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Real Estate & Property Situation in Pakistan
crisis. There is an estimated shortage of more than one million houses which is
likely to grow by 0.6 million every year. But mercifully the situation is not
as bad as in
where the housing shortage is a staggering 40 million houses.
But it makes an interesting
reading to understand the dynamics of the real estate market in
One can safely assume that it is an underdeveloped market. As compared to
developed economies of the world where the real estate is mostly financed
through mortgage, it is a completely neglected sector in
financing in the property sector is only a recent phenomenon and can be
qualified as negligible. Even the present mortgage financing is volatile with
floating interest rate, which means that the lender is unsure of the real terms
and conditions of the loan and the banks are at liberty to change the terms and
conditions in case of adverse interest rates subsequently. It is interesting to
note that mortgage financing is more than 50 % of GDP in most developed
countries whereas this ratio is less than 2% in
Another worrying factor of the
real estate market of
is the poor land record maintenance. It is still manual and efforts to
computerize it have failed in the past. Bribery is the order of the day in land
record and Patwari is still the king who may temper with the record according
to his sweet will and vested interests. There is also a risk of fraudulent
transactions due to non-transparent land record.
Recently following a worldwide
boom in international real estate business, property market in
also witnessed a sharp growth. One of the factors may also be the recent
decline in interest rates. It is a standard principle of economics that in a
falling interest rates regime, people tend to invest in real estate, thinking
it to be safe and secure from inflation.
Another stigma on the property
sector of
is the speculation mafia. With the drop of interest rates, people were
uncertain about their investments in banks and withdrew to invest in the
property market, which offered attractive returns overnight, thanks to
speculation mafia. Many housing societies were formed to defraud people. Files
were in circulation everywhere without any physical existence of the plots and
houses on ground and many opportunists and speculators benefited from this
panorama. And ultimately common man was the looser, who was left with the file
without anything concrete as the housing societies suddenly started to
disappear. One can easily remember the example of Bankers City Housing Society.
But at the end of the day, common man in
house of his own, which seems a distant dream. One way to overcome the shortage
of houses in
may be the introduction of multistory buildings to avoid the heavy urban land
cost. This will naturally lower the
prices of houses and may bring these in the reach of a common citizen.
Government may devise a policy to encourage the
participation of the private sector in the property market. But the discouragement
of speculators is very essential. Moreover the Government needs to help the
poorest segment of society through its sate owned organization called House
Building Finance Corporation. Government may also identify the sate owned land
in the urban areas and give it to the private sector on soft lease terms for
building houses for the poorest segment of society. This will lower the high
property prices in
and will help in maturing the property& real estate market on stable
footing.
