The real estate market of Pakistan has seen an uptick in the development of high-rise projects, both in the residential and commercial sectors. As people shift their preference from building homes in faraway areas to living in luxury apartments and high-rise buildings, the demand of such units has grown exponentially. Many prefer living closer to main city centres as it reduces travel cost, cost of living, and cost of access to better municipal services.
According to many experts, cities cannot continue their horizontal expansion without dire impacts on a country’s environment and ecosystems. Accommodating a greater number of people in the same amount of land is only possible through vertical development. It is the only option for Pakistan’s major cities, as the current rate of population growth and rural to urban migrations have forced people into living in squatter settlements.
Continue reading to understand why living in high rise residential projects can be a better option in the future?
Why Invest in High Rise Real Estate Projects
Investing in real estate is a tedious process and requires deep insights into market trends and housing prices. Since developments in urban infrastructure and employment opportunities in an area influence the price of land, it is considered a best practice that people invest in plots of land that have a favourable development outlook in the future. This way, they can buy plots of land at lower prices, with higher appreciations and returns later. However, as cities continue to urbanise at an ever-increasing rate, the availability of land in and around urban centres has become restricted and out of range for many middle-income class people. Therefore, many are forced to invest in housing societies and development projects established in the outskirts of the city or those located very near city boundaries, and it is important to consider how this will impact out in the future.
It generally means that main employment and commercial centres are located far away, and transportation and living costs are increased. Also, a less developed road network adds to the problem as it becomes increasingly difficult to commute during peak travelling hours. The provision of urban municipal services is also concentrated near urban centres, making the effective delivery of these services in farther areas problematic, cumbersome, and ineffective. Another major outcome of the rapid urbanisation taking place in Pakistan’s major cities is that third spaces like parks and recreation centres have become a rare sight. Most of these amenities have been converted into housing projects and commercial centres without any regulatory oversight. This means that residents do not have options to live a balanced and fulfilling life, with daily activity levels also dropping. Therefore, in an age of increasing awareness of these issues, it is better to invest in vertical development projects near main city centres which provide a modern and high standard of living in an inclusive manner.
The world has adopted the vertical development model where prime residential and commercial land, in the heart of major city centres, is being used to build high-rise buildings that can accommodate a larger number of people and businesses in the same plot of land. Vertical development can ensure that third places in a city can be safeguarded from land mafia and ensure that all city residents have an equal chance at living healthy and prosperous lives. Pakistan faces a housing shortage of 10 million housing units. This means that the existing rate of development cannot match the housing demand which is a product of rural to urban migrations and increasing population growth.
Not only can vertical development help solve the challenge, but it can also fulfil the ever-increasing demand in a limited amount of space. Therefore, it can be understood that the future of urban development lies in vertical development projects. Investing in these projects can be a lucrative option as they offer apartments at affordable rates. One can easily buy 2 apartments at the price of a single plot in high-grade societies. This allows the investor to secure a living space while also ensuring that rental income can be earned. The ever increasing demand for housing is a guarantee for low vacancy rates, even in developed projects; and even while single-family homes offer the comfort of living independently, modern high-rise apartments and commercial centres offer the smooth function of all urban amenities and greater connectivity with business and employment centres.
What to Consider Before Investing?
It is very strange that people conduct due diligence on every purchase decision they make, be it from cars to mobile phones, but they do not consider key important factors that are needed to make a secure real estate investment in high-rise vertical projects. There are many malpractices in the real estate sector such as false advertisement agencies that promote illegal development projects openly with lucrative investment returns. However, if a person ensures four important steps before making an investment, it is highly unlikely that the investor will land in a capital trap.
The model relies on measuring key metrics like ownership, approvals, demand, and delivery. Let’s explore what each of these terms refers to, and how they will help you in making a secure real estate investment.
Ownership
Before investing in any high-rise real estate project, one should always check the ownership of the plot of land. In many cases, people do not pay attention to this very important detail and find themselves in litigation cases in the longer run. Not only does this deter investors from making investments in the overall real estate sector, but it also harms those developers who are working on authentic and legal practices.
Pakistan has recently seen positive developments in this regard as the country’s PropTech sector is showcasing the use of multiple technologies. An online property verification service and an online land registry service has recently been launched by PropSure Digital Solutions to ensure the provision of timely and accurate data to local and overseas investors. Now it is easier than ever to verify the actual ownership details of any real estate project being offered to investors.
However, checking the ownership details is only the first step towards making a safe investment. All real estate projects need approvals from regulatory authorities before they can conduct any development on the ground.
Approvals
All real estate development projects in Pakistan are regulated by local regulatory authorities. For example, in Islamabad, the Capital Development Authority (CDA) is responsible for meting out regulations. From Layout Plans (LOPs) to No Objection Certificates (NOCs), there are more than 22 approvals that need to be obtained for a project. Although some of these approval documents take a lot of time to obtain, and most developers start their on-ground development well before the final approval arrives, it is best to invest in those projects that have already obtained these necessary documents. As there can be no guarantee of whether a developer will secure all the necessary approvals by the time the project is completed, it is important that one goes forward with only approved projects.
Demand
Another important yet subtle dimension to investing in real estate is to check the demand of a particular real estate project. If an area is not yet fully populated by residential homes and apartments, the demand for a commercial project will not develop. It is also important to check local development trends while determining demand for a specific project as local infrastructural developments often lead to shift in trends of housing and commercial activity.
A further level of research can be done by checking the master plans of city. Although very few cities are developed according to their originally designated master plans, it can help to give a wider picture of the planned developments in the area. This can help in determining future development projects and how that will impact the current project you are willing to invest in.
Delivery
Lastly, it is important to check the credibility of the developer you are investing with. A history of delivering real state projects on time and with high customer satisfaction is usually a good indicator of whether the developer will finish the project on time or not. Gauging customer satisfaction of the developer will also help develop insights into whether the developer is considerate towards his clients or not. This process can be easily done by checking the past projects of a developer and if their stipulated deadlines were met.
Previously, all these steps were a tedious process and very few investors conduct due diligence before making an investment. However, the real estate landscape has changed significantly and new investors are more tech-savvy than the older generations. They rely on and demand technological solutions to help them provide these services. Leading Pakistan’s real estate sector towards a digital revolution is a key requirement of the current sector.
Although investing in residential and commercial plots comes with a sense of security of ownership, several factors can impact the decision of future investors in the real estate market depending on factors like the standard of living, the cost of living, and access to reliable municipal services. Keeping into consideration the growing population trends and rural to urban migrations, the rising demand for housing and commercial activities near main city centres is leading the sector towards vertical development projects. Not only do they offer a higher standard of living in terms of lower energy and services costs, but they also are far more accessible to nearby employment opportunities. Modern high-rise apartments offer their residents all the amenities of luxury life in the heart of main city centres and allow for greater sustainable practices to be adopted on a wider scale.
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