Saturday, September 1, 2012

Why People Prefer to Invest in Pakistan Real Estate?

Pakistan has a vibrant real estate sector offering excellent prospects to locals and foreign property investors. Due to regional unrest in several countries of the world, foreigners consider Pakistan real estate a safer investment than their local property markets. Moreover, the opportunity to earn huge bucks and minimal restrictions for purchasing also make the evident reasons why people are always keen to invest in Pakistan property.
Many first class housing societies are being launched in Pakistan to guarantee comfortable, affordable, convenient and modern lifestyle for people living there. Societies like Bahria Town Lahore, Valencia Town, Central Park and Sukh Chain Gardens in Lahore make the top most examples in this regard. The quality lifestyles offered by these societies also lure people to invest in Pakistan property. Some other reasons include the following:
Slow but Steady Returns!
History shows real estate sector in Pakistan is recession proof, since it is one of those sectors which tremendously absorbed the effects of global financial crises and managed to offer stable returns even during bad times. Unfortunately after fast growth of the sector from 2001-2004, the property prices have been improving slowly over the last few years. This does not discourage investors because they know though the returns on realty investment are slow but quite safe and steady in Pakistan.
Hedge against Inflation!
Normally if rise in value of investment is less than the rise in the rate of inflation, it means your investment is losing value. The return on saving or fixed accounts is quite less in Pakistan as compared to the cost of inflation which people had to pay. They believe gold provides the best hedge against inflation but only a few know that property in Pakistan does the job better. There is nothing that fights inflation better than real estate. The all time high returns offset the effect of inflation and lead the investment towards growth.
'HALAL' Source of Income!
According to estimates, around 97% of the population in Pakistan is Muslim. In Islam income earned as an interest is 'haram'. The returns earned from saving accounts, fixed accounts and profits from stock trading are forbidden sources of income. A lot of investors, owing to their religious beliefs, are hesitant to earn income from forbidden sources and prefer investing in real estate. This is because rental returns from Pakistan property and capital gains on its sales make one of the purest forms of 'halal' source of income.
High Investment Liquidity!
Liquidity is the ability of investment as to how quickly it converts into cash. According to a report of the World Bank, Pakistan is facing a serious housing shortage. The annual unmet demand remains around 1.5 million for housing units and average occupancy rate per house is around six. This is why demand of property especially in posh housing schemes like DHA and Bahria Town Lahore remains all-time high. Investors know they can liquefy their investment anytime when they need cash since the realty market remains crowded with property buyers in Pakistan.
Property Tax Exemptions!
The favourable property tax policy in Pakistan also encourages investors to invest in Pakistan realty sector. Capital gains or losses on sale of property are tax free but subject to tax if sale and purchase is carried out as a business activity. Rental income is taxable but tax brackets are quite favourable. Rental income tax is applied to gross value of rent and tax brackets are subject to change from time to time according to policy of government. Moreover, on inherited property there is no tax.


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