value, it will always be essential to be informed to define the amounts of your business most appropriately.
Have a plan:
Discipline always translates into success, and this habit has much more to do with being active and constant at work than being rigid and unable to react to changes. This is why, when we talk about having a plan and abiding by it, what you must understand is that before entering the real estate market you should take some time to design your business plan.
This plan will help you establish critical aspects, such as the vision and goals of your company. Still, it will also encourage you to protect your business with a series of rules that ensure the decisions you will make throughout your career as an entrepreneur in the field.
You will be able to establish specific things such as your target market, selection criteria and even the selection criteria of your properties. Put yourself before problems through a contingency plan that consider your investment’s risk analysis and the financial viability of a purchase or a sale.
Find allies:
The real estate business tends to be independent and lonely because it allows practitioners individual freedom and flexibility compared to other jobs. For the same reason, it is advisable to go to good allies to maintain a good network of contacts and grow in a highly competitive and agile market.
With allies, we mean reading books that teach methods to achieve financial “good health” or encourage the practice of habits to be effective in business, even attending courses and seminars designed especially for people who want to learn everything necessary to function. Successful in the world of real estate investment.
It is also advisable to interact with real estate agents and financial advisers to listen to their experiences and opinions, but above all to finish inserting themselves more and more into the beautiful and complex world of real estate.
Finally, a good idea to become a great real estate investor is to interact with ordinary people who are examples of success, either due to their personal experiences or economic fluctuations in business in general and within the field.
It is a type of inspiration that you can also find in opinion leaders with a good presence in social networks and participation in books, courses and seminars in the field.
So, these are some of the strategies that beginners should keep in mind while entering the real estate market. Make use of these strategies and excel in the real estate market of Pakistan.
Real Estate Strategies for beginners
Crackdown on Encroachments in Zone 4.5 by Building Control South
CDA Building Control South Director Shafi Marwat has ordered a crackdown against encroachments campaign against illegal residential and commercial construction in Zone Four and Five.
In this regard, the authority has formed two teams – with Deputy Director Javed Zehri in charge of the Zone Four team while Deputy Director Sajjad Bajwa will oversee the operation in Zone Five.
Director South Shafi Marwat has instructed the concerned teams to write a letter to the Enforcement Directorate to stop illegal constructions in the stated areas.
For news and blogs, visit Feeta.pk.
Crackdown on Encroachments in Zone 4.5 by Building Control South
The FBR real estate valuation kerfuffle
The real estate industry is on fire. Earlier this month, the Federal Revenue Board (FBR) announced that they are reviewing the appraisal prices of real estate, including commercial, residential, apartments, flats and other areas of 40 selected major cities of the country.
Since the announcement, there has been outrage coming from realtors, realtors and investors. The results of the revised valuations were not immediately apparent, but in the following days, it became clear that the market would inevitably slow down. There are already reports of major deals failing with buyers withdrawing at the last second, and sellers are suddenly finding an obvious shortage of buyers for their residential and commercial plots.
Basically, the FBR increased its valuation of property prices for two reasons. The first is the very obvious one, which is that they will use this increased valuation to generate more real estate tax revenue. The second reason is that the real estate business in Pakistan has long been a well of black money, hyper-inflated values, tax fraud, and all other manners of shady practices.
While the market value of the real estate in Pakistan is high, its official value in documentation is usually cited as low enough in an attempt to keep taxes payable low. The new tariffs have tried to fix this very old problem – the official value of land is much lower than the real market value of the same land.
This problem has been around for some time. Its roots are in a complex system of DC tariffs and FBR tariffs that anyone who has had to go through the discontent of buying and selling city property will know. It is a system based on lies, deception, and attempts to avoid taxation. Through its property valuation, the FBR is essentially trying to put together the official index of property and the market value together.
In its current test, the board may have outperformed slightly, as there are many cases in which their rating was actually higher than the market rating. However, the FBR has already said that it will negotiate with stakeholders in the industry, which means that the extra valuation is simply there as a hesitation for when the government inevitably negotiates with the real estate industry to lower the valuation.
Real estate in Pakistan
Please skip this short section. Mostly because it is not exactly related to the current problem, but is instead a brief comment on the nature of the real estate industry in Pakistan. In July 2020, Farooq Tirmizi made a story for Profit titled ‘Why (and how many) Pakistanis are investing too much in real estate.’ The story showed that although the obsession with real estate has understandable foundations and originates in an essentially good idea: the need to buy assets that generate inflationary returns has gone too far and is now beginning to create a drag on economics. growth, investment opportunities, and housing affordability.
Real estate in Pakistan is a strange obsession. It has been co-opted by some of the most shady characters this country has seen and because there are so few regulations, things very easily manage to get out of hand. Pakistani real estate agents and realtors do not really have licenses or exams that qualify them to do the job they are doing. It is easy to find hidden passages in documents and development is confusing and incessant. These are many of the traits that have made this sector the degenerate disorder it is today. It is also why it is accused of being used to park black money, and why organizations like the IMF and FATF are unhappy with Pakistan, which we will discuss further in the story.
In addition, the commentary also raises more questions about the fate of real estate in Pakistan. You don’t need to pass an exam to be a real estate agent, you just need a phone to make calls, make connections and be a good salesperson. This act itself pushed real estate to be traded like a commodity rather than a real estate asset. The revaluation, whether overestimated or undervalued, not only makes it difficult to park money but can eventually lead to the inconvenience of real estate. Maybe then homes may one day become accessible.
Watch this space for more information on that. Stay tuned to Feeta Blog for the latest updates about Pakistan Real Estate.