Property as an Investment Option in Current Country

Buying Property General Advice
#1

I am an architect working here with a consultant in Saudi Arabia for the past 1½ years. I am currently having Rs 40 lac as my savings. Need an expert advice through this forum about any investment opportunities in Pakistan. My family is based in Lahore, and I will also prefer to live there once I will decide to resettle to my home country.

I am looking from purely an investment point of view, as per my current conditions I will not be in a hurry of any house construction till 7 to 8 years.

My main question to the experts is whether buying any property as an investment tool will be worth it against the prevailing Pakistan's atmosphere ? Will it be able to return any good returns after 7 to 8 years ? like more than two folds etc?

#2

Hm, well for the past 5 years property has not been a good investment generally speaking but for the the past 10-15 years it has been good so no one can predict the future! but for the current situation it does not seem like property will be a good investment in the near future i.e. 2-3 years.

#3

So what should be the smart move then? Stay with some liquid cash investment in the form of any savings account for the time being and to observe Pakistan real estate? Waiting for it to start inflating again?

#4

Well in my opinion the smart move for the near future (close to 1 year) would be keep your savings in foreign currency esp. US$ and see what happens I mean where the economy and the real estate sector is going then make your move accordingly right now is a very bad time to invest! As property prices in majority of areas may FALL directly or indirectly via the fall of the rupee!

#5

Well this might be a short term strategy, or to save your money from being further affected by inflation. What will be the solution if the picture regarding the real estate remain unchanged in the course of two to three years? (as it seems to be)

I have these options in my mind if we talk about 5 to 7 years strategy.

  1. Gold Bars
  2. Foreign Currency (although it will not be considered as a profit return investment in the long run)
  3. Some PKR Saving account or any Shares etc(Although Risk Factors are involved at higher rate in shares)

Need some valuable comments from brothers on this forum.

#6

Assalamualaikum Bro

Alhamdulillah a great forum.

As an advice for you brother Shoaib, i read over and over again advices to deposit savings in bank accounts to earn interest. Keep in mind that Allah has declared war against the users of Riba (interest)! Dont risk your akhirah for gains of this dunya.

Re. the investment, I have been in the same situation as you. My research suggested a diversification of my investment is the best option. I invested in a commercial shop at the early stages of construction of that shopping centre (Alhamdulillah the shop has been paying rent for the past 3 years and also appreciated its capital value). I bought some some blocks of land in a new estate in Rawalpindi and the value has only moved up enough to keep in line with inflation. All in all I am still at a positive return in my investment.

Shares (I am within the funds management industry) are at a critical time due to the Euro zone political issues and could be hammered if Greece leaves the euro zone. Gold at the same time looks over priced due to all the purchase by frustrated investors sick of the stock market drops. Any stabilizing in the stock markets will see gold take a short term dip.

I would suggest 30% commercial property, 30% residential investments, 20% shares, 20% gold. You will not see your investment return 50% or so in a week, at the same time it is highly unlikely you will see it drop as well if diversified across asset classes.

Take the above as a brotherly advice.

Salam alaikum Amar

#7

So long as this government is in power I would avoid further investment. This government seems in only interested in stealing peoples money and pushing Pakistan back at the behest of its paymasters in Delhi and Washington. Rupee is expected to further depreciate as they have taken out loans from IMF, looted the money and now it is time for the people to pay back those loans but there is no money in the kitty…so they will have to print more paper thereby devaluing its value further. Our enemies are destroying us from within.

#8

@Amar

You are Right that Keeping your Savings in a PKR savings account is a foolish task, in religious terms & it will not give you any meaningful financial benefit as well, because inflation in Pakistan is going at a much higher rate than the interest rate they will offer you. So by doing this you will still be losing your money...

(30% commercial property, 30% residential investments, 20% shares, 20% gold)

Can you give any valuable directions about first three items? I am currently stationed in KSA, will be living in Lahore once I return!

