Investors Are Moving Their Money In Real Estate. But Why?

The outbreak of COVID-19 spared no country, as the financial markets slumped globally.

Countries around the world enforced lockdowns, as it brought along the shutting of borders, suspending travel and transport, lockdowns, big shifts in the stock markets as the global shares took a hit, oil price crashed and unemployment as the probability of recession lingered.

The imposed restrictions have an adverse effect on the entire supply chains of large corporations and industries, as the dynamics of supply and demand shifted drastically.

The world is recovering from the crippling effects of COVID-19. New trends are being witnessed as the countries are trying to revive their economies.

Where different countries adopted various techniques to mitigate the effects of the pandemic and kick-start the economy, Pakistan chose the revival of ‘Construction and the Real Estate Industry.’

Pakistan’s construction industry accounts for over $50 billion, making up around 12-13% of the GDP. Out of this, the real estate sector contributes approximately one-third i.e $15 billion of the total industry.

The outbreak of the deadly pandemic displayed the existing threat – insufficient income for means of survival.

People adopted various means to overcome this issue and ensure a secure future. In order to achieve this, the most common trend observed has been investors moving their money to real estate.

Here are a few salient features as to why the investors are moving their money into real estate.

Second assured income

The outbreak of COVID-19 has redefined the outlook of life. From disrupting economic activities to unemployment, the pandemic has unveiled all kinds of threats, forcing everyone to plan out and work for a secure future.

It has highlighted the need that everyone needs to create a source of additional income before.

Real Estate stands out as one of the safest and most beneficial investment opportunities with one of the highest percentages of monetary returns.

The long-term investing in real estate is beneficial, as it minimizes the risk and cancels the crushing effects of short-term volatility by overcoming price depreciation.

The second assured income has helped the investors to only save for a secure future but also increases their wealth, which is discussed in the next point.

High Return on Investments

Many people view investing as a form of income, and some are quite successful at making a living by investing in different options, including stocks, bonds, or mutual funds.

Real estate, however, is considered a diverse asset, which is why it successfully attracts hefty investments. Whether you decide to buy, sell or rent, real estate projects have helped generate some extra cash, ensuring the provision of not only future benefits but also yields high returns on investment, that too in a short duration of time.

It has high liquidity. This means that you can convert your investment into cash quite easily. Real estate investments tend to provide a steady and reliable cash flow, which in turn only improves your cash flow and ensures higher returns in the long-term.

One can always utilize the high returns to reinvest and reap the benefits of investment through maximum returns.

If you’re on the lookout for a safe and secure investment opportunity, check out the projects marketed by Graana.com.

Introduction of PropTech and Adequate government policies

Despite the growing economic importance that the real estate sector has attributed to the development of the national economy, it remained largely underdeveloped in Pakistan, with its true potential untapped

The real estate sector has always enjoyed strong confidence. Pakistani people have always considered land to be a safe investment, be it residential or commercial.

First, one observed a lack of transactional transparency, security, lack of clarity, confusing processes and regulations, false valuations by fraudulent agents, owners, and developers had frightened the local people from investing in property.

The longevity of real estate investment was a popular belief in Pakistan, but the reasons did not inspire new investors, creating a monopoly.

The no to little integration of technology played a major part in discouraging the investors.

This, however, was replaced by the introduction of Proptech.

PropTech companies in Pakistan, despite being nascent, started making steady progress by introducing smart property portals like Graana.com and utilized technological advancements to provide customers and investors with a comprehensive real estate system.

Verifications of the listings, advanced multimedia displaying realistic three-dimensional views remotely and providing a comparative cost of the property, with future market trends.

This, in turn with adequate government policies, especially during the spread of COVID-19 helped the sector attract a positive influx of foreign investments.

Under the relief package, some of the significant initiatives provided were waiving off the withholding tax on materials in the construction sector, and lower sales tax aligned with the provinces, and discarding the required money-trail.

The terms of the package, valid till December 31, 2020, has proved to be a game-changer for the real estate sector.

The government further worked on introducing ‘Non-Residential Pakistani Rupee Value Accounts’ (NRVA), further enabling Overseas Pakistanis to invest in residential and commercial real estate and stock exchange, etc. through legal channels.

Taken into consideration, the confidence of the investors in the market was shattered because of the outbreak of COVID-19 pandemic.

However, by accommodating not only all the players of the construction and real estate sector but also non-filers, overseas Pakistanis, the government has opted for an incremental approach in reforming the system through fast track reforms and incentives, to overcome the implications for the economy, especially real estate.

Maham is a Content Writer.
She handles marketing communications at Graana.com.



  • close
    >