Guaranteed Rental is usually a sham; it’s effectively just a discount on your total payment and does not equate to luxury. Nowadays developers shall market, on billboards and TVCs, unexplainable prices to their apartments and add a guaranteed rental percentage for a specific time period. Sure, a guaranteed rental for a small time period can be good in the short term, however this guaranteed return is not the actual rent that the finished product shall produce after completion. Developers shall use the advertising one two punch of “Luxury” & “Guaranteed Rental” to lure in naive buyers into purchasing apartments whose actual rental return capacity is nowhere near the guaranteed rent promised up till the apartment’s completion.
Eventually purchasers are left stuck with an asset whose opportunity cost ends up dwarfing the guaranteed rental return they gained. This is why it is best to trust an apartment project whose rental returns have been actualized through executed rental contracts with various tenants. Actual realized rental return is a barometer of a projects luxury and stands as proof of concept. Proof of concept stands as one of the most important characteristics that projects can be compared by.
Having said that, previous successful developments usually can cause complacency and this complacency further culminates in the form of shoddy developments being sold on previous glories. As is the case for numerous apartment buildings in Pakistan’s three major cities.
