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The role of technology in the real estate sector

The role of technology in the real estate sector

Realizing the real potential of the real estate sector can change the economic situation of any country.

Technology has come to innovation due to easy access to the internet and every aspect of life is changing with each passing day before our eyes. However, the general perception is that technology has not been adapted to the real estate sector in the same way as all other sectors. It is no longer the case that a sector that has a cure for economic stagnation, in which 70% of a country’s wealth is located, should be kept completely devoid of technology, so it is important to mention here that the real estate sector I have been using the term property for the last few years.

The meaning of property

This combination of two words, a combination of property and technology, holds the secret of the development of this entire global industry. The combination of property and technology has attracted a great deal of global attention, and new business practices and emerging trends indicate that the global market has embraced the industrial revolution that thrives on this combination of property and technology in the real estate sector. ۔

In such a situation, the effects on the Pakistani real estate market are also significant on which today’s article is based. The real estate sector in Pakistan has long been plagued by fraud and outdated traditions, but things are slowly changing. We see the adoption of new technologies improving information management and making real estate transactions more transparent and easier.

Some about blockchain technology

When it comes to promoting technology in the real estate market, you will see the word blockchain in the very beginning. Even if one does not understand the science behind the word, one can guess that the chain formed from blocks and the data transferred between them cannot be changed in any way due to which this technology can transfer information from one place to another. It is considered completely safe to transfer to another place.

Fiscal transfers and transaction payments are possible through this technology. Forbes, a global journal of blockchain technology, predicts that over the next three years it will be fully integrated into the real estate domain and you will see significant transactions taking place on digital assets.

Benefits and trends

As mentioned a few lines ago, blockchain technology can eliminate the risk of fraud in real estate transactions. This technology increases the speed of data transmission and thus can reduce the duration of any real estate deal.

This is giving rise to a new digital architecture, and issues such as the actual status of land, property rights, land use and property rates are now being determined by artificial intelligence. Where the role of technology is clear and human intervention is minimal, things will go smoothly. In the same way, the blockchain has made things much easier. Many companies today use chatbots, respond to potential clients, and maintain CRM leads. Using AI you can increase lead generation and conversion rates.

Smart contracts

The advent of smart contracts thanks to blockchain technology is also a welcome development. Smart contracts are actually a modern, digital form of paper contracts in which no third party has a role. Both parties are convinced that it is not possible to delete or amend any of the terms and conditions in the terms and conditions on which the deal was struck. According to the global magazine Forbes, smart contracts give you no room for doubt and completely eliminate fraud from day to day financial transactions.

The term Internet of Things

You may have heard the term Internet of Things. The use of this term can be seen in everyday routines, even in every aspect of human life. It is difficult to deny the role of this word in residential and commercial real estate. Those who do not know this may think that it is not a matter of knowing what is going on. This will allow you to have a greater degree of automation and thus facilitate the business.

The Internet of Things serves as a fuel for smart real estate. Commercial real estate, Generation Y trends and the emergence of smart solutions are all due to this term. Moving data from one place to another, setting up indoor navigation systems, workplace optimization and having smart building management systems is also the religion of the Internet of Things. A smart home and building management system increases the resale value of the property and thus the technology can be linked to return on investment.

invest in Commercial Real Estate

Why to invest in Commercial Real Estate?

Any type of property, whether it’s commercial or residential, can be a good investment opportunity. For your money, invest in Commercial Real Estate typically offer more financial reward than residential properties, such as rental apartments or single-family homes, but there also can be more risks.

Understand the full pros and cons of investing in commercial properties is important so that you make the investment decision that’s right for you.

Why to “invest in Commercial Real Estate?”

Commercial properties might refer to:

  • retail buildings
  • office buildings
  • warehouses
  • industrial buildings
  • apartment buildings
  • “mixed use” buildings, where the property may have a combination of uses, such as retail, office and apartments.

There are nuances to managing each of these types of properties. To paint a general picture, let’s examine the pros and cons of investing in a single-story commercial retail building, such as a community “strip mall.”

Positive Reasons to Invest in Commercial Property

Here are some of the pros of buying commercial real estate over residential property.

Income potential.

The best reason to invest in commercial over residential rentals is the earning potential. Commercial properties typically have an annual return off the purchase price between 6% and 12%, depending on the area, current economy, and external factors (such as a pandemic). That’s a much higher range than ordinarily exists for single family home properties (1% to 4% at best).

Professional relationships.

