Posted by Capt Shahnawaz on September 29, 2021
Real Estate Market Analysis
The real estate investments market has shown phenomenal growth in the year in the past 14 months or so. Most people seem confused as prices in most areas have already gained 60 to 70% and in some areas even more than a 100%.
Investing in the same areas which have recently gained so much seems a high-risk investment and this begs the question, what are the best real estate investments you can make in 2021-2022?
While diversification is important, over diversifying is not. I do not agree that in order to make money you need to invest in every new real estate opportunity that pops out on the map.
No one really has the time to study and analyze dozens of societies and keep an eye on them all the time. It is best to select two or three best options and keep your focus.
This will eventually help you manage your assets in a better way and earn far more profit than investing everywhere and anywhere.
Real diversification is not about buying plots in different societies, but investing in different kinds of real estate assets. Plots, Buildings, and rental generating properties are the main areas you need to diversify your investments.
While just like other areas DHA Multan has gained quite a lot in the last year, however, the plot prices have not yet reached their peak. While it may not show any huge gains in the next year the possibility still exists.
A realistic assessment of a 1 Kanal plot in DHA Multan should be 17 to 20 Million and in years to come DHA Multan will slowly move towards its target price.
It is just a matter of time as the prices keep increasing wherever DHA Multan starts development.
Keep your focus on blocks that are less developed and you will gain a good amount. Trouble is that you will have to pay development charges amounting to 2.3 Million let’s see how it will most likely play out.
The below example is just an expectation of an average transaction and investment return in DHA Multan.
Plot price as of Oct 2021 : 110 Lacs
Transfer expenses & commissions : 5 Lacs approx
Development charges : 2.3 Million approx
Total investment : 138 Lacs
Expected Plot price in 2 to 3 years : 200 Lacs
Sales expense & commissions : 3 Lacs
Return : 59 Lacs
ROI : 14.25% per annum approx
Although it is more likely that the prices will remain stable for a year or so, it is one of the best and safest investments for a 2 to 3 years cycle in the real estate market as of now.
Over the past years, construction projects especially luxury apartments have had a huge success in Lahore real estate market.
This is the evergreen segment of real estate and has shown very high gains even between 2016 to 2020 when most people thought that real estate was going down but in reality, only Plots, files, etc were going down. Learn more about construction opportunities here
One thing to keep in mind is the selection of the construction project. Therefore, you must study, analyze and carry out all the research just like you do when you are investing in societies.
Projects are much easier to analyze and research and do not involve complex and long procedures. In addition, if you search, you will easily find a cost-effective and value for a money project which will give you very good returns over the years.
To make a forecast we will use investment in the Sixty6 Gulberg apartment building. Imlaak has done all the due diligence about the said project which has been analyzed and is recommended for investment.
An expected investment and return in Sixty6 Gulberg will most likely look like this:
Apartment size : 556 Sqft
Price per sqft as of Oct 2021 : 23000 per sqft
Total Price : 128 Lacs (Paid in installments in 3 years)
Transfer expenses & commissions : Zero
Development charges : Zero
Total investment : 128 Lacs
Expected price in 3.5 years : 40000 Per sqft
Total price after 3.5 years : 222 Lacs
Sales expense & commissions : 5 Lacs
Return : 90 Lacs approx
ROI : 20% per annum approx
DHA Gujranwala has announced Balloting on 8th October 2021, the file price of 1 Kanal plot has already gone higher than 1 crore. Although this could be a bit risky play if purchased at a higher price.
However, if the prices do not jump higher after Balloting it may be a good time to look for an opportunity to buy. Although a lot will depend on DHA Gujranwala’s master plan and how it continues its future development, the market will respond positively to the balloting because of overall positive market sentiment.
There are two possible scenarios, either the prices will jump just after balloting as the market sentiment is very positive and this is the most likely scenario or the prices will remain stable or crash a bit.
The second scenario where the prices remain stable or crash a bit due to selling pressure is more suitable for investment. I believe that the plot prices will reach between 17 to 20 Million in the next 2 to 3 years.
In many ways, the gain is similar to that of DHA Multan. However, DHA Multan remains my first priority as of now because it is ahead in the developmental progress.
If you are stuck between both DHA Gujranwala and DHA Multan, I would recommend DHA Multan and if you have the investment for more than 1 plot then 1 each in both will be a good option. However, a detailed analysis is only possible after balloting is done and it is not very far.
Last but not least on this list is Gwadar, it is like a wild card that may play out at any time. The risks are great but so are the rewards, if you are one of those who like to double or triple or quadruple their money then you may look at it.
The next couple of years may offer you a very good time to purchase at very good prices if the prices don’t rise earlier, they eventually will in next 2 to 3 years.
The possibilities are endless, but I will suggest only investing in Sangar and New Town and strictly refrain from investing in other societies. We have all seen how that has played out in the last investment cycle.
The next cycle may happen anywhere between 2021 to 2024 and you may see a 100 to 150% gain at least. This does make it very hard to predict the exact ROI so I will not go into that detail.
Finally, it all comes down to your personal preferences as one size does not fit all.
However, in general, I feel that since plots and files have increased by almost 100% approx in the last year or so, construction projects are the best option available offering the highest returns in the next couple of years. The priority of investment would be as under:
- Construction Projects
- DHA Multan
- DHA Gujranwala
I wish you all the best in your future investments and keep us in your prayers and if you need our help feel free to call us anytime.
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Captain (Retd) Shahnawaz Yaqub Bhatti
Investment Consultant and CEO at Imlaak
Mob : +92 333 1616160 ( Whatsapp)