Pakistan Real Estate?

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get_g0ing
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Pakistan Real Estate?

Post by get_g0ing » Sat Dec 09, 2017 11:35 am

Hi,

This forum is a powerhouse of useful information. I'm happy there's a forum like Bogleheads.

I have a question. From the US, is there a way to invest in or get exposure to the Real Estate market in Pakistan?
In the range of $ 10K - 100K.

Thanks.

[edit: changed topic to Pakistan only]
Last edited by get_g0ing on Sat Dec 09, 2017 10:00 pm, edited 1 time in total.

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LadyGeek
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Re: Dubai and Pakistan Real Estate?

Post by LadyGeek » Sat Dec 09, 2017 1:44 pm

Welcome! I assume you live outside the US. What is your home country?

In this forum, we invest inthe entire market using low-cost diversified index funds. Real Estate represents is a small percentage of a complete investment portfolio.

See: Bogleheads® investment philosophy
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

mhalley
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Re: Dubai and Pakistan Real Estate?

Post by mhalley » Sat Dec 09, 2017 2:09 pm

Not advocating this by any means. Difficult to find a pure reit play from within the US. THIS REIT has about 30 per cent reit in UAE.

https://www.forbes.com/sites/kenrapoza/ ... b9db25491e

http://portfolios.morningstar.com/fund/ ... ture=en-US

Topic Author
get_g0ing
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Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Sat Dec 09, 2017 9:50 pm

mhalley wrote:
Sat Dec 09, 2017 2:09 pm
Not advocating this by any means. Difficult to find a pure reit play from within the US. THIS REIT has about 30 per cent reit in UAE.

https://www.forbes.com/sites/kenrapoza/ ... b9db25491e

http://portfolios.morningstar.com/fund/ ... ture=en-US
LadyGeek wrote:
Sat Dec 09, 2017 1:44 pm
Welcome! I assume you live outside the US. What is your home country?

In this forum, we invest inthe entire market using low-cost diversified index funds. Real Estate represents is a small percentage of a complete investment portfolio.

See: Bogleheads® investment philosophy
I live in the US, but I'm travelling for a few weeks. Currently in Pakistan.

Total stock market is how I'm invested as well. Just using index funds in Fidelity. No individual stocks.

In chatting with people in Pakistan the topic of investing came up. No one here seems to invest in stocks. It didn't sounds like there's even access to the global stock market like we have in the US with Fidelity, Vanguard, etc.

It's a developing country with lots of poverty, BUT, people in the major cities have done incredibly well. Their main form of investing is real estate. Goes something like this:

- A real estate development company announces a new housing project (as cities are growing, there are new housing communities being developed)
- People buy lots (no homes built yet), on monthly or quarterly installments.
- Once the project is further along the way (roads built, electric, water connections setup, etc), the lots increase in value.
- People then sell their lot(s) to someone wanting to construct a home on it, or to someone thinking the price would go further up.

From the conversations I gather that the prices DOUBLE in 2-3 years. People buy lots for $30K and then sell for $60K. They tell me that the prices never go down, because the cities are always growing and there's an influx of money and demand from the large expat population.

Is anyone here familiar with this?

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Mel Lindauer
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Re: Dubai and Pakistan Real Estate?

Post by Mel Lindauer » Sat Dec 09, 2017 9:57 pm

get_g0ing wrote:
Sat Dec 09, 2017 9:50 pm
mhalley wrote:
Sat Dec 09, 2017 2:09 pm
Not advocating this by any means. Difficult to find a pure reit play from within the US. THIS REIT has about 30 per cent reit in UAE.

https://www.forbes.com/sites/kenrapoza/ ... b9db25491e

http://portfolios.morningstar.com/fund/ ... ture=en-US
LadyGeek wrote:
Sat Dec 09, 2017 1:44 pm
Welcome! I assume you live outside the US. What is your home country?

In this forum, we invest inthe entire market using low-cost diversified index funds. Real Estate represents is a small percentage of a complete investment portfolio.

See: Bogleheads® investment philosophy
I live in the US, but I'm travelling for a few weeks. Currently in Pakistan.

Total stock market is how I'm invested as well. Just using index funds in Fidelity. No individual stocks.

In chatting with people in Pakistan the topic of investing came up. No one here seems to invest in stocks. It didn't sounds like there's even access to the global stock market like we have in the US with Fidelity, Vanguard, etc.

It's a developing country with lots of poverty, BUT, people in the major cities have done incredibly well. Their main form of investing is real estate. Goes something like this:

- A real estate development company announces a new housing project (as cities are growing, there are new housing communities being developed)
- People buy lots (no homes built yet), on monthly or quarterly installments.
- Once the project is further along the way (roads built, electric, water connections setup, etc), the lots increase in value.
- People then sell their lot(s) to someone wanting to construct a home on it, or to someone thinking the price would go further up.

From the conversations I gather that the prices DOUBLE in 2-3 years. People buy lots for $30K and then sell for $60K. They tell me that the prices never go down, because the cities are always growing and there's an influx of money and demand from the large expat population.

Is anyone here familiar with this?
FYI, we have a Bogleheads Local Chapter in Dubai. You may want to contact that group to see if they can answer your questions. Here's a link where you can get contact info (see Chapter 58):

https://www.google.com/maps/d/u/0/viewe ... 015625&z=8
Best Regards - Mel | | Semper Fi

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LadyGeek
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Re: Pakistan Real Estate?

Post by LadyGeek » Sat Dec 09, 2017 10:08 pm

Additional details are available here: UAE (Dubai) Bogleheads Chapter in the News
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: Dubai and Pakistan Real Estate?

Post by AlohaJoe » Sat Dec 09, 2017 10:13 pm

get_g0ing wrote:
Sat Dec 09, 2017 9:50 pm
From the conversations I gather that the prices DOUBLE in 2-3 years. People buy lots for $30K and then sell for $60K. They tell me that the prices never go down, because the cities are always growing and there's an influx of money and demand from the large expat population.

Is anyone here familiar with this?
Pakistan had a massive property crash in 2005. So the people telling you "prices never go down" are lying, ignorant, or both.

People in every developing country will tell you the same story.

Come to Vietnam and you'll hear the same exact thing.

Even in the US property investors will tell you "stocks may crash but people always need a place to live". So you shouldn't expect property investors elsewhere to be any less bullish.

It isn't clear why you want to invest in Pakistani real estate instead of Vietnamese, Malaysian, or Chinese real estate.

In any case, property in developing countries is virtually always direct or via private companies and syndicates. The best way for you to invest is to buy property directly.

aqan
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Re: Dubai and Pakistan Real Estate?

Post by aqan » Sat Dec 09, 2017 10:37 pm

get_g0ing wrote:
Sat Dec 09, 2017 9:50 pm
mhalley wrote:
Sat Dec 09, 2017 2:09 pm
Not advocating this by any means. Difficult to find a pure reit play from within the US. THIS REIT has about 30 per cent reit in UAE.

https://www.forbes.com/sites/kenrapoza/ ... b9db25491e

http://portfolios.morningstar.com/fund/ ... ture=en-US
LadyGeek wrote:
Sat Dec 09, 2017 1:44 pm
Welcome! I assume you live outside the US. What is your home country?

In this forum, we invest inthe entire market using low-cost diversified index funds. Real Estate represents is a small percentage of a complete investment portfolio.