Small business owners tend to take pride in their businesses and want to protect their livelihood. Owners of commercial properties are usually not individuals, but LLCs, and operate the property as a business. As such, the landlord and tenant have more of a business-to-business customer relationship, which helps keep interactions professional and courteous.

Public eye on the property. 

Retail tenants have a vested interest in maintaining their store and storefront, because if they don’t, it will affect their business. As a result, commercial tenants and property owner interests are aligned, which helps the owner maintain and improve the quality of the property, and ultimately, the value of their investment.

Limited hours of operation. 

Businesses usually go home at night. In other words, you work when they work. Barring emergency calls at night for break-ins or fire alarms, you should be able to rest without having to worry about receiving a midnight call because a tenant wants repairs or has lost a key. For commercial properties, it is also more likely you will have an alarm monitoring service, so that if anything does happen at night, your alarm company will notify the proper authorities.

More objective price evaluations. 

It’s often easier to evaluate the prices of commercial property than residential, because you can request the current owner’s income statement and determine what the price should be based on that. If the seller is using a knowledgeable broker, the asking price should be set at a price where an investor can earn the area’s prevailing cap rate for the commercial property type they are looking at (retail, office, industrial, and so forth). Residential properties are often subject to more emotional pricing.

Triple net leases.

There are variations to triple net leases, but the basic concept is that you, as the property owner, do not have to pay expenses on the property (as would be the case with residential real estate). The lessee handles all property expenses directly, including real estate taxes. The only expense you’ll have to pay is your mortgage. Companies like Walgreens, CVS, and Starbucks typically sign these types of leases, as they want to maintain a look and feel in keeping with their brand, so they manage those costs, which means you as an investor get to have one of the lowest maintenance income producers for your money. Strip malls have a variety of net leases and triple nets are not usually done with smaller businesses, but these lease types are optimal and you can’t get them with residential properties.

More flexibility in lease terms.

Fewer consumer protection laws govern commercial leases, unlike the dozens of state laws, such as security deposit limits and termination rules, that cover residential real estate.

The Downside of Investing in Commercial Property

While there are many positive reasons to invest in commercial real estate over residential, there are also negative issues to consider.

Time commitment.

If you own a commercial retail building with five tenants, or even just a few, you have more to manage than you do with a residential investment. You can’t be an absentee landlord and maximize the return on your investment. With commercial, you are likely dealing with multiple leases, annual CAM adjustments (Common Area Maintenance costs that tenants are responsible for), more maintenance issues, and public safety concerns. In a nutshell, you have more to manage; and just as your tenants have to worry about the public eye, you do as well.

Professional help required.

If you are a do-it-yourselfer, you’d better be licensed if you are going to handle the maintenance issues at a commercial property. The likelihood is you will not be prepared to handle maintenance issues yourself and will need to hire someone to help with emergencies and repairs. While this added cost isn’t ideal, you’ll need to add it on to your set of expenses in order to properly care for the property. Remember to factor in property management expenses when evaluating the price to pay for a commercial investment property. Property management companies can charge between 5-10% of rent revenues for their services, which include lease administration. Evaluate beforehand whether you want to manage leasing and the relationships yourself or outsource those responsibilities.

Bigger initial investment.

Acquiring a commercial property typically requires more capital up front than acquiring a residential rental in the same area, so it’s often more difficult to get your foot in the door. Once you’ve acquired a commercial property, you can expect some large capital expenditures to follow. Your property might be humming along for a few months and wham, here comes a $10,000 bill to address roofing repairs or a new furnace. With more customers there are more facilities to maintain and therefore more costs. What you hope is that the gains in revenue outweigh the gains in costs, to support purchasing a commercial property over a residential one.

More risks.

Properties intended for commercial use have more public visitors and therefore have more people on the property each day that can get hurt or do something to damage your property. Cars can hit patrons in parking lots, people can slip on ice during the winter, and vandals can spray paint the sides of the building. Incidents like these can occur anywhere, but chances of experiencing something like these events go up when investing in commercial properties. If you’re risk adverse, you might want to look more closely at putting your money in residential properties.

Central Business District project to bring in Rs 100 billion investment

Central Business District project to bring in Rs 100 billion investment

ISLAMABAD: Prime Minister Imran Khan has said that Rs 100 Billion Investment is likely to come in the country from the Central Business District project while development projects have been started for the convenience of citizens and economic development. The government is making passive assets investable.

PM Statement about Rs 100 Billion Investment

An important meeting was held under the chairmanship of Prime Minister Imran Khan in which the Prime Minister was informed in the briefing that an investment of Rs 100 billion is expected in the first phase of Central Business District.

