House value depreciation (passage of time) vs increasing construc. cost

Construction & Materials Construction Cost
#1

Dear all ,

I am an expat and thinking to build a house to rent out for few years and then sell it and built a house for my personal residence, i am curious to know that how much ratio of house value decrease(with the passage of time) vs increasing construction cost. For example, if i construct a house in 10 million in a devolved sector in Islamabad, after 5 years what would be the cost to build the same house vs how much will this house be devalued as it wouldn't be new house. I am doing some math to make my mind to construct or not.

Any depth in this regard will be highly appreciated.

#2

Aoa,

If you construct your house and rent it out for 5 years. The price starts depreciating after 5 years by maximum 10% (on construction only) and so on but at the same time your land can increase many folds or decrease depending on market trends. So if you want to construct and rent than sell. Buy land at bottom rates with a developing society with a good track record. Where land will appreciate with time and 10% depreciation in 5 years can easily be returned as rent.

#3

Buying a plot in a good location and society will always pay back much much more than deprecation

#4

Wa alaikum salam,



Thanks HT bro for your valuable comments, as we saw the inflation every year and if it cost me now to construct in 10 Million, i guess it will cost me about 13 millions after 5 years, so now my question is is value of my house will be (land price + 9 million) or (land price + 12 million) considering 10% depreciation.



Another thing i have a Plot in E-11/1 and since the society is already matured, I haven't seen any hike in prices from past 2 years, and I don’t see any significant hike in next 5 years. What is your opinion? I can consider D-12 as a developing sector and the prices are same as E-11, is it better to sell this and buy in D-12? And construct there and in the span of 5 years it will be more valuable then in E-11/1.

#5

…

#6

All the calculations are done according to current market values. First 5 years its very less but lets say after 25 years its just the price of land you get back...

rental wise E-11 and D-12 are the same...

I dont think a massive jump can/should be expected as both are at there peak at the moment. 8-10% per year should be good enough.

Rest you can decide which plot location is better to built on. One advice go for basement. It will be worth it.

#7

Dear Abbasi,
HT or Hasan Tariq both are same.Don't trust blindly to anyone must check market and past projects of builder.Don't give contract with material.Material purchase yourself and check labour rate in market.I face a big loss by builder so must careful before you start to construction.
Regards

#8

HT equals Hassan Tariq



#9

You can't trap anymore.I just shared my bad experience with unknown builder that's why advice to people that don't trust blindly to any builder.I lost but like to share to people who like to start construction.
I have complete album if someone like to see i can share him by whatsapp +96597271971
Regards

#10

As i said very less sincere and honest builders in market so always careful before to give contract.Always avoid to give contract with material because they show you A+ but never ever use A+.

Regards

#11

Thats very kind of you sharing your bad experience. I hope that builder never ran away with your money. Above all i hope you dont owe him around 5 lacs.

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