See: Bogleheads® investment philosophy
I live in the US, but I'm travelling for a few weeks. Currently in Pakistan.

Total stock market is how I'm invested as well. Just using index funds in Fidelity. No individual stocks.

In chatting with people in Pakistan the topic of investing came up. No one here seems to invest in stocks. It didn't sounds like there's even access to the global stock market like we have in the US with Fidelity, Vanguard, etc.

It's a developing country with lots of poverty, BUT, people in the major cities have done incredibly well. Their main form of investing is real estate. Goes something like this:

- A real estate development company announces a new housing project (as cities are growing, there are new housing communities being developed)
- People buy lots (no homes built yet), on monthly or quarterly installments.
- Once the project is further along the way (roads built, electric, water connections setup, etc), the lots increase in value.
- People then sell their lot(s) to someone wanting to construct a home on it, or to someone thinking the price would go further up.

From the conversations I gather that the prices DOUBLE in 2-3 years. People buy lots for $30K and then sell for $60K. They tell me that the prices never go down, because the cities are always growing and there's an influx of money and demand from the large expat population.

Is anyone here familiar with this?
I don't know much about Pakistan but I'm guessing its more or less same as in other developing nations.

Most of the transactions are probably done in cash and only a fraction of the price paid is declared in the official registry. Money earned from selling your property at DOUBLE the price cannot be declared to the government (may not deposit in bank), thus money once invested in real estate stays in real estate. You sell one property and use the proceeds to buy another.
You won't be able to buy any title insurance either. So much-much higher title risk than in the US.
I will be surprised if you can find any public REIT investing in Pakistan.

Topic Author
get_g0ing
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Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Sat Dec 09, 2017 11:03 pm

AlohaJoe wrote:
Sat Dec 09, 2017 10:13 pm
get_g0ing wrote:
Sat Dec 09, 2017 9:50 pm
From the conversations I gather that the prices DOUBLE in 2-3 years. People buy lots for $30K and then sell for $60K. They tell me that the prices never go down, because the cities are always growing and there's an influx of money and demand from the large expat population.

Is anyone here familiar with this?
Pakistan had a massive property crash in 2005. So the people telling you "prices never go down" are lying, ignorant, or both.

People in every developing country will tell you the same story.

Come to Vietnam and you'll hear the same exact thing.

Even in the US property investors will tell you "stocks may crash but people always need a place to live". So you shouldn't expect property investors elsewhere to be any less bullish.

It isn't clear why you want to invest in Pakistani real estate instead of Vietnamese, Malaysian, or Chinese real estate.

In any case, property in developing countries is virtually always direct or via private companies and syndicates. The best way for you to invest is to buy property directly.
Yes, so that's why I made this post. To find out if there is another aspect to this.

As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.

Valuethinker
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Re: Dubai and Pakistan Real Estate?

Post by Valuethinker » Sun Dec 10, 2017 8:28 am

get_g0ing wrote:
Sat Dec 09, 2017 11:03 pm


Yes, so that's why I made this post. To find out if there is another aspect to this.

As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.
Take the warnings here.

The returns may be great, now. The next time a major politician is assassinated, or the Army takes over, or there is an economic ruction, then prices will fall.

And you may make money, but the people there may take it from you-- the RE brokers, lenders, someone who is corrupt enough and powerful enough just to take your land and fix the land registry so you never owned it... all the things that are a matter of course in a country with as many issues as Pakistan has. Remember when Karachi was virtually a civil war with the MQM? How about Kandahar and the local Taliban? I'd love to see someone try to enforce title to land, let alone collect on a defaulted mortgage, in the Northwest Frontier ;-).

So yes, an emerging economy on the cusp of rapid urbanization (and Pakistan looks like India 20-30 years ago, but with less political stability) urban or urban adjacent property can become very valuable. A lot of people have become rich by owning land near Delhi or Mumbai and having the right connections.

I have to admit I don't particularly like Islamabad (I have not visited but my spouse has). But Lahore and Karachi have potential, to my mind (but will be more expensive to start with). Maybe Islamabad is the overlooked opportunity.

Let's just say that if you put money in:

- it won't be liquid - this is a 10 to 30 year time horizon investment - between the difficulty in selling property, the difficulty in getting paid, and the difficulties of foreign exchange controls, you have to treat this as a long term investment

- you have to be prepared to lose the lot if the politics spins out of control or if you are defrauded etc.

I would not compare this to other investment opportunities available to you in developed countries with well regulated stock markets and no exchange controls.

And I certainly wouldn' t "buy" into claims of high returns from people on the ground.

GCD
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Re: Dubai and Pakistan Real Estate?

Post by GCD » Sun Dec 10, 2017 9:51 am

get_g0ing wrote:
Sat Dec 09, 2017 11:03 pm
As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.
I imagine total stock market index investing as a concept is a very American thing given that Bogle hasn't managed to convince more than a sliver of the US investing public to adopt the approach. Certainly people manage to get rich in other countries in other ways.

My world travel is modest, and about evenly split between the 1st world and 3rd world. FWIW, it seems to me that many of the really profitable opportunities in 3rd world countries would be illegal if done in the US. Insider trading, etc. that are legal or quasi-legal in the 3rd world country. It can be dicey trying to figure out how legitimate something is. I always felt like I needed to consult a local lawyer before getting involved in an "opportunity" and that's gonna cut into your profit. I never pulled the trigger myself so maybe I'm an investing coward.

There are threads here regarding the nuanced problems people get into when investing directly in US real estate. Read those and multiply by 10 what you are gonna have to deal with.

indexlover
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Re: Dubai and Pakistan Real Estate?

Post by indexlover » Sun Dec 10, 2017 11:13 am

Valuethinker wrote:
Sun Dec 10, 2017 8:28 am
get_g0ing wrote:
Sat Dec 09, 2017 11:03 pm


Yes, so that's why I made this post. To find out if there is another aspect to this.

As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.
Take the warnings here.

The returns may be great, now. The next time a major politician is assassinated, or the Army takes over, or there is an economic ruction, then prices will fall.

And you may make money, but the people there may take it from you-- the RE brokers, lenders, someone who is corrupt enough and powerful enough just to take your land and fix the land registry so you never owned it... all the things that are a matter of course in a country with as many issues as Pakistan has. Remember when Karachi was virtually a civil war with the MQM? How about Kandahar and the local Taliban? I'd love to see someone try to enforce title to land, let alone collect on a defaulted mortgage, in the Northwest Frontier ;-).

So yes, an emerging economy on the cusp of rapid urbanization (and Pakistan looks like India 20-30 years ago, but with less political stability) urban or urban adjacent property can become very valuable. A lot of people have become rich by owning land near Delhi or Mumbai and having the right connections.

I have to admit I don't particularly like Islamabad (I have not visited but my spouse has). But Lahore and Karachi have potential, to my mind (but will be more expensive to start with). Maybe Islamabad is the overlooked opportunity.

Let's just say that if you put money in:

- it won't be liquid - this is a 10 to 30 year time horizon investment - between the difficulty in selling property, the difficulty in getting paid, and the difficulties of foreign exchange controls, you have to treat this as a long term investment

- you have to be prepared to lose the lot if the politics spins out of control or if you are defrauded etc.

