Expats Guide to Invest in Pakistan Property
Expats are one of the main source of foreign direct investment in Pakistan. In 2018 expats have sent more than 11.8 Billion USD as remittance in Pakistan in the first 7 months. A major portion of this investment is being used to buy property in Pakistan. Millions of Pakistanis are spread all around the globe to find a better living for themselves and their families. However, at the end of the day they want to invest in Pakistan to secure a home for themselves and their children. Today we need a comprehensive Expats Guide to Investment in Pakistan Property at Government level.
Unfortunately we do not have any plans or policies at the national level to provide these Expats with safe and secure real estate investments. However the public sector has identified this and we can now see dozens of opportunities available to Expats for investment ranging from residential and commercial plots to agriculture and raw land.
The public real estate sector is not regulated in Pakistan and therefore a huge number of projects fail every year and a lot of people lose their heard earned money. Besides this, there are a lot of fraudulent societies who try to rip off people and due to a weak law and order situation, it is too easy for them to get away with this.
If you are an Expat and you are reading this, count yourself lucky. Although this guide is mainly for safe investments in Pakistan and can help people living in Pakistan as well, it is even more relevant to investors who can not visit Pakistan for years and some times do not have a good grip on local real estate developments. This Expats Guide to Invest in Pakistan Property will give you great insight and useful guidelines to ensure that you make safe and secure profitable investments in Pakistan.
Rule No 1 : Invest only in Select Societies
The first and most important rule of all is that you should only invest in tested and trialed societies. If one of your investment in smaller societies has given good returns in the past it does not mean the next one will do as well. All private societies are subject to huge risks There is no need for you to experiment even if you believe that it will give you great returns.
Better late than never
I will shortlist a few of the societies where i believe you should focus on, these societies will provide you with ample opportunities and it will be easier for you to keep an eye on your investments while you live abroad. The reason to select these societies is that they are regulated, they have been delivering to the people of Pakistan for years now and at an average they have given best results in terms of profit in past couple of decades. In addition liquidity in these big societies is good and therefore it is very easy when you wish to sell as buying is not the only thing which should concern you and selling is equally important for good profit taking.
DHA and Bahria both in their own capacity offer a variety of investment opportunities which should cater for every type of investor. It is even better if you keep your main focus on DHA and do some opportunity investment in Bahria, DHA is by far the most safe place to park your hard earned money.
- Defence Housing Authority is by far the safest and most profitable of all, keep yourself focused on DHA Lahore and DHA Karachi and newer developments in other cities as well. Your investment will remain secured even if you do not visit it for years. It is the biggest real estate society of Pakistan and holds the maximum share of investment. If you have invested in DHA , you can rest assure that your money is safe and it will multiply in years to come. DHA also provides you with every kind of investment opportunity, starting from small residential plots of 5 Marla up to 2 Kanals and commercial plots of various sizes for investors with deep pockets.
- Bahria Town is the second best choice when it comes to investment in Pakistan. Although It is more volatile and therefore a bit more risky than DHA but it is the only society i would recommend for Expats other than DHA. In order to get maximum returns from your investment in Bahria Town , you must at all times be in touch with the market and I have personally found that short term and mid term trading is much more effective when it comes to Bahria Town. Bahria Lahore, Karachi and Islamabad offer a variety of investment opportunities for all kind of investors.
- Gwadar Sangar Housing Society A lot of our Expats want to invest in Gwadar and one of the most difficult thing is to find a safe investment to put your money in. It is my strong recommendation that if you are an Expat stay away from private land developers for now and avoid buying open land. Sangar is ideal for investment and most safe in my opinion. In addition I will only recommend that you invest a maximum of 15 to 20% of your portfolio in Gwadar.
Rule No 2 : Become a Tax Filer
Government is tightening noose around non filers so it is very important that you must file your taxes immediately. On a more personal note if you are working abroad , chances are that you file your tax returns regularly, therefore it doesn’t hurt you as you will only pay for any profits you make in Pakistan on your property.
A lot of Expats are confused about filing of Tax returns in Pakistan and some fear that our system is not fair. I do not agree though, i believe that while local tax filers may face some issues because of complicated systems involved in tax filing but we must remember that the system is still evolving however for the Expats it is very crystal clear and offers great financial benefits.
On every major transaction you will save hundreds of thousands and it only costs 10000 PKR a year to file your taxes.
Unlike before now you can not become a tax filer at any time of the year, you must submit it by the end of tax year and if you fail to do so , all transactions you do in that year will be considered as non filer transactions and you will pay extra taxes.
Rule No 3: Prefer Mid and Long Term Trading
As an Expat it may be hard to visit Pakistan every few months unless you are based in Dubai or may be Middle east. In addition every time when you come to buy or sell property, you incur huge transport expenses. So unless you have a huge number of assets, it is best that you prefer investments which will give you returns in 2 to 5 years at least. One year is the minimum you should look at and that too only if you are getting substantial profits.
Rule No 4: Avoid Investing in Houses
I have generally seen a lot of Expats looking to buy houses in Pakistan either for investment or as a holiday home. I mean seriously no matter how rich you are spending money on unproductive assets is just lame. While the plots appreciate over time in price the Houses depreciate as the construction gets older. Also if you have purchased it as a holiday home you will have to pay a substantial amount every year for its maintenance.
Even if you rent your house out it is not worth it as the returns usually are even less than 3% annually. I always recommend that buy commercial properties for rental purposes or apartments.
It is therefore best that you invest now in following and buy a house only when you move back:
- Residential or commercial plots for price appreciation.
- DHA Files
- Apartments and projects launched by reputable developers such as Goldcrest Mall and Residency DHA Lahore or springs apartments. High end and luxury apartments will add a lot of value in coming years in terms of price and rental and in addition they are excellent and secure holiday homes.
Rule No 5: Bypass Marketing Gimmickeries
Unfortunately Expats are an easy target of high end marketing campaigns and a lot of developers take advantage of their lack of on ground knowledge and information. If you keep yourself limited to recommended areas as suggested above above you do not need to worry much. However if you are willing to take higher risk than make sure that you do not fall in to the hands of those marketing geniuses.
Normally a marketing company will be using a selling concept to achieve its goals in short time. Such a strategy will put developers interest ahead and the only goal is to sell the project and not to focus on the purchaser.
It is therefore best to use third party consultants who can provide you with an in-depth neutral analysis and offer you comparisons of various projects in the market and more services than what you are getting when you purchase directly.
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Captain Shahnawaz Bhatti (Retd) is the founder and CEO of Imlaak which is based in DHA Lahore. He has represented a large number of investors in a wide array of real estate transactions. With more then 8 years experience in commercial real estate, marketing and real estate project management, he has a proven track record of guiding national and multi-national clients with their real estate portfolios and asset management. He is also an active real estate blogger and offers free advice through his articles. Imlaak handles real estate transactions valued at well over 9000 million every year. Our specific area of expertise includes strategic planning , transaction management, asset trading, partnerships & venture capitalist with experienced business owners, entrepreneurs, inventors & some proven-concept start-ups. In a very short time, Imlaak has introduced a new vision of professionalism, transparency and hard work in the real estate industry. ‘There is no better time to invest in real estate than today’ Captain S. Bhatti