Best Investments in Pakistan
For many years due to Social, Political and Economical turbulence, Pakistan may have been considered an unstable country to potential investors. However, despite the slow economic growth and highest inflation rates recorded since 2013, it seems the governance of PTI Party, led by Imran Khan seems to have revived investor interest and Pakistan has become considerably more appealing to local and foreign investors alike. Here we will take a brief look at the investments in Pakistan.
In a country where buying costs are low, it is no wonder that investment in Real Estate is the number one choice of investment in Pakistan. Total transaction costs around 8% whereby the buyer pays 4% capital value tax, 2% stamp duty, 1% registration fee, and 1% property transfer tax (globalpropertyguide.com).
Purchasing land for investment is probably considered one of the most conventional, solid, and reliable investments of all. A contributing factor may be that Pakistan is a developing country with tremendous potential and growth opportunities varying from residential, commercial, agricultural, and raw land plots. Added to this is the surge in the construction and development industry, due to which the benefits of land investment seem to outweigh the risks.
An important factor to bear in mind, however, is that land investment may not be suitable for the impetuous investor, or someone looking to make a quick profit and turn around. Land investment requires patience and yields more long-term benefits.
In recent years in account of the current government initiatives, there has been a rise in Overseas Pakistanis investing more so in property in Pakistan. However, due to the lack of laws and regulations governing the real estate sector the country does have a rather cynical reputation for real estate investment. Nonetheless, provided that the investment is made with a reputable and registered source the statistics do seem to suggest that investing in this sector can pay off.
Long-term or short-term, land or property, one thing is for sure that unlike stocks and shares, investment in real estate cannot disappear, it’s a perceptible investment that can overcome inflation over time and guarantee lucrative investment returns.
Pakistan’s Stock Exchange has grown steadily over the past few years and is generally considered as one of the best markets to invest in in the world. The recent recession due to Covid 19 has diminished this growth, however, investing in any stock market, will always involve a little gamble.
For those who may lack the confidence to invest in this sector either due to limited knowledge or for other reasons, The Pak Exchange can offer a list of Banks, Brokers, and other liaisons that can help plan and make investments on an investor’s behalf with potentially lucrative returns.
Another popular investment in Pakistan is the purchase of Bonds, which may generally be considered a safer and more advantageous investment than stocks. Bondholders in Pakistan by and large have secure legal protection and an array of bonds to suit a variety of investors. The guaranteed maturity ensures that interest or principal is repaid and due to the liquidity nature of bonds, the issuers are often able to sell a huge amount without affecting the price too much.
There are also risks involved in investing in bonds, for example, fixed-rate bonds will fluctuate according to interest rate and in the case of bankruptcy, investors can lose most or even all of their money. There is also the reinvestment risk, which means the investors may be compelled to find a new and much less profitable place for investment, and then there is also the risk posed by the Exchange rate, which can vary between two currencies.
Investing in Banks is probably one of the most economical and safest investments in Pakistan. Many banks offer a variety of investment opportunities with differing interest rates and accounts with long term earning ability. Although the returns may not be as lucrative as other investment opportunities the advantages are that because bank accounts are not affected by market fluctuations the interest rate is fixed, giving the investor clarity of calculations and time scale for returns.
It is especially important to be aware of the terms and conditions of your chosen bank and account type, as banks can sometimes charge fees that may surpass the interest rate on your account (service, ATM) which may ultimately squander the investment. Therefore, it is important to read and check the fine prints to be fully aware of the terms and conditions before any investment is made.
Gold is regarded as one of the safest investments and there are not many investment sectors that can contend with it and its ability to safeguard against socio-economical disturbances and its potential to recuperate its value through these descents.
Should you choose to buy actual gold such as coins, bullions or jewellery, this in some ways is similar to investing in Real Estate in that you have physical ownership of your investment. Or on the other hand investment in gold can be made through stocks and funds.
Choosing how to invest in the many forms of gold is dependant on investor inclination and personal capacity for risk, nonetheless regardless of its exceptional history of holding its value and as a great diversifying investment, most expert’s advice not to assign more than 10% of an overall investment portfolio to it.