I would not compare this to other investment opportunities available to you in developed countries with well regulated stock markets and no exchange controls.

And I certainly wouldn' t "buy" into claims of high returns from people on the ground.
+10000

Sage advice for the OP. OP should search the forum for India related Real Estate investments and the issues faced by other dual-citizen investors. If you have citizenship and have lots of friends there, then you must be familiar with every line item ValueThinker has mentioned. Having friends doesn't really help when you get stuck with a sticky situation in India or Pakistan or any of those countries.
“If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.” - Mr. Buffett - Berkshire Hathaway ’s 2016 annual report.

Thesaints
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Re: Pakistan Real Estate?

Post by Thesaints » Sun Dec 10, 2017 11:19 am

Syrian real estate market offers interesting valuations these days...

toomuchRE
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Joined: Mon Oct 23, 2017 1:05 pm

Re: Pakistan Real Estate?

Post by toomuchRE » Sun Dec 10, 2017 8:03 pm

DON'T do it..Not worth it. Listen to valuethinker.. I should have 5 years ago...listened to him and not pumped more.money in Indian RE should have done here..

The risks of RE in India or Pakistan is not worth it. I have close to 2MM worth in India and pretty much a struggle retain it and it's been a uphill task to make it liquid..

Corruption, currency rates always depreciating, politics, banana republic is what makes these deals not worth the risk.. Unless u wanna go back, Don't do it.

I have friends who have close to 10MM worth of RE in India living paycheck to paycheck here in USA...

Having said that, I could never be worth that much on paper without investing in india..Would I get to make it happen, I will post it back in 5 years.....

Topic Author
get_g0ing
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Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Sun Dec 10, 2017 9:22 pm

Valuethinker wrote:
Sun Dec 10, 2017 8:28 am
get_g0ing wrote:
Sat Dec 09, 2017 11:03 pm


Yes, so that's why I made this post. To find out if there is another aspect to this.

As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.
Take the warnings here.

The returns may be great, now. The next time a major politician is assassinated, or the Army takes over, or there is an economic ruction, then prices will fall.

And you may make money, but the people there may take it from you-- the RE brokers, lenders, someone who is corrupt enough and powerful enough just to take your land and fix the land registry so you never owned it... all the things that are a matter of course in a country with as many issues as Pakistan has. Remember when Karachi was virtually a civil war with the MQM? How about Kandahar and the local Taliban? I'd love to see someone try to enforce title to land, let alone collect on a defaulted mortgage, in the Northwest Frontier ;-).

So yes, an emerging economy on the cusp of rapid urbanization (and Pakistan looks like India 20-30 years ago, but with less political stability) urban or urban adjacent property can become very valuable. A lot of people have become rich by owning land near Delhi or Mumbai and having the right connections.

I have to admit I don't particularly like Islamabad (I have not visited but my spouse has). But Lahore and Karachi have potential, to my mind (but will be more expensive to start with). Maybe Islamabad is the overlooked opportunity.

Let's just say that if you put money in:

- it won't be liquid - this is a 10 to 30 year time horizon investment - between the difficulty in selling property, the difficulty in getting paid, and the difficulties of foreign exchange controls, you have to treat this as a long term investment

- you have to be prepared to lose the lot if the politics spins out of control or if you are defrauded etc.

I would not compare this to other investment opportunities available to you in developed countries with well regulated stock markets and no exchange controls.

And I certainly wouldn' t "buy" into claims of high returns from people on the ground.

You've raised excellent points. I would like to discuss these some more.

I too share some of these concerns, that's why I've never considered this before. But in my recent trip, what I'm witnessing has me rethinking. In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).

When I ask about corruption and someone stealing your land outright, I'm told that's not a problem. At least in the cities where they have computer records linked to your National ID. There are two main builders/developers that I hear of and both have excellent reputation. I didn't hear any local story of someone losing their land outright. Some people I know in US who have bought land in Pakistan, also never complained of corruption of this level.

I'm sure there is some corruption at some level, maybe some people get better locations for their lots during the lot allocation, or maybe some areas get developed sooner. That's just my guess, I've not heard anyone making this claim.

toomuchRE
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Re: Dubai and Pakistan Real Estate?

Post by toomuchRE » Mon Dec 11, 2017 9:14 am

get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
Valuethinker wrote:
Sun Dec 10, 2017 8:28 am
get_g0ing wrote:
Sat Dec 09, 2017 11:03 pm


Yes, so that's why I made this post. To find out if there is another aspect to this.

As to why Pakistan and not other developing countries. Because it's doable for me. I have citizenship, good friends here, I also know the language.

My total stock index ROI isn't even close to what people are getting here. The skeptic in me says that if the Pakistani real estate is so profitable, I'd hear about it in the US, so I don't want to be naive. BUT, I don't want to be closed-minded either, that total stock is the end-all, be-all of investing.
Take the warnings here.

The returns may be great, now. The next time a major politician is assassinated, or the Army takes over, or there is an economic ruction, then prices will fall.

And you may make money, but the people there may take it from you-- the RE brokers, lenders, someone who is corrupt enough and powerful enough just to take your land and fix the land registry so you never owned it... all the things that are a matter of course in a country with as many issues as Pakistan has. Remember when Karachi was virtually a civil war with the MQM? How about Kandahar and the local Taliban? I'd love to see someone try to enforce title to land, let alone collect on a defaulted mortgage, in the Northwest Frontier ;-).

So yes, an emerging economy on the cusp of rapid urbanization (and Pakistan looks like India 20-30 years ago, but with less political stability) urban or urban adjacent property can become very valuable. A lot of people have become rich by owning land near Delhi or Mumbai and having the right connections.

I have to admit I don't particularly like Islamabad (I have not visited but my spouse has). But Lahore and Karachi have potential, to my mind (but will be more expensive to start with). Maybe Islamabad is the overlooked opportunity.

Let's just say that if you put money in:

- it won't be liquid - this is a 10 to 30 year time horizon investment - between the difficulty in selling property, the difficulty in getting paid, and the difficulties of foreign exchange controls, you have to treat this as a long term investment

- you have to be prepared to lose the lot if the politics spins out of control or if you are defrauded etc.

I would not compare this to other investment opportunities available to you in developed countries with well regulated stock markets and no exchange controls.

And I certainly wouldn' t "buy" into claims of high returns from people on the ground.

You've raised excellent points. I would like to discuss these some more.

I too share some of these concerns, that's why I've never considered this before. But in my recent trip, what I'm witnessing has me rethinking. In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).

When I ask about corruption and someone stealing your land outright, I'm told that's not a problem. At least in the cities where they have computer records linked to your National ID. There are two main builders/developers that I hear of and both have excellent reputation. I didn't hear any local story of someone losing their land outright. Some people I know in US who have bought land in Pakistan, also never complained of corruption of this level.

I'm sure there is some corruption at some level, maybe some people get better locations for their lots during the lot allocation, or maybe some areas get developed sooner. That's just my guess, I've not heard anyone making this claim.
The risks were worth if you had done it 10 to 15 years ago...Now I doubt it.. Anyway what do we have going in Pakistan that is contributing to growth??? IT...??? . I don't know.. I don't see anything significant that is making the country grow.. Unlike India. Which has all sorts of stuff going on...

Jags4186
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Re: Pakistan Real Estate?

