What is it like to invest in urban real estate of Pakistan?

In Pakistan, real estate investment is considered the safest and the securest investment to yield good return on investment in a matter of months or years. Pakistan real estate is also considered as one of the best investments but the analysis shows that you need to adopt a more realistic approach especially before investing anywhere in urban societies all around the world. According to many experts, urban properties are overvalued and need to be re-evaluated for a correction in price. rnMany people buy properties to reside in but some of the properties are just bought to let and to generate a steady stream of income. Most of the people do not know whether or not they should buy a particular property because of their inability to evaluate property properly. “Rental yield” is a critical and general measure that is used to find out the real value of a property and if it is worth investing. You can get the rental yield of any property by dividing the annual expected rent (that the property can generate) by its total saleable value. The figure you get should help you decide whether or not to invest in any particular property. Generally, people would invest in real estate of Pakistan without even making a rough estimate.rnThe benchmark, in general, is that if the average rental amount exceeds the average interest rate on mortgage loan then it means that the real estate market is set to rise or continue rising. However, if the reverse is true then the property market must be stagnant or might even start falling in future. As we talk about Pakistan homes, lower rental yields mean that the property supply is too high and the real estate sector needs correction while higher rents mean the properties are less in supply and the prices are due to rise. rnA common argument that is made in favour of property investment is that it appreciates in value over time, or delivers a steady return for a longer period of time. However, the truth is that property values have been rising very slowly since 2008, making the potential for capital gains far lower. On the other hand, when a common investor can earn around 14.5 percent interest rate on retail corporate bond, the average property price in Karachi must increase by at least 10 percent a year in order to be at balance. This comparison is about Pakistan Homes, Karachi Real Estate and the other cities also represent almost the same situation.rnAverage property investors in Lahore have been getting around 9 percent to 10 or 11 percent on their investment, which is much better than the situation in Karachi. It means that the deteriorating law and order situation in Karachi is affecting its urban real estate as well. Not all the Pakistan real estate investments are created equal, however. The annual rental yield on properties in different cities of Pakistan is different e.g. in Lahore and Islamabad, the annual rental yield is higher than that of Karachi.