In Pakistan, investors often face a daunting task when deciding where to allocate their resources. While banking deposits and other investment avenues are available, real estate stands out as a superior option. This article examines the reasons why real estate investment outperforms banking deposits and other investment options in Pakistan.
Higher Returns on Investment
Real estate investments in Pakistan offer significantly higher returns compared to banking deposits. According to data from the Pakistan Bureau of Statistics, the average annual return on real estate investments in Pakistan ranges between 15% and 20%. In contrast, banking deposits typically offer interest rates ranging from 5% to 8% per annum.
Long-Term Appreciation
Real estate values in Pakistan have consistently appreciated over the long term, providing investors with a reliable source of wealth creation. A report by the Pakistan Real Estate Investment Trust (PREIT)
Rental Income
Investing in real estate also generates a steady stream of rental income, which can help offset mortgage payments and other expenses. According to data from Zameen.com, a leading real estate portal in Pakistan, rental yields in major cities range from 4% to 6% per
annum.
Tax Benefits
Real estate investments in Pakistan come with attractive tax benefits, including exemptions on capital gains tax and deductions on mortgage interest payments. The Federal Board of Revenue (FBR) allows investors to claim a deduction of up to PKR 2 million (approximately USD 12,000) on mortgage interest payments.
Diversification Benefits
Real estate offers diversification benefits, as property prices are not directly correlated with stock market fluctuations or other investment options. A report by the National Bureau of Statistics highlights that the correlation coefficient between real estate prices and stock market returns in Pakistan is approximately 0.2, indicating a low level of correlation.
Conclusion
In conclusion, real estate investment is a superior option for investors in Pakistan, offering higher returns, long-term appreciation, rental income, tax benefits, and diversification opportunities. While banking deposits and other investment options are available, real estate stands out as a stable and lucrative investment avenue.
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Data extracted in January 2025