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Investors Advice discussions and advice. Participate in ongoing dicussions and get invaluable Investors Advice advice from people who are experts in their industries or start a new Investors Advice discussion.
( 719 posts )

[38 Replies]
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.

    139 days ago In Investors Advice
    Post Answer
    Abdul Qayyum
    (1893 posts)
    With high regard to the learned members, most of the property investors do not buy upon high intellectualized sort of analysis as this being only avenue to raise Halal money by expats and majority of residents, for the last so many decades in Pakistan.
    Certificates are only advised from the patriotism point of view, if one does not mind to take sood on investment.
    If done in Hala ways, even small margins can do wonders as there is huge " Barkah" in this way.
    Certificate and deposits sure help states and I am in no way qualified to tell Halal and Haram but most of the scholars say what I am saying.
    When you buy a piece of land, even if other non-Islamic defined options available, you give Commission to dealer who is raising his family. You buy stamp paper to a man who is raising his family, notary public, gets circulated, state and other families get their earnings.
    The above is only for a plot but if you go in construction business, your are literally raising 10s of families (carpenter, electrician, time fixer, Mason, many more plus, if done on honest footing, it is highly likely that you make yourself a wealth person only in 2 or 3 projects done: Well " wealthy person" description is relative term but you can sure be a well off person.
    Investments and gambling are distinct from each other. Solid property with value additions does not go in vain , it might see ups and down but eventually it will sure give profit much more than sood's bound profits.
    Having said that, only in Pakistan the above is true as almost 3 quarters of a century and if govt starts regulating just now it would take a long time before other options dominate real estate investments.
    I am not denying that other options are non-existent in Pakistan but still property is dominating profit wise, if bought in a well performing society.
    Friends: If you are involved in a Halal business where others are getting their bread, you are living on their prayers not on your own abilities.
    I have seen 10s of super intelligent , smart , wicked people who lost in thinking that others are fools and they themselves are intelligent to mint money from others!

      135 days ago 

      (1084 posts)
      The bottom line(s)

      1. Govt. Perspective: Dire Need of USDs

      With IMF's stringent conditions and the terms of Saudi/UAE loan. That loan/borrowed money, primarily is not for utilization but for reflection into reserve accounts like an individual maintains his bank statement for immigration/visa purposes by borrowing someones's money, not touchable but somehow reflects ownership in documents. Based on the available options, one of the most feasible is to borrow money from overseas residents as that money comes at some premium but no strict conditions. Magnitude of it can be small but each $ matters under current circumstances.

      2. Citizen's Perspective: Only Overseas and ones holing USDs

      (A) Interest Factors: Both YES and NO group. Traditionally, the overwhelming majority (as per historical trends) Interest factor is a pure NO go.

      (B) Available Options: There are already many not only offered by the Govt. but also by many national banks and other financial institutes offering more or less the same.

      (C) What's New: Nothing much except for re-branding as earlier Euro Bonds were floated on a same idea (10-year bonds at 6.875 %). Now appeal is to overseas to come in at this critical time, specifically with their USDs.

      3. Alternative(s): Crowdfunding Sources

      To avoid (A) Infrastructure Development Loans from foreign institutes, and (B) Interest Factor, Govt. can initiate crow-funding of such projects. We see frequent news on loan being obtained from whatever foreign institute to develop such Motorway, Port, Dam etc. and loan will be repaid by leasing the constructed infrastructure for some good number of years (prime example are Toll Plazas/Posts on Motorways that collect all that goes at loan payments + profits of the lending institute). In this scenario, the infrastructure projects can be funded by citizen's money and profit (more or less whatever) generated from economic zones, operational aspects etc. given back to people. Its 'by the people for the people' model. One invests in his own country to develop it and earn from it. At the moment one of the headache for Govts. is to borrow from one and repay to others for their investments in state projects.

      No interest and no a rocket science! as this model has been started to be successful at many countries or at city level. It requires vision by the Govt. transparency and awareness among people.

