Why do young people need to invest in real estate as early as possible?

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Young people in the twenty-first century have some apprehensions about purchasing a home. Young individuals in today’s environment do not necessarily have a lot of financial security. Parental leave, independence, and starting a family are all typical desires, and many young people still see the advantages of buying rather than renting when it comes to housing. Graana.com tells you about the significant benefits of buying a home at the start of your adult life.

Real estate can be a tremendous investment if you take the time to learn about the process and the best strategies to obtain high returns. Many young people wanting to invest in real estate keep waiting for the right time and never gather the courage to do so. Those who do not make an effort to learn about rental property investing are missing out on a fantastic opportunity.

Graana.com brings you a list of significant benefits of investing in real estate at the start of your adult life.

 

Early bird catches the worm

Many incredibly successful people recognised the potential of real estate investing at a young age and are now reaping the benefits. You can begin to develop good saving habits at an early age. This will be an invaluable experience, particularly if you have higher-budget long-term objectives in mind.

Purchasing is a sound financial decision through which you learn financial responsibility along with making money. You’ll be well ahead of your colleagues, who are likely unaware of the great potential of the real estate market. Suppose you still live at home and aren’t ready to leave. In that case, an investment property can provide you with additional income while only requiring you to pay low living expenses, depending on your family status.

 

Education and experience

Most importantly, investing in real estate as a young person provides you with an education. Someone else in the real estate industry will always have more experience. Starting young means you’ll have access to a wide range of knowledgeable property investors who can provide valuable advice.

This will prevent you from making the same mistakes they did when purchasing property, and you will be able to learn faster by following their steps to success. If you make any mistakes when you’re young, you’ll have plenty of time to learn from them.

 

Good habits

Along with developing a habit of saving, you will learn other skills too. Real estate investing teaches you to think in new ways. You’ll learn to think about things differently and realise that money isn’t always the most important consideration when investing. To wait for the most incredible deals, you’ll need problem-solving skills as well as tenacity and determination. Suitable investments sometimes necessitate patience as well.

 

Motivation

You are more liberated during your youth and early adulthood, and your passionate desire to buy a property can be a powerful ally in seeing and analysing your possibilities.

This more fervent and intense demand may be the key to obtaining a dream home at a reasonable price. You don’t have to find a house that will be your first home if you invest in a property when you are still young. You can take advantage of a property with a favourable present market value while focusing on the property’s long-term financial benefits. You may save for your ideal home while earning cash from regular rental payments.

You’ll have more flexibility in what you invest in because you won’t be bound by more restrictions like when you’re old. 

 

More time to reach maximum potential

When you are young, investing in real estate provides you with a chance to benefit from prime real estate while having your long-term goals in mind. Start early and scope out properties in ideal areas you’d like to live in for the future.

Also, you will have more time to give your property to reach its maximum profitable margin and pay off a great deal.

 

Special offers  for young people

Another significant benefit of investing in real estate when you are young is having unique access to offers focused solely on younger age groups.

There are a lot of projects like Imarat Residences that are designed to cater the needs of young people, and you can benefit from them.

 

Source of income

A property takes up less time than a full-time job. You may make money while learning, which is, of course, the dream of any student.

The cost of living is rising to unaffordable levels for many young individuals just starting in their jobs.

Although purchasing a home requires a larger initial investment, the monthly mortgage payments are typically smaller than the monthly income. The property remains the property of the individual making the payments at the end of the day. You are investing in your future, and monthly mortgage repayment is more profitable than paying a landlord rent for the rest of your life.

 

Investing in real estate while you’re young can provide you with long-term benefits. Do your research, be persistent, and look around you. This will be a positive and rewarding journey.

 




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BS Real Estate Management: UCP students visit Graana.com’s Lahore office

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LAHORE: In accordance with the effort of providing the real estate sector with academic backing, the students of BS Real Estate Management (REM), visited Graana.com’s Lahore office.

The students were briefed by the higher management authority of Graana.com regarding the various aspects of the real estate sector and how academics can put the real estate sector on a professional trajectory.

According to the details, the students were impressed by the working ethics, professionalism and the use of technology in the real estate sector by Graana.com.

On occasion, Director Graana.com Mr. Farhan Javed, had a brief discussion with the student. The director believed that for the progression of the real estate sector, the BS programme will equip the students with the necessary skills for inducing professionalism in the sector. Meanwhile, Regional Head Centre Mr. Nasir was also present.

The experienced professionals of Graana will give the students of the UCP project-based learning throughout their professional degree in BS-Real Estate Management.

The objective of the four-year formal education degree is to specialise the attendees in all phases of the real estate cycle – from conceptualising, initiating, and analysing to negotiating, financing, and closing the transaction and property sales and marketing.

 

For news and blogs, visit Graana.com.




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The impact of Financial Action Task Force (FATF) on the Real Estate sector of Pakistan

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Introduction

Recently, the Financial Action Task Force (FATF) announced its decision to keep Pakistan on its grey list but ruled out the possibility of blacklisting the country as it has met most of the conditions under the recommendation plan. In light of this development, the Federal Board of Revenue (FBR) has intensified inspections against Designated Non-Financial Businesses and Professions (DNFBPs). The FBR has also proposed strict penalties for real estate agents unwilling to comply with the anti-money laundering and counter-terror financing regime. The top revenue collecting authority plans to impose heavy fines on all real estate agents, advisors, and brokers who are reluctant to register themselves with the board of Designated Non-Financial Businesses and Professions (DNFBPs), which is an important requirement put forward by the FATF to get Pakistan off the grey list.

