How the Property Boom Busted our Economy?

[ranaji]

I hope we see the same...... sooner rather than later.

انشا اللہ

 

[Lathi-Charge]

Yes. The investment going into property is basically Capital going into a slumber.
It does not create value/wealth. Conversely, if investment is made into an industry, then the money creates wealth, jobs and value.

And yes, money laundering and/or whitewashing the dirty money is also a factor which played an important part in the boom of this industry in Pakistan.

spot on. with virtually non existent capital gain tax coupled with corrupt practices and miss management, real estate becomes the most attractive preposition for investors in Pak which means the capital is just parked in real estate with highest guaranteed returns.

 

[Lathi-Charge]

If investment in real estate creates no real value, why is there so much real estate market in the world? Is it all a fraud then?

in western economies, the market is well regulated. when the economies are booming, banks lending become a lot more cheaper which makes it an attractive investment option for investors who want to diversify their investment portfolios. recently with massive hikes in interest rates, the markets have been tumbling down with another recession predicted.

 

[Dr Adam]

نیازی کی حکومت سے پہلے فیصل آباد کی ٹیکسٹائل انڈسٹری ملیں بیچ کر سارا پیسہ رئیل اسٹیٹ میں لگا رہے تھے، لیکن پھر دو سال کے بعد وہاں لوگوں نے ٹیکسٹائل انڈسٹری میں پانچ ارب ڈالر کی انویسٹمنٹ کی

اور اب پھر وہ انڈسٹری تباہی کی طرف جارہی ہے، حافظ اور حاجی نے اپنی کٹھ پتلیوں کے ذریعے ریورس گئیر لگا دیا

مملکت فریب و جھوٹ و منافقت الباکستان​

 

[Competent]

Pakistan army used to grab billions from overseas Pakistanis hard earnings in Pakistan real estate scams. Now overseas Pakistanis are just sending money for bread and butter to their families back home. This is hurting the elite establishment so badly !

 

[Competent]

In India people invest in performing stocks as their first preference of investment.
Here people invest in property.
Gov has to make it a viable choice for the masses to invest in shares and ensure proper regulation of listed companies, their audits and performance.
People have invested more than 10Billion USD in Bahria alone which could have made our manufacturing and export sector grow by 9-10% had there been proper regulation and incentives and ease of setting and running publicly traded manufacturing and exporting companies.

Unless there is a clean public govt in Pakistan their should not be a single penny in any investments especially from overseas. This will be one way to put things in the right way!

 

[Competent]

If investment in real estate creates no real value, why is there so much real estate market in the world? Is it all a fraud then?

What is the value in country’s economy by real estate unless it’s from foreign investments. Name any developed country that has more value in their real estate than their natural resources, exports and innovation?
Infact all developed countries regulate their real estate market so that it does not disrupt people housing demands making it less appealing for investing in real estate.

 

[Sohail Shuja]

If investment in real estate creates no real value, why is there so much real estate market in the world? Is it all a fraud then?

There is also a great market for things like gambling and people do make money from hoarding as well. But do these things create something of value?

Likewise, housing is a human need. So, building a home to live in is something of value, no doubt. But when you invest your savings into real estate just for the sake of selling it on a higher price later, when the market prices rise, then your money is basically sitting idle there, just like a hoarder's stock. You just play with the demand and supply situation.

On the other hand, if your money is invested in an industry, say .... like Steel industry, then your money is basically working to extract iron ore, transporting it to the refining furnaces, then making steel out of it and then that steel feeds different industries and you make products out of it. Now here, your money is creating value in the economy. It is moving the industry which is making products, which can either be exported or can be an import substitute and your money is also creating jobs.

Whereas, what goes in a plot, stays in the plot. Only 5 to 10% of it goes into construction industry as development charges. Rest is all a game like hoarding and the money sits idle in the economy. The capital gain, which is basically a price increase with time, is similar to the profit a hoarder earns by selling his goods when the demand gets higher -- Not adding any value and not creating any jobs, except only once, i.e. while construction is done (and even construction may only be up to 40 to 50% of the total cost of the plot).

 

[Sohail Shuja]

If investment in real estate creates no real value, why is there so much real estate market in the world? Is it all a fraud then?

What Causes a Real Estate Bubble?

Home price appreciation is not guaranteed. Can you withstand the volatility in this market? Learn more about housing bubbles and what makes them pop.

www.investopedia.com

Watch the video on the page.