The culture of the housing society | Political economics


EWondering about the rise of housing corporations across Pakistan? What is the purpose of these housing corporations? Who founded these concrete oases? I’m sure you would have land in one of them as well, if not, you must have one. Have you ever thought why we are forced to live in these enclaves? Who regulates these companies? More importantly, why do we need it in the first place?

To begin, let me tell you that a housing society means a society aimed at providing its members with open plots for housing. If it has already been acquired, it focuses on providing its members with common equipment and services. Housing corporations may exist across the world in some context, only in Pakistan have they become a magnetic force, attracting huge swaths of so-called economic activity to them.

Now, let’s go back a bit in history to decode the idea. The concept of housing societies grew out of a culture of the plot that was passed down to us from the British. The colonial government distributed land as gifts to those who were loyal to the colonizers. These people were then free to use the donated land as they saw fit, without any tangible control. So using state land for vested interests is old wine in new bottles. Alongside this, there is also a system of cooperatives – created by law to help poor farmers or working people band together and do things that are more difficult to undertake individually. Shortly after the co-operatives were established, some bureaucrats began to use the Co-operative Act to seize public lands in their name and erect housing corporations, in which the poor would not have the chance to take a peek. ‘eye.

The usual modus operandi is that housing corporations exploit loopholes in institutional mechanisms and use government authority to acquire land at rock-bottom prices and transfer it to wealthy and powerful agents of the dominant coalition. This is despite the fact that the Land Acquisition Act does not allow the taking of land for other than public purposes. The real model of forcibly taking land from peasants and handing it over to the wealthy started with Islamabad. Even today, Islamabad is developing through these harsh, non-market means.

Pakistan is a strange country in the sense that almost all government organizations are involved in real estate development. In fact, housing companies were started by mafias within these organizations; in cahoots with municipal governments who give permissions and turn a blind eye to what happens next. It is a scheme of personal enrichment at the expense of the losers who buy into these companies. Side by side, city governments run with an old-school approach have always banned free market real estate, high-rise buildings and mixed-use construction inside cities. Since we have continued the British tradition of giving plots to government officials, suburban development has been promoted on the basis of housing corporations. What we have today is an expansion of these colonial societies, rather than urban development. Dr. Nadeem ul Haq, Vice Chancellor of the Pakistan Institute of Development Economics (PIDE), recently wrote a Twitter thread about it. The points of this thread are briefly explained below.

Let there be a free and transparent real estate market. Allow people to transact and record the sale of real estate on a website. Let anyone offer more and take it. This could make the whole market open and transparent.

It is pertinent to note that there are invisible string pullers in this sector. Some of the settlements are not guaranteed by those in whose name they were first established. These corporations are run by in-game skinless smokescreens. At the same time, housing corporations usually take decades to develop, starting with false promises. Sometimes the initiating team runs away with funds. On others, the initiator is a scammer.

Those that work have management problems. For example, there is no schedule of commitments from housing companies. Their delivery times are elastic, and their commitments meaningless. The courts are misinformed and end up favoring the managers of the housing companies. People wait decades for plots, and yet the yields are not that high. An idea of ​​the situation can be drawn from the fact that in the last 25 years the CDA has not issued a single certificate of completion to any housing company. That says a lot about the seriousness of the situation.

People who talk about spectacular returns look with a narrow lens at a few developed areas like Islamabad and some famous housing companies, such as Bahria and DHA. What about the average housing company, how long it takes, false promises as well as the sustainability of the overall service post-completion? In most cases, the returns are not that high, especially considering inflation and the exchange rate. A lot of money is lost due to fraud. Therefore, we can say that the real estate sector in Pakistan has not evolved as a true business sector despite its significant contribution to the country’s labor market and GDP. In Pakistan, developers sometimes advertise housing companies with little or no land. Anecdotal evidence suggests that 80% of developers in Pakistan do not deliver.

Let there be a free and transparent real estate market. Allow people to transact and record the sale of real estate on a website. Let anyone offer more and take it. This could make the whole market open and transparent. The government could also offer to buy the property if it feels a low price is being offered. The Pakistan Institute of Development Economics (PIDE) has initiated internal work to design such a mechanism. It will be out soon.

Free the market, let the laws of supply and demand act. Housing and land are expensive because old school forces with a colonial mentality are all in favor of housing corporations. Downtown real estate is locked in government property (government housing), Auqaf, Evacuee, poor titling extreme land fragmentation. If downtown land is freed up, transactions simplified and fragmentation not incentivized, the supply of apartments, offices, commercial real estate will make downturns attractive. Sprawl will be prevented and housing companies will go to the muck of history. As long as downtown supply is killed by regulation, housing corporations will thrive. To supply housing companies, highways and viaducts are built in the heart of the city, further devaluing the city center. Why aren’t town centers allowed to grow vertically? Why are downtowns full of spaces that kill downtown?

Not allowing the redevelopment of high-rise buildings and the city center will slow down the development of the country. It’s time for downtown redevelopment to be a priority. It’s time for mixed use to be allowed. It is time that the authorizations for mixed use at height are liberalized. It is time for the government, including the houses of governors, to leave the cities to let commerce take over. Dense living on contemporary urban infrastructure is the need of the times.

Why? The “why” part is explained in my previous article: The opportunity in the cities, published on June 27 and available online. Municipal governments need to learn. The ingredients are known. We don’t have to do everything from the start. We just need to learn from international prototypes and contextualize them a bit. Are we too dense to learn even what exists in the open air?

The author is a Research Economist at Pakistan Institute of Development Economics, Islamabad

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