What is the Motive behind Real Estate Investment?

There are usually two kinds of customers in real estate industry. The first kind is those people who are just interested to buy a house or piece of land to construct their homes and the other kind is looking for investment opportunity in real estate to make profits after its liquidation.

Both types of customers are different in nature and have different psyche and requirements. But both provide fuel to the real estate industry. Apparently the second kind (investors) usually outnumbers the first kind (the end users).

Another interesting aspect in these two kinds of real estate buyers is that the end users also sometimes want to become investors and would not mind if they happen to gain something on it. After all nobody minds extra cash coming in the way. But the problem starts when the end user is not fully equipped with the investment skill set and abilities. Just like engineer cannot do the job of a doctor and vice versa, similarly if someone is not in habit of checking the real estate price trends in the newspapers, not knowing much about the real estate fluctuations and doesn’t know the reasons behind them, and doesn’t have much grasp over the real estate industry about which areas are going strong and which are showing dips; with such weak knowledge, how one can become an overnight investor in real estate? That is one of the primary reasons that common people happen to lose most of their savings.

Real estate investment is not a fad or play to get into in haste. It requires enough deliberation, thought and analysis. Those who are not willing to undergo such exercise or homework, they are advised to stay away from the investment angle, and should only focus what they want to buy to construct their future home.

The motive behind buying any real estate product is very important. In case of investing, the clarity of motive will help to further filter and shortlist the real estate properties which may have the potential to appreciate in short term , medium term or long term .

So it is important to assess that whether your motive behind investment is to construct a house for your family or to invest and then to liquidate for future profits. These two motives have different workings and analysis to be made before putting in the money. Many a time, it is seen and showed that people usually explore the real estate market somewhat unsure about the primary motive.  The more it is clear the better the analysis will be done.

Investment of any kind, whether in stocks, currency or real estate requires good amount of deliberation and home work. Few areas are good for medium term investments and few may be good for long term investments. So it will all depend on the primary motive and the needs.

All Lahore areas - the north Lahore including the cant and Defence have its own price ranges and the south Lahore including the Raiwind Road have its own price ranges. And the middle areas of Lahore between the north & south including the Gulberg, Garden Town, Johar Town , Canal bank and so many more areas command their own price ranges. However, the age old conventional wisdom of real estate still holds true today i.e. Location, Location & Location.

An investment analysis for real estate will primarily depend on the real estate motives and requirements as well as many other fixed & dynamic variable factors in order to develop a confident feasibility. Certainly such kind of approach and analysis is only required when an individual wants to commit sizable amount of money for investment in real estate sector.

In conclusion, it is always advised to stick to conventional wisdom, ‘better to be safe than sorry’, especially when it is your hard earned money.

By: Z. Ahmad

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