Post by Jags4186 » Mon Dec 11, 2017 9:40 am

I'd rather speculate in Bitcoin than in Pakistan, or any frontier market for that matter.

AlohaJoe
Posts: 5075
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Dubai and Pakistan Real Estate?

Post by AlohaJoe » Mon Dec 11, 2017 10:16 am

get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".

"It is common to find people, in a country where the annual per capita income is $650 a year, to have over $1 million in property."

That aside, I think that toomuchRE has made the strongest points -- be very very careful about your money getting "trapped" -- and many of the others are a bit knee jerk "foreign countries are dangerous" for my taste.

I live in Vietnam. I own a business, have investments, and own property. I am fully aware that the legal system is not as well developed as in, say, the US. When I bought my house it was (to me) a shockingly casual affair. None of the bonded inspectors, title insurance, or escrow accounts that you find elsewhere. We had a "real" contract and a "fake" contract. The fake contract had a lower price and is what we showed to the tax authorities.

But let's also not blow this out of proportion. Literally millions of people are able to buy & sell property in the system. I imagine that, in many ways, Pakistan is similar to Vietnam. Yes, there is corruption. I had to pay a bribe to get a new title issued. (The bribe was around $100.) But in the capital cities there is no dodgy paperwork or theft of land. (Though that does happen in the countryside, though the practice is fading in large part due to social media making it easier to bring the central government's spotlight on local government authorities.)

But there are a lot of things that make property overseas far less attractive than the usual property investing you read about. The primary one is that there is no leverage. That is, no American bank will give you a mortgage to buy Pakistani land. And no bank in Pakistan is going to give you a mortgage, either. (If they even have them; here in Vietnam bank mortgages exist but are extremely uncommon, I don't know anyone who has used one.) So you'll be paying cash. You don't talk about cashflow at all. I don't even know how the IRS treats foreign investment properties.

The hardest part will be getting money back out of the country and dealing with the frustrations of opaque bureaucracy from thousands of miles away in a very different timezone. Do you have a plan for getting the money back out? Some of the stories I know of from Vietnam....taking $10,000 in a briefcase out of the country on every business trip. Finding a "friend of a friend" who wants to invest while you want to divest; so they send 100,000 Euros to your German bank account and you send them 4 billion Vietnamese dong to their Vietnamese bank account. (I mean, it is basically straight up money laundering, right?)

I don't think that property in developing countries is illiquid in quite the way Valuethinker suggests. Most of my friends and acquaintances buy and sell property on a very regular basis. But there's liquid and there's liquid. If your life is in the US then having "liquid" money trapped in Pakistan will be a small consolation.

If you still decide to go ahead with it, then the way to invest in a developing country is to fly there, learn the neighborhoods, find a new development going up, and buy a plan.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Mon Dec 11, 2017 9:46 pm

AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am

Think about what you just wrote here. "It's not uncommon" means "it is common".

"It is common to find people, in a country where the annual per capita income is $650 a year, to have over $1 million in property."
If I understand correctly what you mean ... even I wouldn't have believed it if I hadn't personally talked to the people. Note that I'm not making this claim of the general population, but of niche areas. And they got this way by buying and selling real estate.
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
But there are a lot of things that make property overseas far less attractive than the usual property investing you read about. The primary one is that there is no leverage. That is, no American bank will give you a mortgage to buy Pakistani land. And no bank in Pakistan is going to give you a mortgage, either. (If they even have them; here in Vietnam bank mortgages exist but are extremely uncommon, I don't know anyone who has used one.) So you'll be paying cash. You don't talk about cashflow at all. I don't even know how the IRS treats foreign investment properties.

The hardest part will be getting money back out of the country and dealing with the frustrations of opaque bureaucracy from thousands of miles away in a very different timezone. Do you have a plan for getting the money back out? Some of the stories I know of from Vietnam....taking $10,000 in a briefcase out of the country on every business trip. Finding a "friend of a friend" who wants to invest while you want to divest; so they send 100,000 Euros to your German bank account and you send them 4 billion Vietnamese dong to their Vietnamese bank account. (I mean, it is basically straight up money laundering, right?)
In terms of liquidity, I can share a recent example. A friend living in the US bought a home with $ 50,000 down payment. He sold his land in Pakistan, wired the money to his US bank account, and had no issue.

Valuethinker
Posts: 39243
Joined: Fri May 11, 2007 11:07 am

Re: Dubai and Pakistan Real Estate?

Post by Valuethinker » Tue Dec 12, 2017 7:10 am

toomuchRE wrote:
Mon Dec 11, 2017 9:14 am

The risks were worth if you had done it 10 to 15 years ago...Now I doubt it.. Anyway what do we have going in Pakistan that is contributing to growth??? IT...??? . I don't know.. I don't see anything significant that is making the country grow.. Unlike India. Which has all sorts of stuff going on...
China's New Silk Road project.

Big money going into Pakistan- a lot of infrastructure. Power plants (power shortages are the Pakistani nightmare), a whole new port, railways and highways to China.

The thing is Pakistan is badly screwed up. Poor. Lousy infrastructure. But so was India 30 years ago. Granted India is more politically stable (although think how many Indian PMs have been assassinated?).

Fix a few things in Pakistan and they can do a lot more. They have the professionals, like India, so can do outsourcing as India gets too expensive for western clients. They already do textiles, they can do light manufacturing.

I know. It could go either way. The place is a mess. But there are also huge reservoirs of talent & entrepreneurship. Some quite technologically skilled people. There is a vibrant and successful ex pat community-- both in the West and in the Gulf.

I think we could look back in 30 years and see the Pakistani economy grew at 5-6% pa. Doubling real GDP every 12-15 years say.

Valuethinker
Posts: 39243
Joined: Fri May 11, 2007 11:07 am

Re: Dubai and Pakistan Real Estate?

Post by Valuethinker » Tue Dec 12, 2017 7:15 am

AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.

Some of the great writers in the English language are of Pakistani/ Indian origin or upbringing.

What's really going on here, as you note, is that in a country with 100m+ people, you can make money from the process of urbanization-- the circles the OP travels in he may know people.

I would however caution the OP that "Men always lie about 2 things. How much money they have and how many women they have been with" ;-). So some of his rich friends and acquaintances may not be as rich as they say.
"It is common to find people, in a country where the annual per capita income is $650 a year, to have over $1 million in property."

That aside, I think that toomuchRE has made the strongest points -- be very very careful about your money getting "trapped" -- and many of the others are a bit knee jerk "foreign countries are dangerous" for my taste.

I live in Vietnam. I own a business, have investments, and own property. I am fully aware that the legal system is not as well developed as in, say, the US. When I bought my house it was (to me) a shockingly casual affair. None of the bonded inspectors, title insurance, or escrow accounts that you find elsewhere. We had a "real" contract and a "fake" contract. The fake contract had a lower price and is what we showed to the tax authorities.

But let's also not blow this out of proportion. Literally millions of people are able to buy & sell property in the system. I imagine that, in many ways, Pakistan is similar to Vietnam. Yes, there is corruption. I had to pay a bribe to get a new title issued. (The bribe was around $100.) But in the capital cities there is no dodgy paperwork or theft of land. (Though that does happen in the countryside, though the practice is fading in large part due to social media making it easier to bring the central government's spotlight on local government authorities.)

