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Sheikh_007
( 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.

    112 days ago In Investors Advice
    Post Answer
    Imtiaz
    (926 posts)
    Best Reply
    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.
      112 days ago 

      Nadeem Ahmed
      (4309 posts)
      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
        112 days ago 

        Falcon
        (4443 posts)
        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.
          112 days ago 

          Imtiaz
          (926 posts)
          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.

            112 days ago 

            Ilyas
            (230 posts)
            I would recommend option 2....... And option 1 for those over 60...... Are these certificates halal from religion point of view?
              112 days ago 

              Aftab Khatta..
              (83 posts)
              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.
                112 days ago 

                Ilyas
                (230 posts)
                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"......
                  112 days ago 

                  Nadeem Ahmed
                  (4309 posts)
                  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
                    112 days ago 

                    Rauf Khan
                    (50 posts)
                    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.
                      112 days ago 

                      Isloo1
                      (359 posts)
                      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.
                        112 days ago 

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