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Lessons To Be learnt -Downfall of Real Estate Market in Pakistan

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The real estate industry of Pakistan went downhill after the summer of 2016. Although the downfall was a subtle one in some regions of the country, it was rather more like an artificial boom. Properties that were highly popular faced a bigger steep downwards as compared to other properties.

After the resurrection of the Karachi stock exchange market, there was a ray of positivity for the industry among the public. It is apparent that the economy of Pakistan might actually be getting better than before. It looks like 2020 is going to be lucky for the real estate market as we expect to see some stability and improvement in the overall revenue.

The devaluation of Pakistani currency in 2018 and 2019 and then its resurgence later also helps to prove the fact that it is too early to form a negative opinion about the real estate sector.

Getting a good profit on real estate investment is a tricky challenge and needs a lot of research as well as a good experience of the working of the market. However, the better thing is that even amateur investors get a good return in the market if they have holding power. On the other side, investors with better exposure to market and experience make 10 folds more in comparison to those who lack it. The biggest challenge is fixated on the idea for maintaining real estate assets for better growth.

It is therefore important to evaluate and analyze the past and prioritize what is more important.

Holding power is the key to the success

You need to have some kind of back up plans while investing in the real estate sector instead of gambling. Quick money might seem a fun and attractive option, but as the saying goes – easy come, easy go – holds true in many cases. For example, Bahria Karachi and DHA Lahore, and other locations. If you take it as a gambling game, then it is going to cost you a lot.

“If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes.”

– Warren Buffett

This saying also applies well in the real estate sector, where there is only a slight room for risks.

This is highly important while considering property as the value of a land piece never falls down permanently. It might see a downfall in its monetary value, but the area you buy remains the same, and that is the biggest thing you need to consider while selling that property you bought. Essentially, it is not a loss.

In the same way, the uprise in the pricing value does not mean anything important as the real profit comes when you try selling it.

Believe what you see

An asset is only valuable if it is visible, if you want to invest in localities that are not fully developed, then you should get prepared for a long holding period. It is a lucky win to have some success in this case, and experienced people have the most luck.

In this downtrend, the ones having their properties in the localities that were not developed or were not much prominent in the estate did not get positive results. That is why it is highly important to consider a real estate as a real, existing asset instead of just a part of a documented deal.

This is the reason it is most likely that you will be in a more volatile and vulnerable position if you invest in an underdeveloped region. That is why the idea of investing in real estate becomes like a game of gambling instead of a good investment deal, and on the worse, it might even cost you a fortune. So, the real question arises: why even take the risk? The risk with a good vision is much safer than risking it all thinking it is some shortcut to earn the big zeroes. If the latter is your case, you might need to reanalyze your vision or invest somewhere else.

There has been a sudden gush in different projects in construction all across Lahore since 2016. People started moving from volatile areas and investing in stable, promising regions.

Do not dive in the Market noise

Market noise is also a reason for failure in the real estate. A thousand opinions encroach over a million options in the real estate market everywhere. It causes huge market noise that often confuses potential investors.

Many people take their investment decision on the basis of what is the hot talk of the market instead of going with the logical facts and possibilities. If you think that you have done all the market research you needed to take a step by looking all over the web and watching all the videos, then you are probably going to take a risk.

For saving a bit of money we look for shortcuts and seek self-help instead of taking the right decision and follow the right steps that are actually meant to guide us. It is a blunder we almost make on a daily basis, where we just go with what we think is right for us and end up getting, even more, messier in the situation that is now even worse. You might think that you have made all the right decisions, but most of the time, the key to real success is by taking all the steps instead of looking for an elevator.

In a similar manner, market noise is much more hazardous than we imagine, it shows us the shortcuts and the way out when it could cost you a lot of money in the end. More importantly, what suits the other might not even be fit for you. So, it is always important to ask a consultant for the right advice and go with the facts. Going with logic will help you focus on what is more important and clear up any confusion you might have regarding the real estate sector investment.

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