What is Short Term Investment & Long Term Investment, What to Invest in 2011:
A property that is bought and resold within six to twelve months is referred to as a a short term investment in the real estate market, whereas a property held for three to five years and then sold is referred to as a long-term investment.
Here is a closer look at the real estate trends that have emerged in Pakistan since 1995:
A property that is bought and resold within six to twelve months is referred to as a a short term investment in the real estate market, whereas a property held for three to five years and then sold is referred to as a long-term investment.
Here is a closer look at the real estate trends that have emerged in Pakistan since 1995:
- 1995-2000: Investment was primarily long-term and property prices appreciated by nearly 60 to 70%.
- 2000-2005: Long term investment continued and investors enjoyed heavier appreciations as the economic landscape improved.
- 2006-Present: The short-term investment term began in 2006, when an unstable economy discouraged investors from investing in Pakistan; they opted for the Middle East instead. The people who choose to invest in Pakistan did so only for short periods of time (from six months to a year), after which they either made other short term investments to stopped investing in Pakistan altogether.
- Investors now prefer to sell their property as soon as it's value increase by six to seven percent; when prices decrease by even one percent, they purchase new properties.
- Continuous short-term investments eventually affect the long term scenario of the real estate market. Ideally, property appreciation at the end of a five-year period should be 25 to 30%. However, if short-term investment continuous, appreciation will remain significantly low, reaching only three to four percent.
- Ultimately, short term investments hamper the growth of the real estate sector and result in undervaluing the net worthy of the property.
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