Investing in Plot vs Apartment: Which is the Better Investment Option?
One of the best investment options in Pakistan is sometimes seen to be purchasing a plot or a piece of land in a good housing society. But have you ever thought about whether buying an apartment would be a better option for you? Investing in flats might be a smart move if you want to add a second source of income or diversify your financial portfolio.
If you are still confused about which is a better option for you, here is a detailed guide on the pros and cons of investing in an apartment vs a plot.
Pros of Investing in An Apartment
The overgrowing population and lack of available as well as affordable housing have forced developers in major cities to build high-rise buildings. Because of this, a number of vertical developments have popped up in almost every major city, giving potential purchasers and real estate investors a chance to make significant cash gains in the short to medium term.
If done properly, apartment purchasing may be a great investment. The benefits of apartment investing are given below to assist you in making the right decision:
A Great Source of Earning Passive Income
Rental homes can be a great and reliable source of side income. So, purchasing apartments could be the first step in creating a consistent revenue stream if you want to earn extra money from your property in Pakistan.
Due to the constant strong demand for residential units in well-kept apartment buildings, the owners can use their property to generate a positive cash flow that is typically larger than stock returns.
Additionally, giving away the apartment on rent offers a monthly income that you may either save or invest further, but investing in stocks does not guarantee a good return on investment.
If you are new to real estate investing, you may have heard that while plots tend to appreciate in value over time, homes and flats tend to depreciate with time. While in some circumstances this statement may be accurate, it is crucial to note that the value of flats in Pakistan also rises over time, particularly if they are situated in a recently developed region.
Typically, apartments outside of the city center are less expensive than those located in commercial areas. However, these vertical projects also see price increases as cities continue to grow and spread outward. In other words, if your flat is in an area that is in high demand, its value may skyrocket in the years to come. Just be sure to hold onto it and keep it well-maintained.
Higher Market Demand
Pakistan’s real estate sector is developing quickly. Large detached homes are being quickly replaced by big residential skyscrapers with numerous flats and first-rate amenities. Young purchasers have also started to focus on contemporary apartment complexes outside of the city as a result of houses being considerably more expensive over the previous few years.
The fact that more families are opting to rent now than ever before is another reason why investing in apartments is likely to yield better returns than most other assets. Additionally, apartments have become very popular among millennials due to their relative affordability and security compared to traditional homes.
Cons of Investing in An Apartment
Although purchasing apartments might be a profitable financial choice, this kind of property may have a few disadvantages. Here are some of the most significant disadvantages of purchasing flats because we are dedicated to giving you a complete view.
Apartment purchases are not exactly inexpensive. In reality, buying one can be a significant financial choice for most individuals, thus for their peace of mind, one must be extremely cautious while making the purchase and rigorously carry out the due research.
Purchasing a plot is typically less expensive than purchasing an apartment. It can be a long before you can recoup your initial investment, even if you want to rent out the room.
Not Possible to Sell Overnight
Lack of liquidity is one of the major drawbacks of apartment investing. Selling your house quickly can become a little difficult if you ever find yourself in need of money urgently. Your apartment may be on the market for months before being bought, depending on the area and the state of the building.
In the worst-case situation, you might even be forced to accept a lesser selling price for your home.
However, a plot can be transferred and sold more quickly.
Value May Decrease
The most frequently used justification for choosing apartments over plots is that built structures don’t appreciate as much as land. This could not always be the case. Property owners can run into this problem if the condition of their apartments is poor. Buyers will probably expect to pay less for apartments with outdated floor layouts, exposed electrical wiring, water and floor damage, etc.
Pros of Investing in A Plot
Plot investment has long been viewed as a profitable endeavor. The following are the key benefits of purchasing a piece of land in Pakistan.
Complete Investment Security
Real estate is in greater demand as a result of the rapid development of urbanization. Residential and commercial plots are in high demand in emerging housing societies and gated communities from investors and sincere buyers.
Plots’ value is less likely to depreciate and it makes them a popular investment choice in Pakistan. While investing in this kind of property ensures optimum capital gains over the long term, the selling price of land is heavily influenced by its location and the investment potential of the residential plan.
Plot purchases typically cost less than comparable-sized flat purchases. So, if you’re looking for investment prospects that won’t empty your bank account, you might want to think about choosing a plot in a growing neighborhood outside of the city. Similar to that, you may build your dream house anytime you want on that lot at your own pace, which is sure to make the whole process much less stressful.
Can Be Used for Multiple Purposes
Typically, people purchase a plot to buy houses. However, if you don’t immediately want to build one, you can use the land to host a variety of events and activities. You can use your plot for a variety of events, such as weddings, and sporting events.
Cons of Investing in A Plot
Since there are disadvantages to any sort of investment, these are the most salient ones that all potential buyers need to be aware of before buying a plot:
No Generation of Revenue
Your land won’t provide any cash for the foreseeable future unless you plan to rent out your plot for various events and activities or urgently begin construction. Plots don’t generate any income at all, in contrast to apartments and homes that can be rented out for long periods of time.
The price of construction is another significant drawback of purchasing plots. The cost of building supplies has risen dramatically along with inflation. Therefore, if you were to purchase a plot, you would also need to prepare to fund the building of a home. You will need to find an architect to create the drawings for this and employ a builder to construct the building.
Plot VS Flat-A Comparison
|Liquidity||The liquidity of flats is very low and cannot be sold overnight.||Plots have high liquidity and a higher chance of getting sold in hour of need.|
|Value Appreciation||As the condition of flats deteriorates or worsens, their value depreciates over time.||Their value increase over time.|
|Regular Income||Flats are a great source of side income every month.||You cannot generate revenue from plots.|
|Security||Flats are located within gated complexes and are very secure.||You will have to invest extra to ensure the security of your plot.|
|Transfer Process||Transfer of ownership may take a lot of time.||Transfer of plot is comparatively easy and takes less time.|
|Construction Flexibility||You can easily go for design changes according to your need.||You cannot make changes in the design as it is a small unit of a full-fledge housing compound or building.|
These are some of the benefits and drawbacks of purchasing apartments and plots in Pakistan. Please read them through and decide what is best for your investment needs after doing your research.
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Few more real estate housing schemes which are trending now a days in Islamabad by including: Faisal Town Phase 2, Prism Town Gujar Khan, New City Paradise, Eighteen Islamabad, 7 Wonders City Islamabad, Capital Smart City, Silver City Islamabad, The Life Residencia, Faisal Town Islamabad, Islamabad Golf City, Islamabad Model Town and Marble Arch Enclave.
Al Sadat Marketing is an emerging Real Estate Agency headquartered in Islamabad, Pakistan. With over 10+ Years of experience, Al Sadat Marketing is providing its services and dealing all trending housing societies projects in different cities of Pakistan. Islamabad Projects, Rawalpindi Projects, Gujar Khan Projects, Burhan Projects, and Peshawar Projects etc.
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