The Prime Minister has said that the government is making passive assets investable. He said that Central Business District and Ravi Urban Development projects are important for the future of Lahore and the country. Use environmentally friendly materials in projects.

Prime Minister Imran Khan directed that legal action be taken against illegal encroachments and illegal housing societies.

Pakistan's first plastic road inaugurated

Pakistan’s first plastic road inaugurated

ISLAMABAD: Pakistan’s first plastic road an ecofriendly road was inaugurated in Islamabad.

Pakistan’s first plastic road inaugurated in CDA

The road is made of recycled plastic and is a joint venture between the Capital Development Authority (CDA) and the National Incubation Center.

The road was inaugurated yesterday (Monday) by Interior Minister Sheikh Rashid Ahmed.

The total length of this road is one kilometer and it is one of the many steps taken to make Islamabad an eco-friendly city.

FBR decides to review property valuation rates

FBR decides to review property valuation rates

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to review the property valuation rates.

Statement from FBR Spokesman

An FBR spokesman said the new immovable property rates would be worked out in consultation with various market stakeholders.

It may be recalled that recently FBR had fixed new valuation rates of properties in 40 major cities of Pakistan.

Following the FBR’s announcement, the Association of Realtors announced a nationwide wheel jam strike from Friday this week. He said that with the said action of FBR

Registration of real estate agents with FBR is mandatory

Registration of real estate agents with FBR is mandatory

ISLAMABAD: The government has made registration of real estate agents with the Federal Board of Revenue (FBR) mandatory.

Statement about registration of real estate agents with FBR

According to a statement issued by the FBR, registration of real estate agents with FBR has been made mandatory, after which no public or private development authority will be able to do business with an unregistered agent.

According to the declaration, transfer or registration of any kind of immovable property will not be possible without registration.

According to the notification, this condition will be applicable to all housing authorities and corporate housing societies while it will also be applicable to development schemes for residential or commercial purposes.

The FBR said that in case of violation, action would be taken against all such individuals and businesses under money laundering and terror financing laws.

Metropolitan Corporation Islamabad launches campaign against illegal housing societies

Metropolitan Corporation Islamabad launches campaign against illegal housing societies

ISLAMABAD: The district administration of the federal capital, Metropolitan Corporation Islamabad, has launched a campaign to discourage illegal housing societies.

Metropolitan Corporation Islamabad Crack

According to a notification issued by the Metropolitan Corporation Islamabad (MCI) Secretariat, the MCI has imposed a complete ban on advertising by all such housing societies through advertisements, billboards, banners and streamers which are from CDA. Will not be approved.

According to the statement, housing schemes and housing societies without NOC and all other documentary requirements from the Capital Development Authority (CDA) will be deemed illegal.

 

The CDA awarded the contract for the construction of Tenth Avenue to the NLC

The CDA awarded the contract for the construction of Tenth Avenue to the NLC

ISLAMABAD: The Federal Development Agency (FDA) has opened tenders for the construction of Tenth Avenue and awarded the contract to NLC, the lowest bidder. Tenth Avenue will be built in two phases.

The first phase will include construction of five km long road with installation of drainage system, construction of underpasses between roads and at railway crossings and electrical work while the second phase will include construction of flyover on Srinagar Highway.

Development work on both phases of Tenth Avenue will cost a total of Rs 10.28 billion.

The construction of Tenth Avenue is part of Islamabad’s master plan but no practical steps have been taken in the past for its construction.

The construction of Tenth Avenue will provide indirect services to the residents of Sector I10, H9, I9, H9 and other adjoining sectors while the construction of this road will also improve the flow of traffic on other adjoining major highways.

Pakistan's first property verification center

Inauguration of Pakistan’s first property verification center in Islamabad

ISLAMABAD: The Capital Administration has set up a property verification center in the federal capital Islamabad to curb illegal real estate transactions.

People can check the legitimacy of this property verification center before investing in real estate projects.

It is pertinent to mention here that in the real estate sector on a daily basis Rs. 4 to 5 billion is caught in the whirlpool of uncertified and illegal real estate projects.

Addressing a media conference after the inauguration of PVC, DC Islamabad Hamza Shafqat said that there are many schemes which claim that they are located in Islamabad but they are not there. He said that fraud is also committed by many approved societies.

He said that the first property verification center has been set up in Pakistan and any person who wants to buy a plot in any housing society can check his information from here.

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