Why Real Estate is the Best Invest amid High Inflation and Uncertainty?
There is no doubt that inflation is on the mind of every Pakistani, and we all know Pakistan is undergoing a huge economic crisis and uncertainty is at its peak. The living costs have risen significantly and it has become hard to make ends meet, let alone make savings and invest for the future. All the investment options including the stock market, cryptocurrency, and automobile industry have suffered badly from inflation.
Looking at history, real estate has always been a resort for people in times of inflation and uncertain economic conditions. Whether it is a plot, house, or commercial property, many investors have turned towards real estate during these times as these are far more stable assets in terms of profits, taxes, and reliability as compared to other investments. The demand for housing and residential and commercial real estate increases consistently under any conditions. Although the real estate sector also undergoes the effects of inflation and economic instability, they are quite less as compared to other investment options such as stocks, gold, cryptocurrency, and more.
The following investment options tend to suffer the most from inflation:
- The prices of gold, silver, oil and other finished products rise significantly during times of inflation and uncertainty.
- National Bonds are also badly affected by uneven economic conditions and usually, local governments stop issuing bonds.
- Stocks are also an investment considered beneficial by investors, but during crises, stocks can also get a hard hit and you may suffer from loss.
Real Estate, on the other hand, is traditionally a haven for investors but it should also be approached with care during high inflation.
Real estate can act as a shield against rising inflation, because, not only, the value of the property increases over time but it also generates stable passive income through renting and leasing.
Real Estate during Inflation and Economic Uncertainty
Real Estate is a popular choice for investors during tough times; it offers a useful and more famous store of value during inflation as it conserves your investment and gives you possible earning resources such as rental passive income. It is not true that real estate does not suffer during collapsing economy, it does suffer, but very less than other alternatives as discussed above.
Real Estate: A Hedge against inflation
Generally, real estate is a hedge for different investors during times of inflation and uncertainty, and there are a few reasons behind it:
- First of all, if you are already a property owner, you will see a significant rise in the prices of real estate and you can sell it for a profit.
- Secondly, if you looking forward to buying real estate, you may find the option you were searching for at considerably lower prices.
- Lastly, rental values are likely to raise with an increase in property prices.
To put it simply, you can buy a property in times of inflation if you have cash sitting in the bank or vaults, as currency devalues with time. This way you will have a tangible asset for yourself that continues to grow in value and you can earn good profits by selling it in the future when things get better.
When to Buy Real Estate during Inflation?
As we said earlier, you can buy real estate at considerably low prices during times of inflation. But, it’s not child’s play; you should follow an investment strategy to make sure you purchase a property that can benefit you in the future. You should do thorough research before putting money into any property. You should search for the projects that are being offered at low rates as compared to the market. But make sure that the property you are buying is valuable or it is predicted to become valuable in the future, Another resort is that you buy a property and put it on rent, this way you will get a passive income. You can consult Manahil Estate to buy property at any time!
Selling Real Estate Assets during Inflation and Uncertainty
Selling property during inflation can be difficult as people are searching for more affordable options and are not willing to pay higher amounts. It is better to wait if you are not getting the desired rates as the market is unstable during crises. People are generally very protective of their investments during inflation and worry whether the property they are buying is worth it or not. On the other hand, it is also a fact that property prices rise and you can get a good return on your investments.
To put it simply, you should sell the property if it is giving you expected returns, else wise, it is better to stop and wait for the right time and sell your assets.
Pros and Cons of Investing in Real Estate during Inflation
Following are the pros and cons of making real estate investments during inflation:
Pros
- It preserves the asset worth
- Higher rental values
- The value of the immovable property significantly increases
- Devaluating currency is merged into a valuable asset
Cons
- Decreased customer demand
- Instability in the real estate market
Best Housing Societies to Invest Amidst Inflation
Following are the top picks for you to invest in during these uncertain times:
- Faisal Town Phase 2
- MPCHS Multi Gardens Phase 2
- Bahria Town Karachi 2
- Rudn Enclave
- Capital Orchards Islamabad
- Capital Smart City
- Park View City
Bottom Line
Where inflation is increasing day by day and affecting businesses and investments, real estate can act as a haven for investors. Still, if you are interested in investing in real estate, the current inflationary environment could present a good opportunity to invest in a lucrative long-term real estate asset. Make sure you do your homework and consult a reliable real estate agency such as Manahil Estate before making any decisions!