But there are a lot of things that make property overseas far less attractive than the usual property investing you read about. The primary one is that there is no leverage. That is, no American bank will give you a mortgage to buy Pakistani land. And no bank in Pakistan is going to give you a mortgage, either. (If they even have them; here in Vietnam bank mortgages exist but are extremely uncommon, I don't know anyone who has used one.) So you'll be paying cash. You don't talk about cashflow at all. I don't even know how the IRS treats foreign investment properties.

The hardest part will be getting money back out of the country and dealing with the frustrations of opaque bureaucracy from thousands of miles away in a very different timezone. Do you have a plan for getting the money back out? Some of the stories I know of from Vietnam....taking $10,000 in a briefcase out of the country on every business trip. Finding a "friend of a friend" who wants to invest while you want to divest; so they send 100,000 Euros to your German bank account and you send them 4 billion Vietnamese dong to their Vietnamese bank account. (I mean, it is basically straight up money laundering, right?)

I don't think that property in developing countries is illiquid in quite the way Valuethinker suggests. Most of my friends and acquaintances buy and sell property on a very regular basis. But there's liquid and there's liquid. If your life is in the US then having "liquid" money trapped in Pakistan will be a small consolation.

If you still decide to go ahead with it, then the way to invest in a developing country is to fly there, learn the neighborhoods, find a new development going up, and buy a plan.
All the rest of this is excellent advice.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Tue Dec 12, 2017 10:24 am

Valuethinker wrote:
Tue Dec 12, 2017 7:15 am
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.
Can you clarify the above? I did not follow this. Did I make some grammatical or usage mistake?

Thanks.

an_asker
Posts: 2603
Joined: Thu Jun 27, 2013 2:15 pm

Re: Pakistan Real Estate?

Post by an_asker » Tue Dec 12, 2017 10:43 am

toomuchRE wrote:
Sun Dec 10, 2017 8:03 pm
DON'T do it..Not worth it. Listen to valuethinker.. I should have 5 years ago...listened to him and not pumped more.money in Indian RE should have done here..

The risks of RE in India or Pakistan is not worth it. I have close to 2MM worth in India and pretty much a struggle retain it and it's been a uphill task to make it liquid..

Corruption, currency rates always depreciating, politics, banana republic is what makes these deals not worth the risk.. Unless u wanna go back, Don't do it.

I have friends who have close to 10MM worth of RE in India living paycheck to paycheck here in USA...

Having said that, I could never be worth that much on paper without investing in india..Would I get to make it happen, I will post it back in 5 years.....
I am really interested in your experience (specifically, the struggles you are referring to). Please pm if you don't want to share details.

The reason why I am interested is this: a few weeks back, I learned from DW about relatives who have two plots of land in India - apparently, they had just purchased the land on a whim for the equivalent of a few thousand dollars back in the 1990s. Now, they are worth more than our net worth in the USA - this after working in IT for the last two decades and more (granted, we have not been high earners within IT, but still...)!

an_asker
Posts: 2603
Joined: Thu Jun 27, 2013 2:15 pm

Re: Dubai and Pakistan Real Estate?

Post by an_asker » Tue Dec 12, 2017 10:45 am

get_g0ing wrote:
Tue Dec 12, 2017 10:24 am
Valuethinker wrote:
Tue Dec 12, 2017 7:15 am
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.
Can you clarify the above? I did not follow this. Did I make some grammatical or usage mistake?

Thanks.
No, you didn't make a grammatical or usage mistake, but ... what's being pointed out was that you did the equivalent of putting your hand around the back of your head to touch your nose when you could've done it right in front of your face (this is an idiom that you're hopefully familiar with).

PS: Another example of a subcontinental usage is saying "it was none other than xyz" when just saying "it was xyz" would've sufficed. :-)

toomuchRE
Posts: 91
Joined: Mon Oct 23, 2017 1:05 pm

Re: Pakistan Real Estate?

Post by toomuchRE » Tue Dec 12, 2017 12:36 pm

an_asker wrote:
Tue Dec 12, 2017 10:43 am
toomuchRE wrote:
Sun Dec 10, 2017 8:03 pm
DON'T do it..Not worth it. Listen to valuethinker.. I should have 5 years ago...listened to him and not pumped more.money in Indian RE should have done here..

The risks of RE in India or Pakistan is not worth it. I have close to 2MM worth in India and pretty much a struggle retain it and it's been a uphill task to make it liquid..

Corruption, currency rates always depreciating, politics, banana republic is what makes these deals not worth the risk.. Unless u wanna go back, Don't do it.

I have friends who have close to 10MM worth of RE in India living paycheck to paycheck here in USA...

Having said that, I could never be worth that much on paper without investing in india..Would I get to make it happen, I will post it back in 5 years.....
I am really interested in your experience (specifically, the struggles you are referring to). Please pm if you don't want to share details.

The reason why I am interested is this: a few weeks back, I learned from DW about relatives who have two plots of land in India - apparently, they had just purchased the land on a whim for the equivalent of a few thousand dollars back in the 1990s. Now, they are worth more than our net worth in the USA - this after working in IT for the last two decades and more (granted, we have not been high earners within IT, but still...)!
Well. I have pumped 40% of my net worth in Indian RE in the past 13 years.. Assuming my net worth here is 600k ( low for what I make but lived little bigger due to what I had back home in india...) and I have put 250K. The investment is now around 1.5MM. At least on paper in today's dollars...

100K of that 250K was invested in 2012 which I should have really invested in US RE... Now I need $$$ to buy a house in US.. Having trouble teying to sell.. Will take a lot of time. All I have is plots not apartments. So every other month I have someone trying to MESS up with my property or govt messing up or some headache or potential headache..

Now if I manage to sell, you need to pay 20 or 30% capital gains and then currency depreciation..The actual worth would be 40 to 50 % less compared to paper worth..

Now I need to buy a house in US but stuck and house prices going up in here..

So I figured I will put some $$$ in litecoin...LOL..

Faisal
Posts: 103
Joined: Sun Dec 18, 2016 6:37 pm

Re: Pakistan Real Estate?

Post by Faisal » Tue Dec 12, 2017 2:41 pm

As a Pakistani whose family has multiple homes and properties in Pakistan, I would say if you are not a national don't bother. Yes the growth in the market is amazing. The population explosion, plus the CPEC puts a lot of pressure on homes and housing but remember that the government is unstable, rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar.

I rather deal with the devil then a Pakistani Pathwari.

There is a reason Pakistanis last year bought 4 billion dollars worth of property in the UAE alone, with diversified investment in Qatar and Oman as well.

If you are chasing a profit go for the Pakistan EFT. Its rock bottom now will go down further to maybe 11 dollars. But expect it to increase after the elections and the CPEC moves into phase 2.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Tue Dec 12, 2017 9:10 pm

an_asker wrote:
Tue Dec 12, 2017 10:45 am
get_g0ing wrote:
Tue Dec 12, 2017 10:24 am
Valuethinker wrote:
Tue Dec 12, 2017 7:15 am
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.
Can you clarify the above? I did not follow this. Did I make some grammatical or usage mistake?

Thanks.
No, you didn't make a grammatical or usage mistake, but ... what's being pointed out was that you did the equivalent of putting your hand around the back of your head to touch your nose when you could've done it right in front of your face (this is an idiom that you're hopefully familiar with).

