Why Real Estate is the Best Investment amid Inflation and Uncertainty?
During periods of calamity, human beings tend to restrict spending, limit investments and decide to save, so we go to the banks to deposit as much money as possible in our savings accounts, which is the most conservative action, but unfortunately, the return we obtain are lower than the inflation in our country.
Pakistan’s inflation rate increased to 26.6% in October of 2022 from 23.2% in the previous month. Pakistan’s Inflation Rate is projected to trend around 15.00 percent in 2023. It is the highest in the past two decades and is affecting every business in the country.
Therefore, many investors look for safe investments which have a return on investment that are not volatile, such as investments in the stock market.
Contents
What is Inflation?
Inflation is the increase in the cost of living, the sustained and general increase in the value of the products and services that we use daily. This increase can occur for a certain time and results in the devaluation of money where it occurs. When inflation increases, purchasing power decreases because, with the same money that you used to buy more, you buy much less. That is why when this happens; it is convenient to have the money invested where it can’t lose value.
Take Investment Decisions Wisely
The key to profit in business is not based on making risky bets but on choosing wisely, gathering all the information possible, analyzing the situation, and having perfect synchronization with the market. Information on any subject is vital to making sound decisions and in the financial market, it is simply everything. For the same reason, in the field of real estate, you have to get adequate information to select the best option that can give you high returns and thus do great business.
Buy Property to Combat Inflation
Investing in real estate in times of crisis, although in the eyes of some it may seem risky, will always be a good option because beyond the general idea of solidity that owning a property provides, land does not lose value over time, therefore, On the contrary, it ensures that the initially invested capital is maintained and that it does not depreciate.
Buying a new property in down times, you can secure a good price today that may be much higher tomorrow. In addition, you will have an asset that has not gone through the wear and tear of time.
Reasons to Invest in Real Estate Amid Inflation and Uncertainty
Surely one of the questions that arise is where should we invest during the crisis. The reason is very simple if at the moment your bank account is not growing day by day, it means that you are losing money due to the general and sustained increase in prices, that is, inflation. To prevent you from losing money, you should invest in real estate during crises.
The real estate sector has always been one of the favorite options for investors since it is less sensitive to market fluctuations. Unlike stocks and other businesses, a real estate investment has a more or less stable value, and, for the most part, its price increases over time.
To this, we must add that investing in real estate in times of crisis to resell or rent it out is an even better idea, because, even in difficult times, we need a roof to sleep on. This means that there will always be tenants, especially if the investment is made in quality properties, that are well-located and that meet the needs of the clients. This ensures a regular and stable inflow of money.
Here are reasons why investing in real estate in times of inflation is an excellent idea.
Real Estate Assets Increase in Value
In times of crisis, real estate is a better business. It is very likely that in the years following the recovery from the crisis, real estate will increase in value. So, you will get an interesting capital gain when you decide to resell the property you acquired. In general, investing in real estate gives you security and protection because it appreciates. It is unlikely that the value of the property will deteriorate; instead, it will remain at its current value or increase in value.
A Haven for Your Money
The real estate sector has a definite interest for investors since it does not correlate with the financial markets, which makes it a haven in times of crisis. This investment is less subject to inflation, allowing you to establish long-term investment strategies. Also, investing in real estate is a way to protect your money from inflation, since properties do not lose their value.
Gain Tangible Assets that you have Control Over
Real estate is a tangible asset that you have control over and cannot lose in the event of a crisis, unlike money invested in stocks, businesses, and other types of investments. Real estate is a durable asset, which allows you to protect your investment over several decades. In addition, as we mentioned, a property can generate income on a regular and stable basis. In the long term, investing in real estate is a great way to protect your wealth and guarantee your return on investment.
The Economy Will Recover
It is a fact of life that nothing is eternal, which means that if you invest in a property and when the crisis is over, the economy will take its natural course, resulting in you being able to obtain greater profits through selling at higher rates. In addition to the previous point, as the economy improves, the value of your property increases due to capital gains, which is why you must buy during the crisis.
Safe Investments with Low Risk
If you have doubts about which is better, a house, plots or apartments? Do not worry, investments in real estate have a low risk compared to other financial markets because in the real estate market there is greater control of risks by having the flexibility to be rented or sold at any time.
Protect Capital from Devaluing
Generally, the increases in the value of real estate have been higher than the inflation rate, which is why when investing in real estate even in times of inflation, you protect your capital in a good way with tangible assets. You must take the right time to know how much money you want to allocate to the investment and if a used property or a new one attracts your attention.
Research Before Investing
Sometimes over-analysis only leads to paralysis, it’s good to have information, but not over-analyze it. Give yourself a prudent time to investigate the area in which you want to buy, visit it, and understand what its daily dynamics are. Also, take into account the different market analyses and the data that may be useful to you, but try not to think about it so much, often filling up with information only generates more confusion.
Buy and Hold
Most people tend to get desperate when they see certain market movements and decide to immediately sell abruptly in the face of possible dangers. Expert investors recommend patience as the main value when investing, and more, when it comes to real estate; knowing how to wait and stand firm in scenarios of drastic changes is essential to achieve success.
Conclusion
Investing in real estate is one of the best ways to take care of your capital in changing and challenging economic scenarios. Given the growing inflation, we share some points about the importance of investing in real estate as a defense against this phenomenon.
Would you like to make an investment in real estate with high profitability and low risk? Do not hesitate to take a look at our available properties. For more information, do not hesitate to contact us, we’d love to hear from you.
Contact Us
- Head Office Spring North Commercial, Bahria Town Phase 7, Rawalpindi
- Phone: 051-8895265 / 0345-5222253
- Email: marketing@manahilestate.com
