New Trends in Real Estate
Starting from the beginning, the flu known as COVID-19 proved worse than almost any economic predictor could have imagined. In March of 2020, stores, restaurants, and offices emptied due to the rapid spread of a lethal strain that had no cure available at the time. This lethal strain was quick to take a toll on the economy in which many lost their jobs and, unfortunately, in some cases, their life partners or even family members. But what many people were wary of happening did not occur. The economy—along with real estate—recovered far more swiftly than anyone could have imagined. It’s already above pre-pandemic levels, and job opportunities are expected to recover at an equal rate with them by early 2022.
Some may wonder why the property sector seems remarkably the same before the pandemic. It isn’t; some markets and sectors have changed forever. Some buildings, for example, are not only going to become obsolete but also need to be repurposed to come up with a new system that will suit the economic upkeep of that building. As some economic hurdles like gas and diesel shortages slow down production, there is also worry among residents regarding food shortages which means we should keep an eye on this along with something called “price inflation,” which can become a big problem for many firms within the property sector.
Property managers are finding that some markets and sectors have changed forever. For example, many buildings and other assets have been destroyed in the pandemic, but other properties now stand without any rebuilding, making them obsolete. Other issues may include supply chain problems, which slow or even halt the production of goods and services. Labor or product shortages can also cause imbalances in terms of inflation and pricing production of resources, contributing to an economic risk to those who manage the property.
According to the latest investment predictions, Pakistan’s real estate sector is set to experience exponential growth in 2021. Previous predictions were made in April 2021, but after a short period, it was quickly discovered that the price hike was happening at an even faster pace than experts had originally predicted. According to a recent report, JITO predicts that the Pakistani real estate market value will grow 3.02% in 2021. Last year, it was estimated that values would, in fact, experience a 2.2% increase until April of 2021, but this was found to be an underestimate when the percentage climbed even higher midway through the year.
One reason for this might be Pakistan’s general belief that the real estate market should remain profitable but risky. The government has recently upped its interest in the sector by making various incentives available to investors battling to make a profit while working around their fiscal limitations. With new laws allowing investment managers to buy residential and commercial property, more people are turning towards the market in hopes of profiting finically!
As a result of providing more real estate-friendly policies, the country is attracting more potential investors. Some investors noted that Pakistan’s property sector will have great growth from 2021 to 2023 as residential and commercial developments are already taking place and are on their way to completion. A few trends in Pakistan, such as developing the country’s first-ever smart city: Capital Smart City, help the country see an astonishing growth rate within the industry!
Globe Estate & Builders is a large real estate development company building many projects since 2020, including Goldcrest, Indigo heights, and now Downtown Mall Liberty. Projects like these have performed beyond expectations for investment realization. They are popular in the market right now, and most people know that this has become a very lucrative time for investment opportunities for an astute investor like yourself. Future investors like yourself should use our advisory services to learn more about their next big move to help you make millions from your property portfolio! These are just a few examples of excellent ways to assist you through our expert advice.
Globe Estate & Builders realizes there’s a lot to learn about the future of construction as it expands into new realms. We recently discovered that our projects have been selling out more quickly than expected. Still, we’re happy to report that companies like Indigo Heights have done very well and are among some of our highest-yielding construction investments. Our newest residential project, Downtown Mall Liberty, is sitting pretty in the prime location it was built for and has reached 40% occupancy in just a few months – which is right on target with where we predicted it would be!
It’s not all doom and gloom for authors, as DHA Peshawar has doubled and even tripled the profits in the past four years. Similarly, investment in DHA Lahore has set a record high of late. For example, land sales within the confines of DHA Multan are also rising in popularity as it may not be as large as either of its predecessors mentioned above. However, it’s still an area bound to show a promising increase between 2016-2019.
The market for plots is strong in Pakistan. It can be seen in the number of new communities developed all over cities. In one year alone, DHA Peshawar had doubled from $100 million to $200 million and has seen a threefold increase since two years ago when it was valued at $62 million. Similarly, DHA Lahore witnessed an investment of $150 million after a steep decline from $176 million the previous year. DHA Multan offers opportunities for interested individuals looking to invest in property. This project may not be as large compared to others, such as DHA Peshawar, which recorded a market value of 200,000. Still, potential growth over the next five years is expected to increase exponentially as developers boast developments by 2020/2021.
While the housing market has overall decreased in most cities, and there are several options out there to purchase property, DHA is currently doing extremely well. This brand is more than doubling its profits in just two years and is at an all-time high in sales. The same holds for DHA Lahore as well and even DHA Multan.
House prices are influenced by several factors, including local buyer demand and the amount of housing supply available for purchase. High demand and low supply cause homeownership to increase in value.
Research has previously shown that the average person will spend approximately a third of their yearly income on housing. It is why it’s so important that other factors, including mortgages and interest rates, not get ignored when talking about this topic. Notably, it seems our nation’s homebuyers can afford to purchase homes they could not have in years past – this is also because we are in one of the prosperous times our nation has had in decades. Given how much mortgage rates have dropped recently and how incomes are expected to fare even better in coming years (plummeting mortgage interest rates coupled with the highest growth rate for middle-income wages in decades), consumer house-buying power is already up 21% by 2019. How affordable home prices depend on several factors such as interest rates, incomes, and inflation, to name a few. So while home prices may seem like they’re rising, taxpayers can afford more houses than they could in the past when comparing these compound variables. It isn’t just a case of home prices that determine affordability. Incomes, inflation, and rates can also play a role. So rising prices may not always mean homes are getting less affordable at all. For example, if interest rates are low or incomes are on the rise, home buyers might be able to afford more houses than they could have previously.
In many areas of Pakistan, there is a housing shortage. Buyers are vying to purchase across the state in places like Islamabad and Lahore. Although home prices and vacancies have increased, inventory has decreased significantly, allowing fewer people to purchase homes, leaving current owners in power during negotiations. Suppose more buyers enter the market and prices fall. In that case, new families may enter into homeownership and contribute to increasing inventory as newcomers instead of being outbid by current owners.
On the other hand, if an inventory is high, buyers tend to have a stronger negotiating position. It means that you may be able to negotiate down-home prices or get more favorable interest rates. Low inventory also means fewer bidding wars and less competition for available homes. Housing inventory — or the supply of available housing units, specifically those currently for sale — is another important factor in the market. When the inventory is low and demand is high, it creates a seller’s market. Home prices rise as sellers have the edge in negotiations and there tend to be a lot more bidders than there are available homes for sale.
Thus, the current situation has brought many new trends in real estate, including both positive and negative trends. Along with increase in rates of plots and houses, inflation is increased too with the shortage of houses.