Million dollar question now
With current real estate circumstances, which one is better to invest for short term & long term.
1. Pakistan banao certificate (return in usd)
2. Real estate.
The certificates (offered to overseas) have different implications that primarliy include the following (simplified view):
- Invest in the USD staring with min 5k USD for 3 years with an interest/premium of 6.25% to 5 years for 6.75% per annum. At the end should you opt to get back PKR instead of USD there is extra 1% premuim.
- Beside anything else, a chance and time for the overseas to give back to the country when it needs the most. Return guaranteed by the state.
- The return is better then previous certificates of 2017-2018, not massive difference but still better.
- Return on real estate can be much higher but the fact is right now real estate market is quite slow and returns are unpredictable or stagnant. Is that an indication of months/years of slow down (silent accumulation of ROI) before the market start to take off again... No one knows! One of the most important factor is the Holding Power/Duration that can be short for investors but longer for end buyers or overseas.
- For a predictable and steady flow of income the certificate as of now can be treated as another investment portfolio to keep things going when one end is suffering or is slow.
- Need more explicit clarification on the likely scenario: what are the implications if one wants to pull out of the certificates before the minimum prescribed duration of 3 years?
- I am not sure about the technicalities but if the return i.e., termed as 'interets' even in the certificates description is the interest/riba as per Sharia/Islamic interpretation. If that is the case than it can be a big NO for so many people who care about that. Govt. Can have fatwas as per their likings but if the 'interest/riba' factor has been explicitly clarified that will make it easier to decide.
To conclude, on theory it depends how long and short terms are defined as for certificates min duration is 3 years thats beyond the short term definition. It thould be taken as an alternative and diversification of investment portfolio. In past, real estate had slowed down but when it got recovered it compensated for the duration of stagnation period. In short, the certificates sounds quite reasonable under current circumstances, somehow time to give back and help the country when it needs the most but a must required explicit clarification on interest/riba (free or not) must be presented.
As a personal view, last factor is the major determinantal.
Dear Sheikh_007,
At the moment Pakistan banao certificates is better option for overseas.
"Invest in the USD staring with min 5k USD for 3 years with an interest/premium of 6.25% to 5 years for 6.75% per annum. At the end should you opt to get back PKR instead of USD there is extra 1% premuim"
Many thanks to Imtiaz sab for reply in detail
Regards
Nadeem sb, i think local national saving schemes are more profitable in comparison since our policy rate has already touched 10.25 pc, so for people earninh in Pak Rupees, i think national saving schemes are much better if they are looking for this type of arrangement.
The primary distinction between National Savings and Foreign Certificates/Bonds are:
- The later is exclusive to overseas and currency must be USD, in comparison to the National.
- Importantly it's a USD to USD borrow-return policy with an option to opt for USD borrow by Govt. & PKR return with extra 1% premimum (compared with USD to USD). In National Savings PKR can take big hits of devalued but in the later it's the USD retrun whatever the appreciated or depreciated value at the time of maturity.
Not entirely an innovative idea but somehow a bit better attempt then the previous with Max focus on accumulating the USD to somehow seek overseas help to ease the balance of payments and account deficit.
It's like crowd-sourced debt financing with govt paying less to it's citizens and slightly easy to borrow as compared to debt financing from international funds. In this case, the success mainly depends on the magnitude of deposit and number of certificates issued!
Technically speaking, PKR got just a bit strengthened againts the USD as the Saudi and Emirati borrowed amount has started to inflow and ease the balance for now (SBP resrves got +23% approx) . Although that's not enough but still increases the reserves in the intl. markets & accounts. When that money will be returned (original + 3.2 to 2.8 % interest respectively) at that time the USDs accumulated through certificates (whatever they may be) can come handy to save the PKR at the time of repayments generated from overseas with a time frame of return spanning from 3 to 5 yrs.
I would recommend option 2… And option 1 for those over 60… Are these certificates halal from religion point of view?
It depend from person to person. I am investing in real state because it is 100% halal.
Secondly, I can sell plot anytime and en cashing this bond will be through so much bureaucratic process.
My suggestion, if you have money, invest in real state instead of certificates. Offcourse, if you are Expat PTI supporter, it is the time for you to come forward and buy atleast 200,000$ to 500,000$ certificates.
Khattaka wroora, I believe the sentence " if you are expat PTI supporter" would have been real great if it were like
"If you are the lover of your mother land"......
In last one year real estate market is stable or rise little but our currency become devalued.
I think it good option for low budget overseas investor and for local who working in Pak go to real estate.
Pakistan is start rising and it will rise further in shaa Allah so support Pakistan not PTI.
Regards
Never put all of your eggs in one basket is a well known phrase and I would agree with Imtiaz sahib that you should always have a diversified investment portfolio that includes property, savings certificates etc.
This government has poor credibility and their bonds will not take off as did in previous govt's time.
Property market will get a slight positive surge as Malik Riaz's case is settled. However, any major growth is less likely given tough laws on black money and complete ban on non-filers.
Therefore from a pure investment standpoint, both the options are not very attractive.
National Savings has revised its rates to 11.57%. But the unstable rupee is a major risk, which has lost 30% in few months and likely to lose another 10-15% this year. Therefore this is also a risky proposition.