 

Why is the real estate sector central in curbing money laundering and terror financing?

According to estimates, Pakistan’s real estate sector is worth USD 600-700 billion USD. If planned development accelerates in the country, real estate can become a multi-trillion-dollar sector. Although real estate is a national asset, it can be used for different financial crimes like money laundering, the whitewashing of money created through illegal sources, and the concealment of ill-gotten financial gains. Pakistan’s greylisting by the Financial Action Task Force (FATF) in 2018 set into motion several financial regulations by the government that involved streamlining major sectors of the economy. The FATF gave regular and updated recommendations to curb money laundering and counter-terror financing in the country. The recommendation plan has targeted several areas of the economy including the real estate sector, which lacks regulatory and financial transparency.

Pakistan’s real estate sector is largely unregulated and unplanned. Lack of rules, regulations, valuations, and planning has multiplied all sorts of administrative, socio-economic, and legal problems for the economy in general and the real estate sector in particular. Several loopholes in the regulation of the sector have resulted in its exploitation, making it a harbour of ill-gotten wealth. Real estate transactions and other processes in the sector are largely conducted off the record, which leads to under-invoicing of real estate assets and property. These practices disrupt proper documentation of real estate assets and boost non-transparent reporting. A lack of certified real estate agents, brokers and dealers has perpetuated this issue creating the potential for money laundering and terror financing activities.

 

FATF and its recommendations for the Real Estate Sector of Pakistan:

Under the recent review of Pakistan’s efforts towards curbing money laundering and terror financing, the FATF announced that the country needs to demonstrate Designated Non-Financial Businesses and Professions, their monitoring for terrorist financing, and supervision commensurate with the risks. Under the Anti-Money Laundering Act, the FBR is responsible for ensuring that DNFBPs, which include real estate agents, dealers in precious metals and stones, and FBR-supervised accountants comply with anti-money laundering and counter financing of terrorism obligations. Currently, in Pakistan, out of the 500,000 property dealers and real estate investors/agents, only 22,000 are registered with DNFBPs. Thousands of unregistered real estate investors and property dealers continue to trade unregistered open files, affidavits, and certificates. Under this new regulation, registered real estate and property developers need to check the buyers and sellers’ names on the proscribed persons’ list by the United Nations. If the name of a potential buyer or seller is on the list, the developer or builder has to immediately report it to the concerned authorities.

 

What is the way forward for the real estate sector of Pakistan?

Although the current government is currently obliged to implement the recommendations given by the FATF regarding the real estate sector, it needs a holistic and comprehensive plan to effectively regulate the sector in the long term. The real estate sector suffers largely from a lack of regulations and oversight from any proper authority. The implementation of a Real Estate Regulatory Authority (RERA) is a need of the hour. An overview of international best practices shows that majority of the countries with a mature and profitable real estate sector is governed by a competent regulatory authority. For instance, the real estate sector of Dubai has been able to attract millions of dollars’ worth of investment due to its streamlined and highly regulated real estate sector. The establishment of a real estate regulatory authority will increase transparency exponentially in every area of the real estate sector, from securing investments to the verification of property developers across the country.

 




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Optimising Real Estate Efforts through Social Media

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In a similar way, one of the attributes of success that can be linked to the various accomplishments of real estate is the use of social media. The revolution in electronics gave rise to handheld devices, which brought transformation in communication patterns. With the passage of time, the transformation in technology opened the gateways of social media, which have increased connectivity, unlike anything. Behind the success of e-commerce, there is a significant role of social media which has provided numerous opportunities to the new entrepreneurs which have used to their benefit.

Graana.com highlights how social media can be utilised to the optimum to increase outreach and explore new business opportunities in the real estate sector. Graana.com -Pakistan’s first online real estate marketplace has been exploring new channels on social media, which have helped transform the real estate sector and provide the most authentic services across Pakistan.

In the following ways, can social media prove beneficial for boosting the real estate business

 

Work on Content

The first and foremost thing to do while using social media to increase the real estate business is by developing content that is in line with the company’s objectives and catches the people’s attention. While surfing on social media, people spend most of their time for leisure purposes; therefore, content should be appropriate at first sight to gain people’s attention. It is pertinent to mention that the results will not be immediate; instead, an enterprise will have to raise awareness about its brand before attaining the maximum heights. Therefore, one should try that every post on social media should count.

 

Keeping Content and Services Uniform

A million users exhaust social media apps every day. The content that is being circulated and used by various pages has varying dimensions and offers different services. In all this resonance, for making your real estate brand stand out among the other competitors, one should keep its services and content uniform. The case may vary in some instances; however, this formula should be adopted in most cases. If it suits the brands’ objective, a person can engage the same fraternity members in order to make the most out of a situation. Engaging with the community on social media can help you out in understanding the thoughts of people.

 

Know your Audience

While using social media as a tool for increasing real estate outreach, a person should know its audience. If the target audience is not interested in availing of the real estate service, all of the efforts will go in vain. Therefore, one should have a comprehensive idea of reaching its audience so that maximum benefits can be reaped while posting on social media. Clients are never easy to attract; with proper social media strategy in place and know-how of the client’s need, social media can be one of the best platforms for enhancing your business activities.