#9

@Arshad

You are right, Chances for the rupee to get further devaluated are very much there, as long as this govt remain there. Now since past few days there is 15 to 18 hours power shortage in the larger cities. They completely failed to provide people with the basic necessities of life during their whole tenure

#10

Shoaib bhai. Aap ney ghar to banvana hi hei - hena? Then it is very advisable to invest in one plot or two plots so that you can make a house by selling one of them and building on the other when you return. But invest in non-developed area. In 6-7 years it will be more than double in real terms (i mean after factoring in inflation and rupee devaluation) inshaAllah - unless there is a major catastrophe in Pakistan...and I hope not.

But even if you want to live in Lahore, don't buy there. Buy your plots in Islamabad non developed sectors like B-17; G-14; F-16 etc.... this is because the price of property in Islamabad rises much faster than Lahore.

When you come back to Pakistan and decide to live in Lahore, you can sell your plots in Islamabad and buy prime Lahore residential property and make your house inshaAllah.

I am advising you what I have been doing. I am in the Gulf for the last 6 years, and I have invest most of my savings so far in property in Pakistan. in the last three years even during property slump, my property value has risen much higher than inflation and rupee devaluation.

#11

@PK1

Can you give some information about the plot rates in those sectors in Islamabad? i.e. B-17, G-14, F-16?

#12

In B-17 Block C one kanal is 30-35 lac In G-14/3 40 feet x 80 feet size plot is about 55 lac In F-16/4 one kanal is about 25 lac

There are other options too - I am not a property dealer so I don't know for sure. If you want to buy in Islamabad, please contact Syed Ibrahim - he is a very regular contributor on this site and knows property business very well.

#13

Please always invest in your area’s to avoid dealers exploitation.

#14

@Amar, agree with you.

Euro is not doing well, Greece is likely to be kicked out very soon. And as you must be aware, Spain is next in queue, unemployment has shot up to 23% there. Anyway, you can hardly expect any good forex out of Euro.

US dollar looks better against PKR in the current scenario but USA hasn't got much to stabilize it in international market in the long run.

However, a foreign currency account or gold bars are definitely better than having your savings in PKR.

#15

@Shoaib,

Frankly for Pakistan 7-8 yrs prediction would be nothing but wild guess. Either you invest in short term options or gamble for risk premium of 7-8 yrs. I personally would consider semi-mature options only with relatively lesser return and lesser risk.

On another note, prices are currently low and its likely they will get better after the elections, of course if PPP doesn't come back again.

I don't think investing a part of your savings in Pakistan real estate would harm; likelihood of price increase after elections is more. And as Amar has rightfully said, make a portfolio.

And I would say, gold should always be a part of your investment portfolio, irrespective of its poor performance in last two quarters. It is widely considered as a last resort by households and countries.

For investment, CDA sectors, esp of zone 1 are always the best. With a time frame of 7-8 years, you can play your cards on

G14/3,2,1 [lot of noise of development kicking in but has subsided now, but still you can expect it in 2 - 4 yrs max]

E-12 [you won't get any returns until development starts but the prices will match up with D-12 once developed, which will be double of current ones]

Buying in these undeveloped CDA sectors is technically very difficult; the transfer process, file, idea of probable location of the plot, etc.

#16

@Amar

I would second your advice and highly appreciate your brilliant input. We love to see regular contribution from you.

Ali MEYAAR Builders & Consultants

#17

@Shoaib Mansoor

It be good gesture to mark @Amar's reply, the "Best Reply". Rest is your choice if you like any other better.

Ali MEYAAR Builders & Consultants

#18

@Shoaib Mansoor,

Best would be to invest close to the area you would live in or would most regularly visit that is always my advice to my ex-pat clientèle.

Secondly .. 7-8 years is a long time and good time for your property worth to grow. As for now the property in Pakistan is at its lowest but inshaALLAH with a new Govt the prices will definitely rise. So now is the time to invest.

Thirdly .. there are many good investment opportunities in Islamabad which can be discussed, subject to if you have any interest here.

Ali MEYAAR Builders & Consultants

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