Hence, the only good reason to send your money is... PATRIOTISM.
Another issue with these PBCs is that they can only be purchased by sending funds from foreign bank accounts. For all of those who have sent all their money on the call of the PM to support Pakistan are now can not buy those unless they remit them back to their foreign accounts and purchase the PBCs from there. Now the transfer of money from the Pakistani banks to the Foreign banks would be quite a hassle.
@Isloo1
I think you don't know the latest updates:
In order to avoid arrest by NAB, Malik Riaz already ran away from Pakistan in his personal jet after SC's implementation bench rejected settlement offer of Bahria Town and ordered government to take back all illegally occupied lands from Bahria.
Only way MR will be able to come back if he becomes witness against Zardari and provide all the evidences.
Bahria Town lost it's daddy for now. Prices of plots have plummeted already. No buyer in markets. Offers coming for plots are 2-5 million below the peak prices. Genuine people are crying because they can't even sale anymore on such low offers.
Only place going up is B-17 because of fake-market orchestration. They have been printing fake-news about Margalla avenue again and 100% of their dealer network is controlled. Therefore, 100% of market rates are controlled.
There is no free market mechanism in place at B-17 anymore. Every dealer is being controlled and coached by Multi to quote higher prices.
Laanat
@JDM: Malik Riaz is just a front man, no harm shall come to him or to his business.
I cannot understand when people say " real property" is down?
We bought a plot in Usman block less than a year before at 35 lacs all inclusive and sold last month at 36 lacs. Is it a sign of being down.
We are making a house in E sector on a 10 Marla. Plot was bought around 55 and now at the same place, similar plot not possible to get below 60 lacs!
This house having open basement, a dealer told me that upon completion it might get 20 plus lacs of profit. Is it a sign of being down while MR being in deep waters?
Just started prerequisites of our 6 story plaza in overseas 5 and ground floor has already been booked whereas still no digging activity at sight...just doing paper work!
May be when people say it is down, they mean it cannot be doubled in one week or overnight?
In DHA valley go check the prices of allotted plots....a jump of 6 lacs in one go!
Yes, it is down on files, just paper, no real property and it is mistake of buyers who gambled their money!
In Pindi in muhallala abadees, residential is expensive than even Bahria town and still appreciating. 7-8 lacs per Marla is common price in all Pindi.
You will see MR will never leave his BT and get it settled at whatever cost. Once it happens, BT will again rise. Yes it can be said it is in correction but going down of real property !@@
@Aftab Khattak
If you really think, investing in real estate is also 100% haram at this point.
When you know millions of Pakistanis will not have a roof over their head because people like you and me wants to buy extra plots and hold the market hostage, raise land prices ten-fold and eventually make it out of reach for rest of the nation.
During HAZRAT UMAR R.A. Tenure, one tajir wanted to invest in horses and sell them for profit making. Hazrat Umar told him that he cannot do this because if he does it then rest of people in his state will not have any feed left for their horses. Prices of feed will skyrocket and therefore, his investment in horses was declared illegal.
Likewise, considering that Pakistanis cities already have real estate more expensive even when compared to a modern city like Istanbul.
Even modern state like USA has laws where the minute you buy 2nd property in your name, your taxes skyrocket and this is how they discourage people from holding extra properties, making them available for those who can't even afford one property.
"If you really think, investing in real estate is also 100% haram at this point.
When you know millions of Pakistanis will not have a roof over their head because people like you and me wants to buy extra plots and hold"
-- If done with illegal money and evading tax than YES, otherwise NO.
-- By that logic, saving in your account while million of fellow humans don't even have money for single bread also gets Haram.
-- Basics of economy don't work like that. A person having multiple plots (with legal money) keeps the money within the state, pays the taxes, constructs home to play his parts in keeping many industries and supply chain in employment.
-- Multiple plots can be use to construct homes that can be rented to provide roof to those who cannot afford to own their own home.
** No Religion, Society, Morality stops you from earning more and more in the legal way. Yes there are mechanisms of wealth distribution like Tax or Zakat or Charity etc. that is responsibility of the State to get from the privileged the due share and distribute it to the needy while ensuring the protection for all.
-- US or for that sake EU real estate is heavily influenced by mortgaging model that encourages and facilitates the people to buy supported by banks. The Tax is not on buying the multiple to discourage but buying more represents more wealth and that extra tax is on the magnitude of wealth whether that is used to buy real estate, vehicle or any other excessive asset.
For the record, Hazrat Usman's Wealth was in accumulation within a Single Person but that Wealth was used to help the needy and as per the directives of Shariah.
The distinction of Halal and Haram is quite clear (except when one's life and honor is in danger), lets leave that up to the people to whatever path they prefer for them, rather than finding Haram and Halal when its not there.
** As a personal view, yes certificates-driven profits and revenue (under discussion in this thread) does involve interest/riba.
As usual most stupid comment award goes to "Imtiaz"
So, you must be more smarter than Hazrat Umar R.A.?
Comparing land supply which is limited vs money supply which can be unlimited as state bank can print it as per requirements of the market. Man you are dumb as a brick and still you utter non-sense 24/7.
What a dishonest soul! You are not even worth my time so this is all you get.
Facepalm!!!