A lack of regulations and best practices make Pakistan’s property market very challenging to navigate. Property buyers and sellers in Pakistan must rely on valuations provided by real estate agents and brokers, without knowing how that rate was calculated. Many factors affect a property’s value, including location, the condition of the property, local infrastructure, the environment, and supply and demand (PR, 2021). In addition to these factors, there are many other things that make a property valuable.
Pakistan lacks a proper system of property valuation, which leads to speculation and fraud in the real estate market. To mitigate market risks, buyers, sellers, and investors need a system that is reliable and accurate. It will not only protect people from losing money in bad investments, but it will also regularize the market so that it is protected from real estate bubbles, a term used to describe artificial inflation of price. Continue reading to learn more about how Pakistan can implement a model to value its properties.
The Need for Property Valuation Model in Pakistan
Whether you’re buying, selling, or investing in real estate, it is imperative that a property’s value is determined accurately. Properly valuing a property can produce multiple benefits, including greater market acceptance among investors, supply and demand regulation, protection from speculation, and significant cost savings. Traditional models for evaluating real estate prices are no longer efficient. The decision to use a real estate agent for property valuation requires a great deal of trust and confidence. Since real estate markets are also poorly regulated, the opportunity for misusing this trust and confidence increases significantly.
Property valuations are not only beneficial for potential buyers and investors, but also for sellers who can use the estimates to plan a profitable investment portfolio while reducing risks involved in real estate markets. The real estate industry can track and research market trends, agents can stay ahead of the competition, and financial institutions can process loan applications and collateral assessments more efficiently (Appraisal, 2021). As a result, accurate and transparent property valuation is essential for the Pakistani real estate sector.
How can Artificial Intelligence (AI) be Used for Property Valuation?
AI is the process of gaining valuable insights and making predictions by analyzing vast amounts of data that has been organised, cleaned, and analysed. The underlying algorithms learn the associations between the different aspects of data related to a product or service once the data has been collected. Compared to traditional property valuation methods such as the sales comparison method, rental method, building method, and profit method, artificial intelligence can play an important role in determining the current and future market price of real estate (Julio Gallego, 2004).
When it comes to handling large amounts of data, human beings are limited. However, computers can process an entire city’s worth of land records, titles, geographic indicators, development indicators, supply and demand indicators, and much more in just a few minutes. The result is a fast property valuation model that takes into account all the characteristics of the traditional model and more. The use of AI and machine learning is not only beneficial in estimating current property values, but also in making future predictions for investors, developers, urban planners, and the government (Dr. N. B. Chaphalkar, 2013).
The use of Geographic Information Systems (GIS) for digital land mapping involves the addition of multiple layers of data to a computer model of a map. The virtual images of a map can be viewed on multiple internet-capable devices. GIS systems have a wide variety of applications that allow them to be used for property valuation models. A powerful real estate database can be created by combining this technology with artificial intelligence and unique identifiers. In addition to transport options, crime rate statistics, and school ratings, the AI model can also help determine a property’s value (Esri, 2021).
Can Pakistan Implement AI Systems in the Real Estate Sector for Property Valuation
At the moment, Pakistan lags behind in the adoption of real estate technologies, but companies like Graana.com are changing the real estate dynamics in the country. The company is Pakistan’s first online real estate marketplace, and it provides an extensive lineup of PropTech solutions. Pakistan’s major cities and planned areas have not been digitally mapped. The company, however, has successfully completed a land infrastructure and digital mapping of all major cities in Pakistan. PropSure Digital Solutions, the company’s technology arm, also uses artificial intelligence for a range of products such as interactive help desks, customer experience solutions, and listing optimizations. Graana.com, a leading provider of PropTech solutions, could significantly impact online property valuation for Pakistan’s real estate market.
Pakistan’s real estate market has enormous potential. Despite having survived three waves of the deadly covid pandemic, the country shows signs of growth and investor confidence in the construction and real estate sectors. Speculation in the real estate markets of Pakistan has led to a sharp rise in real estate prices. The introduction of a property valuation system that uses artificial intelligence can greatly increase the reliability of conducting business in Pakistan’s real estate market. Through the introduction of different PropTech technologies, companies like Graana.com are investing in Pakistan’s real estate sector. Therefore, Pakistani real estate could be harnessed to its full potential with accurate and transparent property valuations.
Don’t forget to give your input on our property valuation survey.