 

Sharing Blog Post

The social media platform is not only about selling; there are diverse ways in the service-specific fraternity can be attracted, and one of the ways it can be done is by posting blogs relevant to the services. People love reading, and the blog posts can help put a strong case that a service provider has a keen eye on the latest happening and has strong expertise in the field. An added advantage that this strategy offers is that potential clients and people from diverse fields and backgrounds can be attracted to your posts, which can help create a lasting impact.

 

Pay for Ads

This is among the last steps of the whole procedure in which a person should pay for its ads once the real estate brand has been established. Various social media platforms offer the unique features of posting ads, becoming a major tool for attracting clients and increasing outreach. This will not only increase the credibility of the brand but will also establish its authenticity. Furthermore, this will also help the audience to identify the brand quickly. Managing financial resources is a key to generating successful ad campaigns. 

 




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Optimising Real Estate Efforts through Social Media

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In a similar way, one of the attributes of success that can be linked to the various accomplishments of real estate is the use of social media. The revolution in electronics gave rise to handheld devices, which brought transformation in communication patterns. With the passage of time, the transformation in technology opened the gateways of social media, which have increased connectivity, unlike anything. Behind the success of e-commerce, there is a significant role of social media which has provided numerous opportunities to the new entrepreneurs which have used to their benefit.

Graana.com highlights how social media can be utilised to the optimum to increase outreach and explore new business opportunities in the real estate sector. Graana.com -Pakistan’s first online real estate marketplace has been exploring new channels on social media, which have helped transform the real estate sector and provide the most authentic services across Pakistan.

In the following ways, can social media prove beneficial for boosting the real estate business

 

Work on Content

The first and foremost thing to do while using social media to increase the real estate business is by developing content that is in line with the company’s objectives and catches the people’s attention. While surfing on social media, people spend most of their time for leisure purposes; therefore, content should be appropriate at first sight to gain people’s attention. It is pertinent to mention that the results will not be immediate; instead, an enterprise will have to raise awareness about its brand before attaining the maximum heights. Therefore, one should try that every post on social media should count.

 

Keeping Content and Services Uniform

A million users exhaust social media apps every day. The content that is being circulated and used by various pages has varying dimensions and offers different services. In all this resonance, for making your real estate brand stand out among the other competitors, one should keep its services and content uniform. The case may vary in some instances; however, this formula should be adopted in most cases. If it suits the brands’ objective, a person can engage the same fraternity members in order to make the most out of a situation. Engaging with the community on social media can help you out in understanding the thoughts of people.

 

Know your Audience

While using social media as a tool for increasing real estate outreach, a person should know its audience. If the target audience is not interested in availing of the real estate service, all of the efforts will go in vain. Therefore, one should have a comprehensive idea of reaching its audience so that maximum benefits can be reaped while posting on social media. Clients are never easy to attract; with proper social media strategy in place and know-how of the client’s need, social media can be one of the best platforms for enhancing your business activities.

 

Sharing Blog Post

The social media platform is not only about selling; there are diverse ways in the service-specific fraternity can be attracted, and one of the ways it can be done is by posting blogs relevant to the services. People love reading, and the blog posts can help put a strong case that a service provider has a keen eye on the latest happening and has strong expertise in the field. An added advantage that this strategy offers is that potential clients and people from diverse fields and backgrounds can be attracted to your posts, which can help create a lasting impact.

 

Pay for Ads

This is among the last steps of the whole procedure in which a person should pay for its ads once the real estate brand has been established. Various social media platforms offer the unique features of posting ads, becoming a major tool for attracting clients and increasing outreach. This will not only increase the credibility of the brand but will also establish its authenticity. Furthermore, this will also help the audience to identify the brand quickly. Managing financial resources is a key to generating successful ad campaigns. 

 




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Real Estate Sector and Smart Water Management

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It may seem that water is abundant to cater to our needs however, this perception can be overturned by the mere fact that our water resources are depleting like any other. Unfortunately, Pakistan is among those countries where the dark clouds of water scarcity loom and according to the various statistics by 2040 the country will hit absolute scarcity by 2040. Real estate and water are both linked together in multiple ways, be it the provision of water in the households or be it the water used for land irrigation the real estate sector has major stakes in the availability of water.

Graana.com through this blog brings to the light how water can be best managed and conserved in order to meet the upcoming challenges. Almost every country is encountering a conundrum where the growing population, water scarcity and increasing demand for housing are creating unprecedented challenges for the authorities. By adopting smart water management techniques Pakistan can avoid water scarcity in the forthcoming time.

Concept of Smart Water Management

As evident from the name, Smart Water Management is a system assisted by technology in order to manage the supply of water in the cities. This system can become an efficient tool of managing water and promoting the agenda of sustainable development as it reduces the operational cost while considering the supply and demand of water. Smart management is all about collecting real-time data and then communicating it to the managers and system operators.

In developing countries, this concept is gaining popularity as it is helpful in reducing the transaction cost which otherwise puts a burden on the financial budgets of the municipalities. This technology can provide incentives to the private sector to employ the latest technology which can prove useful in strengthening the supply of water in the localities.

