The city of Karachi, which is the country’s biggest and most productive economic hub, has always been a hotspot of real estate development. Its urban landscape has grown exponentially over the past few decades, turning it into a megalopolis. After the real estate investment shift from plots to highrises in recent years, Karachi has witnessed fast-paced growth and the property market of the city now offers a plethora of investment options, catering to a wide range of investors.
However, property investment in a city as big as Karachi can be a tricky business, especially if someone is unaware of the local real estate trends. People commonly choose between plots and houses, depending on their personal preferences. But, needless to say, there are definitely some other prominent factors related to the price rise and demand-and-supply equation that every potential investor should carefully consider while going ahead with their investment decision.
With the help of an in-depth analysis of the market behavior in the past few years on the basis of the data collected by our team, we’ll now explain to you why you should invest in a house instead of a plot, especially if you are someone who is seeking an opportunity with quicker investment returns.
So, let’s get the ball rolling!
RISING DEMAND FOR HOUSES IN KARACHI EVIDENTLY OVERSHADOWS THE DEMAND FOR PLOTS
According to the search trends recorded between 2018 and 2020, the demand for ready-made houses in Karachi has soared dramatically, rising up by a staggering 123%. Among all the available types of houses in the city, the search volumes for 120 sq yd residential units have increased the most. They have gone up by 35%, which is higher than the 17% and 13% increase for 250 and 500 sq yd houses, respectively.
On the other hand, a nominal increase of 14% has been observed in the demand for 120 sq yd plots in Karachi. The fading popularity of vacant land in the city is mainly due to the fact that, in most cases, investing in a plot comes with many inevitable risks and problems such as zoning regulations as well as different types of litigation issues. Plus, investing in a piece of land may not offer you investment returns as quickly as in the case of buying an already built house.
BUYING READY-MADE HOUSES MAY TRANSLATE INTO FASTER INVESTMENT RETURNS
Purchasing a plot is often classified as a medium-term or a long-term investment, which requires a lot of time and effort before it starts yielding any profits. Buying a house, on the other hand, can be taken as a short-term and highly-profitable investment option, which often translates into immediate investment returns when converted into a rental property.
As per Karachi’s rental market practices, if you invest in a 125 sq yd house, you’ll get to enjoy an annual rental yield of 4.5% on average. This is one of the most prominent benefits of buying a ready-built house in the city, which suits the short-term investors in every sense. Also, the importance of rental yield in real estate should never be underestimated because it has the potential to significantly fuel up your property investment growth down the road.
Investor’s Tip: It is to bear in mind that the value and condition of the built structures may start to deteriorate with time and you may need to get it maintained from time to time. But, these expenses would not bother you if your owned property is fetching you a good rental income, which usually increases with time, keeping in view Karachi’s rental market trends.
These were some of the main reasons why you should invest in a house instead of a plot in Karachi and even other cities of Pakistan. We hope the information we have provided you in this article will help you to come up with an informed real estate investment decision.