By M J Hayat
Current market sentiment from the real estate investors’ point of view is encouraging as the real estate assets have been undervalued to a great extend.
This market due to undervaluation of the real estate assets from the buyers’ point of view is positive and the investors should come up to invest in the real estate as there is an extreme slowdown in the property market.
In addition to this the economic indicators including local and foreign investment are likely to appreciate and GDP growth rate is also estimated to go up. In such conditions the investors of real-estate must pick up the opportunity to buy real estate on lower prices and sell them on higher prices in the near future like after one-and-a-half year to earn maximum profit.
Shehryar Hamid, a real-estate professional, expressed these view in an exclusive interview with Daily The Business here the other day.
Interview with Shehryar Hamid a real-estate professional
“You have to see the existing scenario and future potential. You will invest in some asset only if it is undervalued. Our real-estate market is much undervalued which creates a very high potential in the market.
“There are two sorts of markets, one is buyer’s market and other is seller’s market. You will harvest what you will invest today in a year or two when are economy will get stable as apparently foreign investment is coming. The real-estate market scenario of Pakistan right now is the same as the market of Egypt 20 years ago,” Shehryar explained.
He said that the DC rate is also one of the major contributing factors in the devaluing of the market of the real-estate which is very good from the perspective of buyer’s market but it has created hesitance.
“I am hearing that this law will be revised as the real-estate business is the backbone of any economy and Pakistan is not in the position to bear the devaluing of the market. I really appreciate Malik Riaz for investing but this couldn’t be called a real estate investing. It was just a money making scheme which was very successful.
“The difference between trading and investment is that you pick someone’s share and you’ll see the value in stock market and you earn profit. This is trading. Whereas an investor will buy the shares when the share is at its lowest and no one is buying it depending on the earning potential of the company.
He informed ninety percent of people in the market in Pakistan are traders and have contributed to cause the downfall of the market in addition to the filers and non-filers confusion.
To a question about the “Naya Pakistan Housing Scheme” he said that the project is a very good scheme which will require investors ready to invest as cheap houses are in demand.
“Eighteen Islamabad and Luxury Apartments at the back side of Galleria Mall are some of my most successful projects and the name of my organisation is Wired Real Estate which is serving all across Pakistan. We deal in residential as well as commercial real estate.
“There is an economic slowdown in the real estate market of Dubai and investors are withdrawing their money from Dubai which has strengthened the chances of them turning towards Pakistan”, he highlighted, urging the government to revise its policies and try to take steps to facilitate the investor to make investment in Pakistan.
He went on saying that investing in Real Estate is one of the easiest and most secure ways to make money as it is a relatively low volatility market especially compared to equities and bonds.
In Pakistan, this money-making potential is even more pronounced because when the real-estate market grows it can go north of 10 percent whereas more developed markets are steadier, varying between five percent to eight percent, Shehryar underscored, adding that one of the major reasons for this growth is the nature of the common Pakistani investor, where property is bought in bulk for a short-term and then sold off at an increasingly high profit – this is the nature of the speculative investor.
“Pure speculation is more based on intuition than solid analysis and this is where the risk and reward balance shifts towards the ‘risk’ side of things – we have seen the negative consequences of pure speculation in the form of huge losses incurred by investors over the years” he stated .
“Investing however is different as this is a process of carrying out due diligence and analysis before making an investment decision – Investing differs from pure speculation in the sense that it is a more systematic way of looking to earn money and is usually more long term in nature whereas a speculator primarily focuses on short term profits.
“Investors that have made money by buying low and selling high have usually done so on the basis of a solid understanding of factors that have the most considerable impact on the future value of the assets,” Shehryar added, suggesting a safe horizon should be more than two or two- and-a-half years at the very least and even this time span is less in some cases.
“The real estate investors make money on either rental incomes or capital appreciation and these outcomes are only ascertained when the investing process is diligent and secure,” he said, expressing his sadness that unfortunately, the Pakistani real estate market has also been victimised by a number of scams where a lot of money has been lost and the prevailing uncertainty has confused our investors.
Shehryar said that at this point, it is important to get a better understanding of the real-estate market in general – the market cannot be generalised as different regions perform differently and even within these regions different areas and localities perform differently based on a multitude of factors.
For example, Gulberg Lahore continues to see price increases because of a lower supply and greater demand as commercial activity continues to increase. Luxury apartments which are proving to be great investment vehicles, are mostly coming up in the main areas of Gulberg, he quoted the example.
He said that the important thing is to note that within markets, segments do not all perform homogenously, and the smart investor is able to make money in any kind of a market especially in a slow market.
Uncertainty and mistrust are like poison pills in the real estate market and unfortunately our market has been victimised by these elements, he said, adding that we at Wired Real Estate endeavour to breathe back trust, credibility and competence in to the real-estate sector because it is essential that investors have the opportunity to put their hard-earned money to work for them, through a secure and credible source.
“One of the major reasons why our real estate market saw extremely high growth rates was because of pure Foreign Direct Investment and it is one of our main goals to help our expatriate community invest in our real estate market at this opportune time when the rupee is considerably devalued and the market is too relatively undervalued,” he was of the view.
“Our key clientele, Pakistani expats have so far reflected smart investment principles on the basis of which we operate and have invested a large sum of money in propositions which are especially tailored for them, he said, adding that another key element in our systematic investment tool kit is acquiring an understanding of the goals and objectives of our clientele – this allows for trust building and improved service as in order to correctly advise and help clients invest, it is necessary to first be familiar with what the client is looking for.
In answer to a question he said that Wired Real Estate has propositions for all kinds of investors at home and abroad who seek to invest in profit making opportunities in Pakistan which include high end real estate, apartment complexes, residential societies and commercial real estate.
The key elements which have allowed us to engage an expansive network of active investors are that of trust and credibility which, as a result, has ensured that we operate at the highest level of integrity and work with business partners who reflect the same values and work ethic, Shehryar concluded.