Smart Cities and Water Management

Sustainable development has become a major talk of the town. In the discourse of smart cities, smart water management occupies a dominant position. By employing technology in water management, ad-hoc decision making can be avoided in view of the real-time data. In order to pursue the smart water management system a central authority can be created which can collect data from various organisations for smart water management. The European Union (EU) under its UrbanWater project has developed a web-based urban water management system for effective urban water management. Through the assimilation of estimates based on weather predictions and surface water reserves, customers will be able to obtain the right information to effect change in consumption patterns in urban areas.

Smart Metering

As per the statistics, the per capita consumption of water in Pakistan is 30ltr per capita per day. The variability in the supply of water depends on the variation in season, and the usage of individuals at every hour. For collecting real-time data smart meters can prove handy as they have the ability to collect information and transmit information in a prompt manner. Some examples of smart meters include flow meters, rain gauges and acoustic devices. Singapore has taken the lead in smart water management as it has established a Public Utility Board for Smart Water Grid System. In Punjab 86pc of the urban population is dependent on the water supply scheme, tap water and electric motor.

Reduction of Non-Revenue Water

One of the major problems that the water supply in rural and urban areas face alike is the non-revenue water (NRW). The term is used to describe a phenomenon where the water is lost before it reaches the homes in the form of leakages, lapses in metering, and illegal connections. This is the foremost challenge that is being encountered in urban management. This conundrum is specific to South Asian states where water conservation is given the least focus and most of the water is wasted before it even reaches the households. By adopting Smart Water Management (SWM), non-revenue water can be conserved and utilised.

Equity in Billing

Smart technologies to water management can bring a new transformation in the billing of water as a billing system based on equity can be introduced. Depending on the usage of water a consumer can be charged depending on his consumption rather than charging a consolidated amount which helps to negate the free riders who consume water more than any other consumer.

 

For news and blogs, visit Graana.com.




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Graana.com, UCP gear up for Pakistan’s First BS in Real Estate Management

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Setting a pragmatic benchmark in the real estate academia, Graana.com and the University of Central Punjab gear up to launch Pakistan’s First ever BS Real Estate Management.

Pakistan’s first multidisciplinary Bachelor’s in Real Estate Management course aims to build a pathway to develop a quality workforce and strategic leaders with successful careers to take on the challenges of the housing sector in Pakistan and come up with relevant solutions. 

In this regard, CEO Graana.com Mr. Shafiq Akbar, along with the senior management of UCP – including Dean Business school, Mr. Faisal Mustafa, hosted a webinar to discuss the importance of formal education in revolutionising the sector. 

“To promote this initiative, Graana.com promises jobs to the graduates of BS Real Estate Management from UCP,” announced CEO Graana.com Shafiq Akbar during the webinar.

The objective of the BS course is to specialise in all phases of the real estate cycle – from conceptualising, initiating, and analysing to negotiating, financing, and closing the transaction and property sales and marketing. It further guarantees to nurture the youth by instilling a comprehensive knowledge and developing practical Real Estate business skill set, promoting Real Estate Entrepreneurship and Employment.

 

About the Course

Over the course of the degree, the applicants will be trained to find extensive acceptance in the job market and open the doors to pursue their businesses bringing innovation in this sector. An amalgamation of both theory and practical studies, the one-of-a-kind degree provides a learning experience by closely examining technological, management and legal issues related to the real estate profession.

The wide-range degree is an amalgam of

  • Finance
  • Management theories – including programme management and general management
  • Economics
  • Law
  • Marketing
  • IT

 

The attendees will be subjected to analyse financial and real estate markets and gain a greater understanding of how financial institutions and property markets operate, enabling them to identify the existing loopholes in the real estate sector, further addressing it through an academic approach. 

 

Procedure to Apply

The courses offered in the programme include Introduction to Real Estate Business and Industry, Construction Engineering and Practices, prospects and challenges, project management, strategic property management law, asset management, evaluation, planning, etc. The admission fee for the course is Rs 25,000.

To register for the course, visitBS Real Estate Management

 

This is the second collaboration of Graana.com with the renowned academician, Pro-Rector Dr. Nassar Ikram, having previously served as Pro-Rector, National University of Sciences and Technology (NUST), to launch Pakistan’s first Real Estate Certification – Level 1

 




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Real Estate Advisors versus for Sales by Owners

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Introduction

A majority of those who sell real estate usually take up the services of a qualified real estate advisor. They are professionals who guide individuals through the required processes and help bring their homes in front of a large audience of potential buyers. Traditionally, a real estate advisor’s ability to get interested buyers cannot be compared to that of the property owner. Selling a property requires effective marketing of the estate through taking photographs, leading contract negotiations, networking, and building trust with buyers. There are also high chances of owners being defrauded due to their lack of knowledge of the real estate market and methodologies. Continue reading to understand the comparison between real estate advisors versus owners selling properties.

 

Real Estate Advisors versus Owners

Pakistan’s real estate market has only recently begun to formalise data collection through real estate advisors and brokers. For a long period of time, the real estate market of Pakistan has mainly remained informal, with many people often using real estate speculatively to make high profits. However, one can take numbers from established real estate markets to understand the relationship between a real estate advisor selling a property and an owner selling one. According to a report published by Zillow, 89% of all sellers sell-through and real estate agents. Moreover, 36% of sellers attempt to sell their properties on their own but eventually take the services of agents. Furthermore, only 11% of sellers sell their homes without a partnering agent.