PS: Another example of a subcontinental usage is saying "it was none other than xyz" when just saying "it was xyz" would've sufficed. :-)
That makes sense now :)

Not sure about you, but sometimes that other way around the back of the head sounds better to me :)

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Pakistan Real Estate?

Post by get_g0ing » Tue Dec 12, 2017 9:19 pm

Faisal wrote:
Tue Dec 12, 2017 2:41 pm
As a Pakistani whose family has multiple homes and properties in Pakistan, I would say if you are not a national don't bother. Yes the growth in the market is amazing. The population explosion, plus the CPEC puts a lot of pressure on homes and housing but remember that the government is unstable, rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar.

I rather deal with the devil then a Pakistani Pathwari.

There is a reason Pakistanis last year bought 4 billion dollars worth of property in the UAE alone, with diversified investment in Qatar and Oman as well.

If you are chasing a profit go for the Pakistan EFT. Its rock bottom now will go down further to maybe 11 dollars. But expect it to increase after the elections and the CPEC moves into phase 2.
You seem to have some experience in this.

Are you referring to the ETF called PAK? I already looked into it, but it doesn't have a real estate focus. It's main holdings are Energy and Banks.

"rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar."
Have you dealt with Bahria and DHA? I've heard of zero problems with these two. Everything is computerized and straightforward. If you've experienced or heard of issues, I would be surprised.

Do you have any information on how to buy in Gawadar or Karachi Bahria?

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Pakistan Real Estate?

Post by get_g0ing » Tue Dec 12, 2017 9:24 pm

toomuchRE wrote:
Tue Dec 12, 2017 12:36 pm
an_asker wrote:
Tue Dec 12, 2017 10:43 am
toomuchRE wrote:
Sun Dec 10, 2017 8:03 pm
DON'T do it..Not worth it. Listen to valuethinker.. I should have 5 years ago...listened to him and not pumped more.money in Indian RE should have done here..

The risks of RE in India or Pakistan is not worth it. I have close to 2MM worth in India and pretty much a struggle retain it and it's been a uphill task to make it liquid..

Corruption, currency rates always depreciating, politics, banana republic is what makes these deals not worth the risk.. Unless u wanna go back, Don't do it.

I have friends who have close to 10MM worth of RE in India living paycheck to paycheck here in USA...

Having said that, I could never be worth that much on paper without investing in india..Would I get to make it happen, I will post it back in 5 years.....
I am really interested in your experience (specifically, the struggles you are referring to). Please pm if you don't want to share details.

The reason why I am interested is this: a few weeks back, I learned from DW about relatives who have two plots of land in India - apparently, they had just purchased the land on a whim for the equivalent of a few thousand dollars back in the 1990s. Now, they are worth more than our net worth in the USA - this after working in IT for the last two decades and more (granted, we have not been high earners within IT, but still...)!
Well. I have pumped 40% of my net worth in Indian RE in the past 13 years.. Assuming my net worth here is 600k ( low for what I make but lived little bigger due to what I had back home in india...) and I have put 250K. The investment is now around 1.5MM. At least on paper in today's dollars...

100K of that 250K was invested in 2012 which I should have really invested in US RE... Now I need $$$ to buy a house in US.. Having trouble teying to sell.. Will take a lot of time. All I have is plots not apartments. So every other month I have someone trying to MESS up with my property or govt messing up or some headache or potential headache..

Now if I manage to sell, you need to pay 20 or 30% capital gains and then currency depreciation..The actual worth would be 40 to 50 % less compared to paper worth..

Now I need to buy a house in US but stuck and house prices going up in here..

So I figured I will put some $$$ in litecoin...LOL..

I am impressed that you were able to buy land in India. In case of Pakistan, at the rates now, it's not that feasible to save in USA and buy something in Pakistan. But people in Pakistan (niche areas becoming urbanized) who started small, now have high worth in last 10 years or so.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Dubai and Pakistan Real Estate?

Post by get_g0ing » Tue Dec 12, 2017 9:34 pm

Valuethinker wrote:
Tue Dec 12, 2017 7:15 am
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am
get_g0ing wrote:
Sun Dec 10, 2017 9:22 pm
In the cities it's not uncommon to find a person owning 2-3 houses (each worth $250-350K), 3-4 lots (some worth over $100k).
Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.

Some of the great writers in the English language are of Pakistani/ Indian origin or upbringing.

What's really going on here, as you note, is that in a country with 100m+ people, you can make money from the process of urbanization-- the circles the OP travels in he may know people.

I would however caution the OP that "Men always lie about 2 things. How much money they have and how many women they have been with" ;-). So some of his rich friends and acquaintances may not be as rich as they say.
"It is common to find people, in a country where the annual per capita income is $650 a year, to have over $1 million in property."

That aside, I think that toomuchRE has made the strongest points -- be very very careful about your money getting "trapped" -- and many of the others are a bit knee jerk "foreign countries are dangerous" for my taste.

I live in Vietnam. I own a business, have investments, and own property. I am fully aware that the legal system is not as well developed as in, say, the US. When I bought my house it was (to me) a shockingly casual affair. None of the bonded inspectors, title insurance, or escrow accounts that you find elsewhere. We had a "real" contract and a "fake" contract. The fake contract had a lower price and is what we showed to the tax authorities.

But let's also not blow this out of proportion. Literally millions of people are able to buy & sell property in the system. I imagine that, in many ways, Pakistan is similar to Vietnam. Yes, there is corruption. I had to pay a bribe to get a new title issued. (The bribe was around $100.) But in the capital cities there is no dodgy paperwork or theft of land. (Though that does happen in the countryside, though the practice is fading in large part due to social media making it easier to bring the central government's spotlight on local government authorities.)

But there are a lot of things that make property overseas far less attractive than the usual property investing you read about. The primary one is that there is no leverage. That is, no American bank will give you a mortgage to buy Pakistani land. And no bank in Pakistan is going to give you a mortgage, either. (If they even have them; here in Vietnam bank mortgages exist but are extremely uncommon, I don't know anyone who has used one.) So you'll be paying cash. You don't talk about cashflow at all. I don't even know how the IRS treats foreign investment properties.

The hardest part will be getting money back out of the country and dealing with the frustrations of opaque bureaucracy from thousands of miles away in a very different timezone. Do you have a plan for getting the money back out? Some of the stories I know of from Vietnam....taking $10,000 in a briefcase out of the country on every business trip. Finding a "friend of a friend" who wants to invest while you want to divest; so they send 100,000 Euros to your German bank account and you send them 4 billion Vietnamese dong to their Vietnamese bank account. (I mean, it is basically straight up money laundering, right?)

I don't think that property in developing countries is illiquid in quite the way Valuethinker suggests. Most of my friends and acquaintances buy and sell property on a very regular basis. But there's liquid and there's liquid. If your life is in the US then having "liquid" money trapped in Pakistan will be a small consolation.

If you still decide to go ahead with it, then the way to invest in a developing country is to fly there, learn the neighborhoods, find a new development going up, and buy a plan.
All the rest of this is excellent advice.

