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Real Estate Business In Pakistan: Is It A Good Investment Or Not?

Real Estate Business In Pakistan: Is It A Good Investment Or Not?

The real estate business in Pakistan has never been risk-free, but lately, the risks have become more significant. What's more, many people also believe that the real estate business in Pakistan isn't profitable anymore  at least, not as much as it used to be! But are these assumptions accurate? If so, then why? And if not, how can investors profit from the opportunities available in this sector? This article explores these questions and seeks to provide answers that will help interested investors decide whether or not to invest in Pakistani real estate.

Why is Pakistan's Real Estate Market Booming?

Investors have always earned a decent amount in the real estate business. It will remain so because it's about buying property and providing services to your clients that make them feel comfortable. Here are some reasons why the real estate business is booming in Pakistan.

All kinds of property available

There are thousands of buildings and homes for sale across Pakistan, from apartments and villas to shopping malls and warehouses. Whether you want a dream house or a stock portfolio, it's easy to find something that fits your needs. And with so many properties available, there are plenty of opportunities to sell them.

High demand

The Pakistani economy has been growing steadily, with an ever-increasing number of people moving toward larger cities for better opportunities. Thus, the demand for real estate in Pakistan has been increasing housing prices. In fact, according to some estimates, Karachi and Lahore are among the top 10 cities with the highest increase in housing prices. It makes investing in property development a lucrative option. It means that you'll always find a massive demand for residential and commercial properties and a considerable potential for growth and profit when buying land and selling it at higher prices later on.

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Benefits of Real Estate Investment in Pakistan

Government support

The Pakistani government has done much to make investing in its real estate industry attractive. It's not just tax relief and free market, but also several other incentives that can bring some profound benefits to investors. The government offers tax incentives for those who buy expensive houses or invest in commercial property development. For example, if you have a residential property worth over $150,000 (or any commercial property valued at over $300,000), you are eligible for a five-year income tax exemption on rental income. Hence, if you're willing to do a profitable business venture, you should consider investing in real estate as it can be highly rewarding.

High-end customers

Pakistani consumers have shifted to more luxurious purchases, especially when it comes to their homes. This trend has made selling high-end products very profitable. Some of these Pakistani consumers are now buying properties worth millions of rupees and paying taxes.

Increasing Population

The Pakistani population is expected to reach more than 250 million by 2023. According to reports, around 35% of these people reside in urban areas. This increasing demand from urban dwellers is bound to fuel further growth in the Pakistan real estate sector.

High cost of living

The cost of living, particularly rent, has increased in Pakistan due to a shortage of space and soaring property prices. Thus, many people who cannot afford to buy their own houses or commercial properties are forced to rent them. This demand has also created an opportunity for intermediaries and agents who want to profit by charging higher fees to their clients.

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Real Estate Problems Challenges in Pakistan 

Increasing residential projects

The government has launched several projects to improve infrastructure and provide better facilities to its citizens. These developments will bring people from rural areas into cities, increasing the demand for properties there.

All these factors combined make real estate one of the most lucrative businesses in Pakistan today.

Best approaches to invest in real estate and the associated risks:

Business owners can invest in real estate in multiple ways i.e. both individually and collectively. But there are some risks also associated with each kind of investment. Let’s discuss some of them.

Buying property directly and renting it out to tenants

There is no secure and simple way of investing in real estate than this method. You can either buy a complete house or a single room, relying on your means. This option gives you complete control over how much rent you charge and how long your tenant stays, but at the cost of being personally responsible for any repairs or maintenance issues.

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Complete Guide for Property Registration in Pakistan 

Putting money into mutual funds

Managed funds are another place to finance passively. There are mutual funds that invest exclusively in real estate and others that include it as a small part of their broader portfolios. Buying shares in a real estate investment trust (REIT) offers you exposure to an extensive portfolio of properties without dealing with any of the hassles of owning them yourself. The downside, however, is that you're at the mercy of your REIT manager—you have no control over how much rent they charge or how long tenants stay.

By purchasing commercial property

If you want to earn a handsome profit with a minimal or no risk at all then you should go with this strategy. This type of property, such as office buildings or shopping malls, provides arbitrage opportunities that residential properties do not.

Buying  underdeveloped land

Investing in raw land allows investors to take advantage of urban sprawl and growth by getting into properties before they're developed. The risk, however, is that development can be slow or never happen at all?

Land flipping

Flipping houses can be a great way to make money, as long as you have enough cash to buy homes that need repairs and then resell them at higher prices. This method requires you to research market values and neighborhoods, but it's also a good way for new investors to get their feet wet.

Conclusion

Real estate is a lucrative industry that, if done right, can earn you a lot of money. Every gain, however, may come with its own set of risks. You now know how profitable the real estate business in Pakistan is, after reading this article. You should also be aware that building a reputation in the industry takes time and work. So take a chance on Pakistan's wealthy real estate market by investing in one of the finest methods outlined above. But don't forget to weigh the risks that each opportunity entails.

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