Although every real estate market will differ in dynamics, the overall difference between the two approaches can be understood. A majority of those who wish to sell their property on their own do so because they believe that it will save time and money. As they would not have to give commission to the advisors, they will also benefit from a higher profit. Some individuals also believe that they know their property better than anyone, and therefore, they are best suited to sell it. Past negative experiences with real estate advisors also increase their distrust. Consequently, it is necessary to understand the risks and opportunities in selling a property through real estate advisors or selling it in a personal capacity.

 

Benefits of Selling with Real Estate Advisors

A real estate advisor who helps a seller sell his property is called a listing agent. They are responsible for helping the seller through the listing and closing of the final deal. There are several services which a property advisor can provide to their clients, such as providing clients with local housing market experience, marketing of the listing, handling negotiations, and easing of selling processes. A real estate advisor has access to multiple properties in an area and is also well aware of all the comparables in the surrounding areas. This can help calculate a reasonable value of the property. They are also mindful of the current market conditions and, therefore, strategize the best possible way to sell the property, earning the highest return on the sale. Furthermore, experienced real estate advisors are aware of all housing codes and can point out any red flags which may cause the value to go down. In doing so, they can also suggest the best possible improvements that will help achieve the maximum potential of the sale.

Real estate agents are also better in terms of the marketing of a property. As they are more aware of the market and how to entice potential buyers, they can offer recommendations to sellers in terms of staging their homes. They also hire professional photographers to take great listing photos and can help bring out the features buyers are looking for. Real estate agents also host open houses, physically showing home to potential buyers. This allows them to buffer the seller and all potential buyers by fielding calls, answering questions, and scheduling showings. A real estate advisor may also network with other real estate agents who prefer to buy from them to get a commission from the sale. Lastly, real estate agents ease the selling process. Selling a home involves a lot of paperwork, and professional advisors help their clients identify any legal loopholes or unusual requests. In a multiple offer situation, they will also advise their client on the best possible option.

 

Conclusion

Selling a property involves many tasks. Real estate advisors offer their services in each area for a streamlined process, from marketing the property on multiple listings, handling different offers, networking, negotiating, and filing paperwork for the final transaction. Most owners believe that they are better equipped to sell their property as they have the most information on it; however, they lack the expertise and knowledge of the market required for making a proper valuation while also being more vulnerable to scams by other professional property agents. Therefore, selling a property through real estate agents and advisors is the best course of action for people.

 




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Real Estate – Strengthening the Hospitality Sector | Graana.com Blog

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From the south to northern areas of Pakistan, the country is blessed with gigantic mountain ranges, iconic plains, and mystic shrines. These all are nonetheless an asset of Pakistan which contributes in a great manner to the economic development. The hospitality sector is one of the allied components of the tourist sector, if it goes unnoticed it can act as a missing puzzle. Most people have a very narrow view of the real estate sector, they often restrict the real estate sector only to the buy and sale of plots.

Graana.com, through this blog, takes a different path and establishes that the real estate and hospitality sector have an inextricable link. The hospitality sector can be one of the factors that can bring in the commercial real estate investment along with providing employment opportunities to the many. While traveling to the famous tourist destinations in the country, it can be observed that the hospitality sector has yet to be given a formal shape and there is great room for improvement.

The real estate and hospitality sectors are inextricably linked in the following manner

Why Hospitality Sector Matters

The concept of the hospitality sector has a very wide scope, and it is observed that the real estate and hospitality sector can not operate in isolation. To reap out maximum benefits both sectors correspond to each other and with the increasing inflow of tourists in the country, the mutual relation between the two sectors should be explored.  Moreover, Bringing the hospitality sector into the limelight which had remained out of mainstream sectors to create a skilled workforce equipped with modern techniques is the

Vacant Spaces and Services

Real estate is all about optimising the land value. A state, be it Pakistan or any other has ample area of vacant land which can be used for the purpose of maximizing the utility of land. It has been seen that many states lease their lands to gain maximum returns. Hence, the vacant lands which are the property of a state can be leased out to establish hotels, or start a business activity that can benefit foreign and domestic tourists. This strategy will add to the revenues of the government along with attracting Foreign Direct Investment (FDI) in the country. Across the globe, renowned hotel brands have adopted this business model and are creating ripples in the hospitality sector.

Invigoration of Allied Industries

In 2019, the number of tourists in the country increased by 12.19pc as compared to 2018, with increasing tourist influx, industries associated with the hospitality sector will also get a new vigor which will contribute to the GDP growth. This fact can be illustrated from a very basic example that the construction industry will be one of the beneficiaries if the hospitality sector acts as a precursor to stimulating the output of the industries. In this whole supply chain, the associated sectors particularly private businesses will benefit the most. In short, it can be said that the allied industries are the major stakeholders in the consort of the hospitality and real estate sector.

Replicating Airbnb Models

The Airbnb case studies are of particular interest to those who have kept a thorough eye on the real estate sector. The business model was started by two friends who had difficulty paying their rents. Replicating this model at the local level can prove fruitful for the residents who have free spaces in their homes which can be rented out. The use of technology can prove beneficial in this aspect as the residents can upload their listings on a particular application which can be explored by the tourists. This strategy will be a means for the local population to earn from the existing resources.

