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Is Residential Real Estate the Better Option or Commercial for Investing in Karachi?

14/12/2020

Is Residential Real Estate the Better Option or Commercial for Investing in Karachi?

Known as the city of lights, and being the largest city of Pakistan - Karachi is home to over 20 million people. Located on the eastern coast of the Arabian Sea, the metropolitan centre is an amalgamation of linguistic, ethnic and religious diversity, making it not just a unique cultural hub but Pakistan's primary industrial and financial centre that adds a significant chunk to the country's GDP.

Moreover, Karachi offers a complete and comfortable lifestyle with a well-developed infrastructure, top-notch healthcare facilities, advanced educational institutions and the most rewarding real estate projects. The bustling city has propelled farther onto the global economic stage with the launch of China-Pakistan Economic Corridor (CPEC). The city offers a number of investment opportunities both in commercial and residential sectors.

Is residential a better investment opportunity or commercial? Generally, there is no definite answer to this question because the answer depends upon a number of factors including the capital, investment goals, personal preferences and the return on the investment.

Where to invest?

This is the most critical factor determining whether you should go for commercial sector or residential - barring any limitations of capital. Let's make it a little bit simpler. Pakistan always has housing shortage so investing in residential sector should be a great option in the most populous city in the country. Well, the math is not so simple.

When it comes to investing in a residential property in Karachi, the investor will have to closely follow the dynamics. For instance, people want to live close to the centre and for that they are willing to forego larger properties at relatively affordable prices. That is why, Karachi is the only leading metropolitan that depicts a robust apartment culture.

If you have huge capital and want to invest in residential properties - you must consider investing in apartments near central city. On the contrary, if you have limited budget but still interested to park the investment in residential property, consider investing in off-plan bigger homes.

Properties near central city

Let's consider that you have enough capital and is all set to invest in a residential apartment in the city-centre. Consider the fact that the value of property will fall over time due to wear and tear and new projects being launched in the surroundings. Unlike residential properties, commercial properties are very well maintained mostly for their clients, which actually means that you will continue to gain from commercial investment.

Capital counts

If you are short on capital, you may not be able to catch an attractive commercial property for investment because commercial properties are always expensive than residential ones. However, if all other factors equate, real estate experts suggest investing in commercial properties can yield better returns than residential property.

Investment goals

Yes, investment goals play a major role in determining where you should invest in Karachi real estate. If you are a serious investor who can manage a huge chunk of time and resources, you must go for commercial investment. These properties will help you get higher returns, but also require higher levels of understanding business models and the dynamics of commercial real estate.

If the capital is not an issue and are also looking for more and sustained monthly income, the real estate experts suggest investing in commercial properties, as in most of the cases, these properties generate higher and stable income over a longer period of time. On the other hand, if you do not have any investment goal, its better to invest in residential properties as these holdings can help you fulfil your short or medium-term investments.

The bottom line of whether investing in commercial real estate sector in Karachi is better than investing in residential real estate or not entirely depends upon you. It entirely depends upon your budget, your investment goals and where you wish to invest.

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