"So some of his rich friends and acquaintances may not be as rich as they say."
Small comment that just came to my mind on this point. I am in agreement 100%, people here do like to exaggerate. I sense some pressure of coming across as successful. And the main way for people to do so is to brag about how much property they have, how educated their children are and the top school they are studying in, and the so high tuition fees they pay. Having said that, I will clarify that it won't be flat out lies. Let me compare with USA. Here if you see someone with a big house and a fancy car, it doesn't really mean that they make a lot of money. They might be heavily leveraged. But Pakistan is cash system. So if someone buys homes, plots, cars, they are doing so in cash.
So in my experience people will not lie that they have 4 plots, when they "only" have 3. The exaggeration might be in how much profit they made. Say, if they made $30K profit, they might brag that they made $40K.

User avatar
unclescrooge
Posts: 4193
Joined: Thu Jun 07, 2012 7:00 pm

Re: Pakistan Real Estate?

Post by unclescrooge » Tue Dec 12, 2017 11:45 pm

I have a friend who invested in land in India.

While the land has appreciated considerably, currency depreciation and the hassle of extracting it has made it a headache. And I suspect he would have made identical gains by investing in the U.S.

Also, valuations are often set by comparable sales, not appraisals. And when you try to sell your property, the expected valuation is rarely achieved.

whiteprius
Posts: 168
Joined: Thu Feb 04, 2016 6:48 pm

Re: Pakistan Real Estate?

Post by whiteprius » Wed Dec 13, 2017 12:06 am

I think my broker (Fidelity) lets me buy such international securities. I'll check tomorrow.

https://markets.ft.com/data/equities/te ... ?s=DCR:KAR

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Pakistan Real Estate?

Post by get_g0ing » Wed Dec 13, 2017 5:07 am

whiteprius wrote:
Wed Dec 13, 2017 12:06 am
I think my broker (Fidelity) lets me buy such international securities. I'll check tomorrow.

https://markets.ft.com/data/equities/te ... ?s=DCR:KAR
I can't see an option to buy this REIT (DCR:KAR). If you figure out how to buy, kindly share.

toomuchRE
Posts: 91
Joined: Mon Oct 23, 2017 1:05 pm

Re: Pakistan Real Estate?

Post by toomuchRE » Wed Dec 13, 2017 10:49 am

get_g0ing wrote:
Tue Dec 12, 2017 9:24 pm
toomuchRE wrote:
Tue Dec 12, 2017 12:36 pm
an_asker wrote:
Tue Dec 12, 2017 10:43 am
toomuchRE wrote:
Sun Dec 10, 2017 8:03 pm
DON'T do it..Not worth it. Listen to valuethinker.. I should have 5 years ago...listened to him and not pumped more.money in Indian RE should have done here..

The risks of RE in India or Pakistan is not worth it. I have close to 2MM worth in India and pretty much a struggle retain it and it's been a uphill task to make it liquid..

Corruption, currency rates always depreciating, politics, banana republic is what makes these deals not worth the risk.. Unless u wanna go back, Don't do it.

I have friends who have close to 10MM worth of RE in India living paycheck to paycheck here in USA...

Having said that, I could never be worth that much on paper without investing in india..Would I get to make it happen, I will post it back in 5 years.....
I am really interested in your experience (specifically, the struggles you are referring to). Please pm if you don't want to share details.

The reason why I am interested is this: a few weeks back, I learned from DW about relatives who have two plots of land in India - apparently, they had just purchased the land on a whim for the equivalent of a few thousand dollars back in the 1990s. Now, they are worth more than our net worth in the USA - this after working in IT for the last two decades and more (granted, we have not been high earners within IT, but still...)!
Well. I have pumped 40% of my net worth in Indian RE in the past 13 years.. Assuming my net worth here is 600k ( low for what I make but lived little bigger due to what I had back home in india...) and I have put 250K. The investment is now around 1.5MM. At least on paper in today's dollars...

100K of that 250K was invested in 2012 which I should have really invested in US RE... Now I need $$$ to buy a house in US.. Having trouble teying to sell.. Will take a lot of time. All I have is plots not apartments. So every other month I have someone trying to MESS up with my property or govt messing up or some headache or potential headache..

Now if I manage to sell, you need to pay 20 or 30% capital gains and then currency depreciation..The actual worth would be 40 to 50 % less compared to paper worth..

Now I need to buy a house in US but stuck and house prices going up in here..

So I figured I will put some $$$ in litecoin...LOL..

I am impressed that you were able to buy land in India. In case of Pakistan, at the rates now, it's not that feasible to save in USA and buy something in Pakistan. But people in Pakistan (niche areas becoming urbanized) who started small, now have high worth in last 10 years or so.
Well, I knew the Indian RE would go up 17 years ago. So put all my money when it was affordable. I have inherited more stuff on top of this...The issue is, all on paper and haven't seen money in my bank. Unless I see that money in my bank, I'm not counting them anymore for my planning purpose..

an_asker
Posts: 2603
Joined: Thu Jun 27, 2013 2:15 pm

Re: Dubai and Pakistan Real Estate?

Post by an_asker » Wed Dec 13, 2017 10:59 am

get_g0ing wrote:
Tue Dec 12, 2017 9:10 pm
an_asker wrote:
Tue Dec 12, 2017 10:45 am
get_g0ing wrote:
Tue Dec 12, 2017 10:24 am
Valuethinker wrote:
Tue Dec 12, 2017 7:15 am
AlohaJoe wrote:
Mon Dec 11, 2017 10:16 am


Think about what you just wrote here. "It's not uncommon" means "it is common".
AlohaJoe

I totally agree with you but this may simply be the Pakistani/ Indian way of communicating in English. The Raj (British Empire) changed the subcontinent, but was also absorbed by the subcontinent. One legacy was a fluency in the English language and in writing in that language-- but in their own style.
Can you clarify the above? I did not follow this. Did I make some grammatical or usage mistake?

Thanks.
No, you didn't make a grammatical or usage mistake, but ... what's being pointed out was that you did the equivalent of putting your hand around the back of your head to touch your nose when you could've done it right in front of your face (this is an idiom that you're hopefully familiar with).

PS: Another example of a subcontinental usage is saying "it was none other than xyz" when just saying "it was xyz" would've sufficed. :-)
That makes sense now :)

Not sure about you, but sometimes that other way around the back of the head sounds better to me :)
I agree! What gets my goat is folks who complain about subcontinentisms and then write "xyz could care less" about it :oops:

Valuethinker
Posts: 39243
Joined: Fri May 11, 2007 11:07 am

Re: Pakistan Real Estate?

Post by Valuethinker » Wed Dec 13, 2017 10:59 am

get_g0ing wrote:
Wed Dec 13, 2017 5:07 am
whiteprius wrote:
Wed Dec 13, 2017 12:06 am
I think my broker (Fidelity) lets me buy such international securities. I'll check tomorrow.

https://markets.ft.com/data/equities/te ... ?s=DCR:KAR
I can't see an option to buy this REIT (DCR:KAR). If you figure out how to buy, kindly share.
Be very careful of US PFIC rules.

For a US taxpayer, they are pretty lethal to returns.

Valuethinker
Posts: 39243
Joined: Fri May 11, 2007 11:07 am

Re: Pakistan Real Estate?