Strengthening SMEs

One of the major portions of Pakistan’s economy is dependent on the contribution of Small and Medium Enterprises and they pool in 30% of the total GDP. In the case of tourism, the mode of earnings for many locals of tourist destinations are dependent on the Small and Medium Enterprises simultaneously, they are also a medium of self-sustenance of many households. By remodeling the real estate in the major tourist destinations, the SMEs can become a major tool for revamping the tourism industry. Moreover, the hospitality sector will be given a new dimension.

 

For news and blogs, visit Graana.com.




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Impact of State Bank of Pakistan Regulations on the Real Estate Sector | Graana.com Blog

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Introduction

In countries where construction financing is a separate product, housing finance is not provided for under-construction projects. However, the State Bank of Pakistan (SBP) has developed guidelines to help mortgage providers provide housing finance for under-construction projects. The procedures mentioned by the SBP are extremely detailed and require many bureaucratic documents. This can have a negative impact on the adoption of the process as it will be costly and time-consuming. It can also be argued that some of the functions defined by the SBP fall in the ambit of a Real Estate Regulatory Authority (RERA). However, the guidelines also ensure that developers have all the necessary documentation and approvals before selling to anyone, thereby increasing transparency in the sector. Continue reading to understand the impacts of SBP regulations on the real estate sector of Pakistan.

 

State Bank of Pakistan as Regulator of Real Estate

The State Bank of Pakistan (SBP) plays a vital role in ensuring the financial sector’s stability. As a central bank, it has been entrusted with the responsibility to regulate Pakistan’s monetary and credit system under the State Bank of Pakistan Act 1956. As no aspect of any industry can act independently of the financial system, the real estate sector of Pakistan is also susceptible to policy shifts from financial institutions. Commercial banks have always remained reluctant to provide loans and mortgages based on allotment letters only. However, under the new SBP scheme, housing finance providers will give assurances to the purchaser that once the building has been developed according to the approved layout plan, the funds will be given to purchasing the unit, thereby allowing for financing of under-construction buildings, apartments, and homes. This will also limit the risk for financial institutions, as in the case where the developer does not complete the installation, the funds will not be discharged. The SBP has also laid out clear and extensive guidelines on multiple aspects of the process, such as checking necessary ownership documents and approvals by regulatory authorities. However, it has also stipulated that a No Objection Certificate (NOC) be obtained for every unit sold under the financed project. This is a peculiar detail that might cause many bureaucratic delays in the completion of the project.

Banks will also have to devise a selection criterion for project assessment and eligibility criteria for those developers who can apply to the program. The builder criteria may include the builder’s/developer’s financial soundness, track record, compliance background with legal and urban planning issues, and milestone completion on previous projects.  These builder’s/developer’s can be private or government entities. Furthermore, the banks will ensure a physical and legal inspection of all relevant documents such as title documents, NOCs, and approved site and layout plans. The selection criteria may also include access to schools, hospitals, transport, utilities, and marketability of the housing units. Once all verification has been done, the banks will sign a Master Financing Agreement (MFA) with the builder/developer. This agreement will include the construction plan, milestones, project completion time, and loan disbursement and repayment plan. The SBP has also stipulated that the mortgage provider for units under the project must be the same as the construction lender.

 

Possible Impacts of SBP Guidelines

The function of the central bank in any country is to strike the right balance between market structure and regulatory frameworks to ensure the functional efficiency of the economy. Over-regulation can suppress financial innovation, while an imperfect market structure can reduce the efficiency of the system and affect consumer interests. Regulations are introduced to change the behaviour of regulated institutions because unregulated market behaviour can lead to suboptimal outcomes.  A majority of commercial banks in Pakistan usually invest in government-backed securities as they offer high returns and large capital buffers. However, some of the conditions set by the SBP for approval of housing finance in under-construction projects indicate a foundation lack of confidence in commercial banks. It says that banks do not have the capacity and capability to assess the credit risk of construction projects. In contrast, a majority of these commercial banks have risk departments stacked with well-qualified risk professionals. Suppose the SBP pursues micro-management of housing loans on such a level. In that case, it is feared that commercial banks will prefer to invest in government-backed securities instead of economy-driving and consumer-serving products.

Furthermore, the builder and legal counsels should agree upon any agreeable structure for the security of purchase. In the case of defaulters, the builder usually has access to deposits made earlier and can use them to sell the unit at a discounted price later. Therefore, as long as the bank has completed due diligence, other approvals from authorities like NOCs should not be required for the sale of units. Moreover, dealing with delinquent purchases also falls under a real estate regulatory authority (RERA). Overall, the guidelines can bring a positive change in the real estate sector and increase the number of housing finance in Pakistan; however, the establishment of RERA in each province is vital for consumer welfare and bringing transparency to the real estate sector.

 

Conclusion

The State Bank of Pakistan (SBP) has initiated a new scheme that allows commercial banks to give housing finance for under-construction projects. However, the central bank has imposed several guidelines and processes for the approval of projects and developers. Tight guidelines and strict conditions can lead to a show of mistrust of commercial banks in their capacity for risk assessment. Furthermore, requirements like obtaining NOCs for each unit in a high rise are bound to increase bureaucratic delays in projects. Therefore, establishing a real estate regulatory authority is necessary for the real estate sector to release financial institutions from the burden of carrying out tasks of a real estate regulatory body.

