EDITORIAL: Nobody’s talked about real estate and construction as well as the 40 or so associated sectors in quite a while. Some time after the amnesty scheme ended and prices shot through the roof this sector just slipped off the radar. It might have been good for revenue for a while but the amnesty also opened the floodgates for black money in a manner that shocked even policymakers and priced home building, and even renting, right out of the reach of middle- and lower-income groups. That’s why the government’s flagship Naya Pakistan Housing programme, which shared space in boastful ministerial tweets with the construction bonanza, also ran out of steam. And it seems, increasingly with time, that real estate initiatives of the last few years have only made the rich much richer and bid up prices across the board.
Yet it’s still not too late to reform real estate. So far the government hasn’t come up with a comprehensive policy because it hasn’t been bothered to frame one. The idea to leverage this sector for stimulating economic activity and generating revenue is as old as the country, but effective implementation of this idea has left a lot to be desired. The public-private partnership (PPP) model has brought more problems than solutions. More often than not, it turns out that private parties sell units to more than one buyer, which results in endless litigation and a quick flight of faith and capital and honest, hard-working people who make investments in dubious schemes end up on the losing side.
There’s also the so-called qabza mafia, which has turned what is referred to as land laundering in some circles into a fine art. They specialise in illegally occupying land, literally stealing it by having their ownership legitimised, and then turning it over to investors for real estate business, etc. It’s much later of course, if at all, that the law catches up with some such characters and, once again, ordinary people who get duped into their net pay the price for their corruption. This mafia has also been around since forever and no administration has been able to do anything about it. Who can forget that not long ago the governor of Punjab resigned in protest because even his office was helpless in assisting overseas Pakistanis against it?
The government must have learnt very important lessons from the Supreme Court’s recent order to demolish a building in Karachi and also its fallout. It encroached only a foot-and-a-half outside its boundary, but into very important space, so it wasn’t something that could just be whitewashed with a customary penalty. Therefore, the whole structure had to be destroyed. A good start in overcoming all these problems can be making land insurance and title insurance necessary in order to protect lenders and buyers from financial loss and also against claims against property. They require payment of small premiums to insuring entities at the time of purchase. These entities then proceed with the necessary risk management and due diligence at the right time and prevent needless hassles and headaches later. Such things, along with complete digitisation of land records is the best, and the safest, way to proceed. That’s why the fact that the first phase of digital cadastral mapping of Pakistan is complete is very heartening.
There’s no denying that stimulating real estate lifts dozens of sectors and industries along with it; and that it’s a very useful leading indicator of turns in the business cycle. It’s also very true that providing low-cost housing to marginalised groups is a sure shot way of improving public welfare as well as income and employment. Yet the government can’t escape the charge that while it might have had the right thing in mind, what it has really achieved is hardly anything to write home about. Since it does not have too long before the next election, and surely it would like to see real estate growing steadily and strongly, it must give serious thought to properly reforming this sector in a way that benefits are spread across all spectrums of society. Handling the risks rightly is, after all, often more important than hunting for profit and revenue.
Copyright Business Recorder, 2021
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