With inflation on the rise and the economy crumbling due to trade imbalance, the current government has imposed several taxes on industries, which is increasing investment problems in several sectors.
However, although political instability has affected the market to great lengths, Pakistan’s real estate sector has still managed to perform positively. Many investors tend to put their money into real estate projects to save it from depreciation. Therefore, for anyone who is looking to expand their assets, real estate is the right choice at this time.
Benefits of Property Investment
Real estate investment has the following potential advantages for investors:
- Continuous cash flow in the form of rentals, appreciation, and business activities on the property
- Tax breaks and deductions
- Wealth and equity building
- Portfolio diversification
- Inflation hedge to stop currency depreciation
- Long-term financial security
These benefits allow investors to build their assets and use the income from these sources for various other projects.
However, before buying any property, investors must go for a complete real estate market analysis. It will help in recognizing the potential factors that can affect the property value over time. Moreover, with accurate market analysis, they will be able to set realistic rental values of the property or get good profits in property resales.
Factors Affecting Property Value in Pakistan
From government policies and global economic conditions to the design plans and features of the property itself, many factors define real estate market trends in Pakistan. The following are some major factors that can affect property values in Pakistan:
- Economic and political conditions
- Supply and demand
- Location
- Floor area ratio
- Condition of the property
- Amenities
- Neighbourhood
Economic and Political Conditions
A country’s economic and political stability is a harbinger of good living conditions for its citizens. Economic stability is linked with a higher human development index and GDP, which in return leads to a positive attitude towards spending.
With economic stability, investors’ trust in the real estate market grows and they tend to invest more money in property sales and purchases. These situations lead to an increased demand for properties, increasing their prices. However, the conditions are quite opposite during economic and political instability.
Supply and Demand
According to real estate market analysis, the relation between property supply and value is inverse. It means that if in a particular area, several comparable properties are available, their prices will be low. Investors will have several options to choose from and there are greater chances of properties remaining unsold.
However, in cases where demand is high and property inventory is limited, the prices of properties will be higher. More people will bid for the property and it will raise its original price. Therefore, while buying a property, look for an area where supply and demand are moderate. In this way, you will be able to purchase property at a good rate.
Location
A property’s location is its price tag. If a property is located in an upscale area where facilities such as schools, healthcare facilities, transportation, business and recreational areas, and good employment opportunities are present, its price will be high. The following are some factors that you should consider when looking for options:
- Close access to schools, commercial areas etc.
- Land size
- Neighbourhood
- Development projects
- Presence of amenities
Floor Area Ratio
Floor to area ratio represents the total area of construction on a lot. For any investor, it is the deciding factor to invest in a property. Buildings with high floor area ratios have higher prices as they provide more space for new projects inside the property.
Investors want to get the most out of their properties be it in the form of rentals, business activities, or any other project. Low FAR limits the scope of construction and does not provide any space for facilities and amenities like a lift, pool, parking area etc.
Condition of the Property
Most buyers go for the curb appeal of properties, which means if a property’s outer appearance is appealing, buyers will be ready to pay more. Properties in bad conditions have low chances of selling at good prices. However, sometimes buyers look for old properties with high FAR, so they can customise and renovate the building according to their choice.
A property’s price can be raised with a few upgrades and design changes. If you are a buyer, old properties are recommended because you can save a lot of money even after renovations.
Number of Amenities
Amenities make properties more valuable for potential buyers. They are two types: outdoor and indoor amenities. Outdoor amenities are mostly part of residential communities and they include:
- Kids’ play area
- Swimming pools
- Sporting facilities like cricket net, basketball, tennis courts, squash etc.
- Indoor games
- Clubhouse
- Landscaped gardens
- Wide-open spaces
- Parks
Indoor amenities include those that are present inside the property and add value to it. They include the following:
- Swimming pool
- Indoor gym
- Elevator
- Smart thermostat
- Multipurpose utility room
- Attached garage
- Covered porch
- Indoor library
Considering these factors while buying any property is important as it can help buyers get the best value on their investment. However, we will recommend a complete real estate market analysis before any investment in the sector.