      ** The Rise of Public-Sector Crowdfunding

      ** How Communities Are Using Crowdfunding to Finance Public Projects

      4. Real Estate Factor: The Stock Market Analogy

      At the very basic level, Govt. can auction state land (e.g. Commercial, Agricultural, etc.) even starting at a small level, based on shared pricing. For example, a hypothetical scenario that some commercial land/Markaz in some underdeveloped X sector costing Y money can be split up into multiple shares (y1, y2, ...yn) and floated in market to be purchased by any one who can. With money raised, and development started as soon as the worth goes up the share holder start to get their profit in a legal, regulated and taxable way. The real-estate shares can change hand as they do in the stock market. Private projects can also follow the same path that is much better regulated and shares reflect value of an immovable asset that is on ground, will not vanish and even in case of crash will retain at-least the base value. Instead of auctioning to individuals, auctioned to masses requires more administrative efforts but better circulation of money, and much less manipulation by individuals that drive the market after being sole owners or JVs.

      Revenue generation in today's age need more efforts and creativity. The minds who created this mess of Pakistani economy cant get it out of the same mess. Change of attitude, people and thought process is a must. World has moved long beyond Certificates or Real Estate for revenue generation from inner sources and own citizens

      5. Real Estate Industry - The Long Neglected Domain

      Why Banks and Financial institutes (holding Cash Assets) are better regulated while Real Estate is not? Because policy makers are short sighted with only relying on Cash aspects and also because real estate business, by large has only been considered as a dealers' dirty game while banking (despite corrupt practices and financial scams) is considered as white color business. Each PM/Finance Minister would love to hold meeting with Bankers but rarely with Real Estate developers so one who is neglected doesn't get any fair say in the policies either.

      For the majority, who has the investment power and magnitude does have concerns over the interest factor. I am sure, when better options with less margins but no interest factor becomes available by state, there can be massive investment. Just an example, Meezan Bank somehow better marketed Auto Financing (Car Ijarah) as Shariah Compliant Financing and in no time became the Market Leader when the opportunity was arise!

      * Personal views, subject to personal interpretation and writing. Corrections and amendments (based on facts) are most welcome!!
        135 days ago 

        (243 posts)
        @Imtiaz, a quick solution may be that overseas be given tax exemption completely if they invest in real estate in USD. Halal/Haram issue resolved and govt gets the foreign currency.
          135 days ago 

          (1084 posts)
          AlRanaTrue... and solutions can be multiple to the same problem.

          However real estate is one possible dimension of revenue generation. It's need to be correlated with infrastructure development etc. Otherwise, if all overseas money routed towards tax free real estate we will have situations (supply-demand) where far-flung half cooked real estate projects will be super expensive with broken infrastructure.

          Infrastructure Development can impact masses and in Mid-East and Americas lots of progress and development done at super fast pace due to available infrastructure and Pakistan after lagging behind for half a century is taking the same path under CPEC but with heavy loans... and too little too late sort stuff.
            135 days ago 

            Abdul salam
            (2 posts)
            Im new to this forum. One aspect perhaps not many has pointed out is the taxation on income from bonds. You need to also check the local taxation laws of the country you are living in.

            Also wait to know if it is shariah compliant or not.

            If there are no taxes and the bonds are shariah compliant, then go for bonds. Here are my reasons

            a) Dollar rate will increase anyway, we can expect dollar rate to increase around 8 to 12 % as we are basically import based country. There is huge gap btw our imports and exports. So we will always need more and more dollars.

            b) It seems that government is looking to add more taxes to the property market. Which will make it slump further. If gov is able to do even 1/4 or the million home promise, the demand for homes/land will be reduced quite alot.

            Rest, Allah is all knowing. We are only making guesses based on our flawed intelligence.
              134 days ago 

              Tahir Mehmoo..
              (1 post)
              Gents, can anyone comment whether the Pakistan Banao Certificate scheme is shariah compliant or not? with reasons/explanation.
                100 days ago 

                Furqan ul Re..
                (7 posts)
                Real estate industry in smart way.

                The way you play smart you will find it profitable.

                as a businessman always go for a risk
                  99 days ago 

                  (1084 posts)
                  As long as publicly involved info, Pakistan banao certificates offer interest that is not Sharia Compliant, unless I may be missing some more implicit info or Fatwa, that doesn't sound to be the case.

                  Some reasonable analysis on Real Estate growth in and beyond 2019.

                    99 days ago 

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