Buying property at any time is always a big decision. Purchasing property in another country is even more daunting. If you are an overseas Pakistani with limited first-hand knowledge of the Pakistani market, you need to educate yourself before investing your money. Fortunately we live in an age where access to information has never been easier. The internet is a game changer for investors, but even more so for overseas buyers. It is now possible to get information regarding most projects through property portals like Zameen.com, Estate 4U, developer websites, and municipal websites.
There are significant risks involved in buying in an unfamiliar and emerging market, particularly one with limited regulations such as Pakistan. That being said – the big issues are invariably the same – whether you are buying property in Miami or Mianwali (i.e. is your money safe and will your property be delivered on time). The solution is also the same – carefully select your investment after having conducted a thorough due diligence. These are the things to look out for.
Select an established developer
Choose a developer with a track record of delivering projects on time and on budget. That is not to say that lesser established developers are inherently unsafe – it’s just that if you are unfamiliar with the Pakistani market, minimize your risk by going for a sure thing. It is also a good idea to do a corporate due diligence to find out if the developer is registered by the SECP and otherwise licensed to engage in property development in Pakistan. Find out what you can through the internet, and if you are still unsure, consult a law firm in Pakistan to conduct a search through the SECP and other relevant authorities.
Go for a reliable project
Invest in projects which fall within the jurisdiction of municipal authorities (i.e. CDA, DHA, KDA, LDA etc.) or are within masterfully planned communities, such as DHA, etc. Properties within these areas have a more developed title registration system. Investing in other areas (i.e. agricultural land, out of town developments) is more complicated, as there is a possibility of disputes regarding the ownership of the land.
Secondly, confirm if the project has been approved by the relevant government authorities. If approval has not been granted, not only does the project lack credibility, there is also a possibility that the project may cancelled by the government and your money will not be recoverable without recourse to an expensive and protracted court case. In many locations, it is now possible to find out online if a project has been approved by the relevant municipal authority. For example, the LDA has an excellent website that provides a list of approved projects (and similarly, CDA periodically issues public notices regarding unapproved projects. I would advise that not only you review such websites, but also follow up by calling or emailing the relevant government department and the master developer on whether the project has been approved, and if possible, whether the necessary building permits have been obtained.
What’s your motivation?
There are a number of reasons that people buy property such as for investment purposes, rental income, or personal use. Decide why you want to buy a property and choose accordingly. In most cases, the reason why you want to buy a property will determine which project to invest in. It is advisable that you do your research and consult industry professionals (including websites like Zameen.com which offer periodic updates and evaluations of many projects) that offer sound commercial advice on what is the most appropriate property for your requirements.
Dos & Don’ts
DON’T get carried away by huge marketing campaigns and incessant hype. Just because a project has the biggest marketing budget doesn’t mean that it has the most credibility. Base your decisions on hard facts – not the number of front page newspaper advertorials.
DO carefully review any property sale agreements and accompanying plans carefully. You should be absolutely clear what you are buying whether it is a plot of land, apartment, or completed villa. If you have the resources, appoint a lawyer to review the contract and terms of sale. In any event, I would strongly advise any person unfamiliar with Pakistan to hire a specialist conveyancing lawyer to assist you regarding the transfer of ownership.
DON’T’ fall asleep at the wheel. Before making any payments, try and find out the construction progress. If you have any concerns, do not hesitate to contact the relevant planning authorities or master developers on why a certain project has stalled. You should also peruse websites like skyscrapercity.com have online communities where investors share information regarding ongoing projects.
DO reduce and spread your risk if possible by not investing all your money in a single project, particularly if you are buying the property for investment purposes, and not for your personal use.
Final Recommendations
The key consideration for any potential overseas investor is if their money is being utilized correctly. As discussed above, there is a lot that you can do in terms of due diligence from abroad that was not possible before. However, it is advisable to retain on the ground assistance through reputable industry professionals such as lawyers, agents and specialist conveyancing and market research companies. Finally, if you can – there is nothing better than getting first-hand knowledge by visiting Pakistan and doing your own research on the ground, especially if this is the first time you are buying property in Pakistan.
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