Real estate prices resume upward trend



Sunday, April 13, 2008
By Syed Salahuddin Haider

KARACHI: The real estate sector is gradually easing out of its two year slump as prices have finally started to rise on the back of positive political developments in the country. The recessionary period is easing, which is evident by rise in the sale and rental values of properties all over the country.

According to statistics, on a 15 year basis, the average growth per year in real estate is around 30 to 35 per cent.

In layman’s terms, real estate can be defined as simple land, all products made of land, on land and relating to land. Real estate has proven to be a better tool of investment in terms of security and returns in comparison to any other instrument or tool like bonds, bank fixed deposits, gold, currencies, stocks, shareholdings. The bonus is that rental income can also be earned. However, care must be taken in vetting the title documents, quality of the estate, history and future aspects.

A new development in the field has been the introduction of Real Estate Investment Trusts (REITS) which will help in investment in the sector. These are now also authorised in Pakistan by the government and because of these, real estate products shall be more affordable to the common man.

REITs have been present in developed countries for a long time even though it took Pakistan some time to introduce the concept in our society. The practice is that: real estate firms and other companies who have valuable real estate holdings offer their share to common public and they are quoted on the stock exchange.

Interestingly, in Pakistan 80 per cent of the properties are in the name of people other than the actual owner. For example, in the name of wife or some close relations. Among other things, this practice signifies the growing understanding of how important possessing assets are amongst middle income groups, especially the security it offers women and their children in case of divorce or death of a husband.

There are also other benefits and advantages of real estate. These include help in securing visas and immigration outside Pakistan to places like Canada, the UK and the USA.

Properties can be swapped or exchanged as well. There is neither any leftover nor pilferage. Mortgage and emergency help can be obtained by using estates in your name. Moreover, real estate can be acquired in installments over a period of 15 to 20 years.

It is easily and readily transferable. It never becomes out of date or obsolete (except old construction if not maintained properly but even then the land value holds). Money shall depreciate in years at today’s and future inflation rate in Pakistan but real estate shall always be head and shoulders above.

When you own property, it provides safe, secure and ever increasing value and it creates image, respect, name and credibility in the community. You can stand as guarantor, surety for others and for your self. At the same time, you are also safe from theft, burglary and forgery as real estate is a sort of bearer cheque ñ yet cannot be cashed by anyone.

At present there is also no gains tax and there are no bans, quotas or limits of real estate possession.

Finally nothing is better than real estate investment for old age security. It is transformable into any shape and other products and it is least affected by time. The writer is the president and CEO of Century21, a real estate and development entity.

http://www.thenews.com.pk/daily_detail.asp?id=106430