 




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Renewable Energy Systems and Real Estate

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Introduction

According to a recent German Watch Report of the Long-Term Global Climate Risk Index 2020, Pakistan is the 8th most vulnerable country to the adverse impacts of climate change (The News, 2021). The energy demand is constantly increasing in Pakistan as the country develops its industry, agriculture, real estate, and transportation sector. However, the largest share of electricity generation is with the thermal sector, which uses LNG, coal, gas, furnace oil, and nuclear energy to produce electricity. Not only are these sources expensive and lead to a high cost of production, resulting in very high costs of electricity for the general and commercial consumer, but they also adversely impact the climate by contributing significantly to the emittance of greenhouse gases. Nevertheless, renewable energy sources like solar systems are widely implemented in Pakistan’s commercial and residential areas. These systems provide reliable and affordable energy to their users with low maintenance costs and multiple incentives in tax breaks and goodwill in society. Continue reading to understand how renewable energy systems are transforming the real estate sector.

 

Renewable Energy and Pakistan

Realising the importance and potential of renewable energy in Pakistan, the Federal Government has set a target of achieving 20 percent renewable energy capacity by 2025 and 30 percent by 2030 in the national grid (NEPRA, 2020). However, achieving this herculean task will not be easy if the approach is limited to power stations based in remote locations. The high cost of installing and maintaining transmission lines alone will offset any perceived benefits over time. Therefore, the most appropriate method of introducing renewable energy is to promote its usage in the residential and commercial real estate and agriculture sectors. The declining costs of solar photovoltaic cells coupled with effective and efficient installation systems have made solar energy the fastest growing sector of Pakistan. The State Bank of Pakistan (SBP) has also declared Renewable Energy the Sector of the Year for 2021-22 (Durrani, 2021). According to industry estimates, around 3500 MW of solar panels have been imported to Pakistan in the last ten years. Out of these, only 1000 MW have been installed in independent power generation plants, with the rest being deployed in the residential, commercial, and agriculture real estate sector.

 

Why Adopt Solar Energy Systems in Residential and Commercial Real Estate?

There are many advantages and upsides of installing renewable energy systems on residential and commercial real estate. Along with benefiting the environment in the form of clean energy generation without burning fossil fuels, it also benefits the country in the future sustainability of energy. The real estate sector has a massive demand for energy, increasingenergy demand with greater use and adoption of technologies in the construction and marketing area. Energy prices in Pakistan continue to increase at a fast pace. With increasing energy growing demand due to the economy’s expansion, future businesses also give an advantage to the self-sufficient estate in terms of its energy needs. Therefore, having solar systems installed on residential, commercial, and industrial units can significantly reduce energy costs for businesses and individuals while also helping increase the overall income generated by landlords of commercial properties.

Furthermore, a significant number of people have now gained awareness of climate-friendly strategies and opt for a greener lifestyle. They attach importance to living in homes and buildings that generate eco-friendly energy, while it also brings other benefits to them in the form of tax breaks and incentives from the government. Due to innovation in technology over time, the cost of installing a solar system has also been significantly reduced. There are now methods that are less invasive and keep intact the integrity of the structure. The use of special chemicals ensures that even after mounting solar brackets, the roofs remain waterproof and damage-free. Moreover, the climate of Pakistan presents a near-perfect picture for solar energy systems adoption. Summers usually last for several months, with roof-based panels also providing insulation from heat, thereby reducing energy requirements for air conditioning. Lastly, solar energy systems can improve a commercial and industrial estate’s net operating income and help extend lease terms.

 

Challenges in the Adoption of Renewable Energy Systems

There are serious challenges that impede the adoption of solar energy for residential and commercial consumers in Pakistan. As per the Alternate Energy Development Board (AEDB), a total of 16,639 applications for net metering of on-grid solar connections have been received by all distribution companies of Pakistan as of 31 July 2021. This only amounts to 314 MW of mid to large-sized residential and small to mid-sized commercial solar PV systems. A high initial cost can be one of the reasons for the slow adoption of the technology. However, the total number of loans under the State Bank of Pakistan’s financing scheme for renewable energy amounts to 423 since the launching of the scheme five years back. At the same time, the share of financing only stands at 2.5 percent of total on-grid installed systems. This shows the dismal picture of financing for solar systems in the country. Banks and financial institutions have remained skeptical of solar technology and local vendors. However, the market has taken significant leaps over the years, and more people are now aware of net-metering technology and rising imports of Solar PV panels. Another important reason for the slow adoption of solar is a lack of product understanding in the market and institutions. The government has no formal efforts to promote a deeper understanding of how solar systems can help the general masses in their energy costs and sustainability.

 

Conclusion

Pakistan continues to face the threat of climate change as it is among the top ten countries most affected by it. The energy sector is one of the largest emitters of greenhouse gases as a large share of the generation process is based on thermal energy and the burning of fossil fuels. As energy demand continues to grow in accordance with developments in the industry, agriculture, and real estate, the challenge of adopting sustainable energy sources for reliable and affordable energy becomes more highlighted. The Federal Government has set a target of achieving 20 percent renewable energy capacity by 2025 and 30 percent by 2030 in the national grid. The State Bank of Pakistan (SBP) has also declared Renewable Energy the Sector of the Year for 2021-22. It is hoped that by adopting prudent fiscal and awareness policies, the adoption of renewable energy in the real estate sector will increase significantly.

 




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Forex trading versus Real estate: Which is a better option?