Post by Valuethinker » Wed Dec 13, 2017 11:10 am

get_g0ing wrote:
Tue Dec 12, 2017 9:19 pm
Faisal wrote:
Tue Dec 12, 2017 2:41 pm
As a Pakistani whose family has multiple homes and properties in Pakistan, I would say if you are not a national don't bother. Yes the growth in the market is amazing. The population explosion, plus the CPEC puts a lot of pressure on homes and housing but remember that the government is unstable, rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar.

I rather deal with the devil then a Pakistani Pathwari.

There is a reason Pakistanis last year bought 4 billion dollars worth of property in the UAE alone, with diversified investment in Qatar and Oman as well.

If you are chasing a profit go for the Pakistan EFT. Its rock bottom now will go down further to maybe 11 dollars. But expect it to increase after the elections and the CPEC moves into phase 2.
You seem to have some experience in this.

Are you referring to the ETF called PAK? I already looked into it, but it doesn't have a real estate focus. It's main holdings are Energy and Banks.

"rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar."
Have you dealt with Bahria and DHA? I've heard of zero problems with these two. Everything is computerized and straightforward. If you've experienced or heard of issues, I would be surprised.

Do you have any information on how to buy in Gawadar or Karachi Bahria?
There are a couple of ways of playing a rising Emerging Market. I think Mark Moebius wrote a book about this (He runs the Templeton Emerging Market fund).

Consumer product companies are often very fully valued, and it's rare to find one that fits. It's the Coca Colas, Unilevers, Nestles, P&G that are the big EM branded goods players, and that's only a fraction (ULVR has high exposure to India via Hindustani-Lever joint ownership; Diageo is another such company (Johnny Walker, Guinness)).

Banks can be another way. Banks are usually cheap on a PE or price to book basis. But as EM mature, banking grows at least as fast as the economy as a whole and often faster. However there are technology risks (non bank competitors like mobile phone operators). And periodically there will be crashes etc that will really hurt banks and bank shareholders. And also they are quite susceptible to fraud and corporate malfeasance.

Companies that are focused eg on oil & gas are generally less useful, because they are subject to the same global forces as developed country O & G companies-- indeed many natural resource cos in EM are listed on London SE (and there have been some horrific governance scandals). You are really not, then, playing the growth in domestic economy but rather playing the world commodity cycle. It is not the commodity producing nations that have developed rapidly in general, it is the countries with human capital and thus the potential for low cost exports and domestic consumption growth (China India Vietnam etc.).

Cement and building materials companies can be another good way of playing the domestic revolution. Cemex in particular. However again global macro forces do affect them - -they are not pure plays?

Commercial property via REITs or other listed cos? If you can live with the issues around such companies (governance again) then it's another way of possibly finding a cheap way into markets.

The usual merit of direct property investment is the use of financial leverage. Both residential and commercial property in developed markets have pedestrian returns BUT you can borrow against your investment, thus increasing returns (and risk).

EM it's usually more of a play on urbanization and economic development. You have to be aware that these are boom-bust markets and the issues we have discussed around such investments. This has to be a long term investment-- I would guess 10 year time horizon.

As others here note, liquidity and repatriation of funds could be a big issue.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Pakistan Real Estate?

Post by get_g0ing » Wed Dec 13, 2017 9:05 pm

Valuethinker wrote:
Wed Dec 13, 2017 10:59 am
get_g0ing wrote:
Wed Dec 13, 2017 5:07 am
whiteprius wrote:
Wed Dec 13, 2017 12:06 am
I think my broker (Fidelity) lets me buy such international securities. I'll check tomorrow.

https://markets.ft.com/data/equities/te ... ?s=DCR:KAR
I can't see an option to buy this REIT (DCR:KAR). If you figure out how to buy, kindly share.
Be very careful of US PFIC rules.

For a US taxpayer, they are pretty lethal to returns.
Isn't that for over $300,000 investments.

Topic Author
get_g0ing
Posts: 591
Joined: Sat Dec 09, 2017 11:09 am

Re: Pakistan Real Estate?

Post by get_g0ing » Wed Dec 13, 2017 9:07 pm

Valuethinker wrote:
Wed Dec 13, 2017 11:10 am
get_g0ing wrote:
Tue Dec 12, 2017 9:19 pm
Faisal wrote:
Tue Dec 12, 2017 2:41 pm
As a Pakistani whose family has multiple homes and properties in Pakistan, I would say if you are not a national don't bother. Yes the growth in the market is amazing. The population explosion, plus the CPEC puts a lot of pressure on homes and housing but remember that the government is unstable, rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar.

I rather deal with the devil then a Pakistani Pathwari.

There is a reason Pakistanis last year bought 4 billion dollars worth of property in the UAE alone, with diversified investment in Qatar and Oman as well.

If you are chasing a profit go for the Pakistan EFT. Its rock bottom now will go down further to maybe 11 dollars. But expect it to increase after the elections and the CPEC moves into phase 2.
You seem to have some experience in this.

Are you referring to the ETF called PAK? I already looked into it, but it doesn't have a real estate focus. It's main holdings are Energy and Banks.

"rules for selling and purchasing are horrendously bad and you will have to deal with the pathwari and tehsildar."
Have you dealt with Bahria and DHA? I've heard of zero problems with these two. Everything is computerized and straightforward. If you've experienced or heard of issues, I would be surprised.

Do you have any information on how to buy in Gawadar or Karachi Bahria?
There are a couple of ways of playing a rising Emerging Market. I think Mark Moebius wrote a book about this (He runs the Templeton Emerging Market fund).

Consumer product companies are often very fully valued, and it's rare to find one that fits. It's the Coca Colas, Unilevers, Nestles, P&G that are the big EM branded goods players, and that's only a fraction (ULVR has high exposure to India via Hindustani-Lever joint ownership; Diageo is another such company (Johnny Walker, Guinness)).

Banks can be another way. Banks are usually cheap on a PE or price to book basis. But as EM mature, banking grows at least as fast as the economy as a whole and often faster. However there are technology risks (non bank competitors like mobile phone operators). And periodically there will be crashes etc that will really hurt banks and bank shareholders. And also they are quite susceptible to fraud and corporate malfeasance.

Companies that are focused eg on oil & gas are generally less useful, because they are subject to the same global forces as developed country O & G companies-- indeed many natural resource cos in EM are listed on London SE (and there have been some horrific governance scandals). You are really not, then, playing the growth in domestic economy but rather playing the world commodity cycle. It is not the commodity producing nations that have developed rapidly in general, it is the countries with human capital and thus the potential for low cost exports and domestic consumption growth (China India Vietnam etc.).

Cement and building materials companies can be another good way of playing the domestic revolution. Cemex in particular. However again global macro forces do affect them - -they are not pure plays?

Commercial property via REITs or other listed cos? If you can live with the issues around such companies (governance again) then it's another way of possibly finding a cheap way into markets.

The usual merit of direct property investment is the use of financial leverage. Both residential and commercial property in developed markets have pedestrian returns BUT you can borrow against your investment, thus increasing returns (and risk).

EM it's usually more of a play on urbanization and economic development. You have to be aware that these are boom-bust markets and the issues we have discussed around such investments. This has to be a long term investment-- I would guess 10 year time horizon.

As others here note, liquidity and repatriation of funds could be a big issue.
I like this analysis. It's touches a lot of important points.

But, is physically buying the land the only way to invest in Pakistan real estate. I was starting to like the DCR:KAR idea but doesn't look like we can buy it from USA?

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