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“In investing, what is comfortable is rarely profitable.” — Robert Arnott.

 

Investment is a real game-changer in one’s life. With profitable and wise investing decisions, one can achieve financial stability at a very high pace. There are many investment opportunities available in Pakistan. Each investment opportunity comes with its own set of pros and cons. Some of the most common investment opportunities in Pakistan include forex trading and real estate.

‘Forex trading versus Real estate’ is a topic that has been under discussion in the investment market for years now. Each mode of investment comes with its advantages and disadvantages. 

 

If you are a new investor about to make your first investment, you need to go through this blog. 

In this blog, we bring you a concise yet very informative list of things you need to know about ‘Forex trading versus Real estate’. To learn more about the comparison, keep reading.

 

Forex:

According to Investopedia:

The foreign exchange market is where currencies are traded. Currencies are essential because they enable the purchase of goods and services locally and internationally as well. International currencies are a widespread investment opportunity in Pakistan because they are needed to be exchanged to conduct foreign trade and business.

 

Things you need to know about the forex trading market:

“Money is just something you need in case you do not die tomorrow. Let this be a reminder for you not to obsess over profits and losses. In whatever you do, strive for enjoyment, focus, contentment, humility, openness… Paradoxically (and as an unintended consequence) your trading performance will improve significantly.”

 

Forex trading works differently than real estate. In forex trading, traders in the market invest in different international currencies through a broker or facilitator. Sometimes, people even invest in currencies without taking help from intermediaries. People usually prefer investing in international currencies that are strong and perform well in the global market.  For example, people prefer investing in dollars, euros and dinars because these currencies are solid and faceless fluctuation than other currencies.

Pros of investing in forex trading:

  • The forex market is an investment that has the highest form of liquidity. This means that if you have to exchange your investment, you do not have to wait longer for it. Take your currency to the nearest currency exchange centre and get the money as soon as possible.

So, if you are someone who wants to invest his hard-earned cash in something that has high liquidity, we suggest you go for forex. 

  • It is straightforward to enter into the forex market. You need to have basic knowledge of currencies and how they work, and you are good to go. Also, it is easy to take a break from forex trading.

 For example, if your target forex market is down, you can participate on the next trading day. This way, you will not have to invest in something that is not profitable for you at the moment. 

  • Forex trading comes with high availability. This means that as an investor, you will have access to the forex trading market 24/7. The trading starts every day in Australia and ends in New York. The major countries with big trading centres are Singapore, France, Hong Kong, United Kingdom, Australia, the USA, and Germany. This also means that forex trading comes with diversification, and one can continually expand his portfolio. 

 

Cons of investing in forex trading:

  • In terms of profits, forex trading comes with little earnings as compared to real estate. Also, the forex trading market fluctuates and depends on a lot of external factors such as economic conditions of the country.
  • Also, you need to keep a check on the currencies and their past and present trends. This is important to ensure that you eliminate the risks that go along with it. In short, forex trading comes with a lot of attention and focus. 

 

REAL ESTATE:

But land is land, and it’s safer than the stocks and bonds of Wall Street swindlers. – Eugene O’neill

 

Before the comparative analysis between real estate and forex trading, it is essential to understand the things you need to know about real estate.

 

Things you need to know about the real estate market:

As compared to the forex trading market, the real estate market functions differently. Unlike forex trading, everything in real estate is bigger. Hence, real estate requires more considerable capital for investment. 

Also, with enormous investment comes more significant risks and more uncertainty. But it should also be noted that real estate comes with many perks and benefits that are not usually enjoyed in forex trading. Real estate allows you to own a tangible asset. That tangible asset can be used in many ways as well. Also, real estate gives you greater returns and more security in the long term. 

 

Pros of investing in real estate:

Some of the significant advantages of real estate are mentioned below. 

  • Real estate is one of the few assets in the world whose value appreciates over time. The land is an asset whose demand is increasing by leaps and bounds due to the global population increase. Hence, real estate is always in demand, and real estate will also remain fruitful for investors. 
  • Real estate is one of the best sources to generate revenue. You can earn money in real estate through renting, house flipping, buying plots and commercial properties.
  • It is seen that real estate has seen more technological advances than forex trading. Today, real estate has been improved by leaps and bounds due to advancements in the science of IT. Today, investors can easily connect to buyers, renters, and even potential business partners through online portals and mobile applications.

 

Cons of investing in real estate:

  • Real estate comes with low liquidity. This means that if you want to sell your property for cash, you may require some time for it. 
  • It is a common misconception that real estate is the gateway to financial freedom. This concept is genuine, but investors need to keep in mind that economic freedom in real estate will come with some time. Real estate requires some time to appreciate. It takes time and lots of patience before you can earn from your investment.
  • If you have little capital in hand, real estate investment might be an issue for you. For example, real estate projects such as commercial properties and apartments need a good amount of money. Without enough capital, one cannot invest in real estate
  • Property management is a serious and complicated task for real estate investors. Unlike forex trading, people need proper management and maintenance for their real estate property in Pakistan.

 

So, these are some things you need to know before investing in real estate and forex trading. We hope this blog gives you a fair idea about both investment opportunities in Pakistan. Go through the list and secure your money by keeping in view these pointers. 

If you have any additional questions or suggestions, leave a comment in the comments section below, and we will get back to you as soon as possible.

Happy investing!

 




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