Land is perhaps the most important natural resource a country has. It is scarce. It has many uses. It is a source of power; it provides food; and on it we build our shelters. There is no state without land. The same land on which we live was the abode of our ancestors and shall also be the abode of our future generations.
Housing is a basic need of every human being. One of the measures of poverty of a country is the number of homeless people in that country. Everyone remembers Bhutto’s famous slogan of ‘Roti, Kapra aur Makaan’. Every political party in Pakistan has promised a decent shelter for masses in its election manifesto. But what is the reality? Barring a few small schemes here and there, most of the housing sector has been left to the private sector and that unfortunately has mostly been interested in development of land rather than providing an affordable home. Today the country is full of DHAs, Bahrias, Smarts, Citys and a hoard of other similar projects. Is this something good or bad? The answer is not simple. However, it will be worthwhile to look at some unintended consequences of this policy.
The commodification of land
In Pakistan land is being sold and purchased as a commodity and its price varies, during the boom period, almost daily and sometimes many prices of the plots prevail in a day. This is more like the prices of shares in the Stock Exchange and gold in the international and local markets. The most popular investment in Pakistan is that in open plots. Like every commodity market, this market is also rife with speculation and arbitrage. Since many promotors of housing schemes have a perpetual business of land development, they play their part in ensuring that prices of plots continue to rise or are at least maintained to make their future projects attractive.
The effect of it is that the housing has been taken beyond the reach of middle class and lower middle class. A salaried person if he wants to build his own house of some sorts will now have to involve himself firstly in the trading of land to make some money to provide the requisite funds for building a house. Salary alone is not sufficient for this project.
Land that was supposed to be for the purpose of housing of the general public of this country is now being owned by investors. Over 80% of the people’s wealth is dumped in the land
Erosion of agricultural land
You start travelling from Peshawar to Karachi via GT Road, you will see a new housing scheme coming up in the outskirts of every town and city through plotting of lands that were previously used for agriculture. Pakistan has one of the fastest growing populations in the world. During the last 50 years it has increased to four times. Our agriculture is still primitive. We have a very low per acre yield of all crops as compared to India and China, our two neighbors with large populations to feed. This erosion of agricultural land has led to food shortages and reduction in the production of cotton that supports our textile industry which is the largest export industry of the country. We have now started importing both wheat and cotton. We have also been importing pulses and vegetables from neighboring countries.
Look how we have destroyed mango orchards on thousands of acres in Southern Punjab where world’s finest mangoes are grown and rice fields in the Gujranwala Region where world’s best rice is grown. We all know how land of Chak Shahzad, near Islamabad, was misappropriated by the powerful elite to build their farm houses on land that provided vegetables to the twin cities.
Wastage of national resources
Mania of land development and investing in it is so high that we see several large housing schemes being promoted simultaneously in the same city. Sizes of such projects are based on the capital and other resources available to the developer rather than the demand for housing in that area. Developer has no problem in selling as investors are too eager to buy. But the irony of the whole situation is that it takes decades to bring residents to these housing schemes. The entire money spent on development remains unutilized during all this period.
Living in an under-occupied housing scheme is always expensive due to lack of public transport and non-availability of commercial facilities near one’s residence, thus requiring more than one car in the house and increase in the fuel bill. A country where automobiles are assembled from imported parts and are run on imported fuel, such housings are creating additional pressure on our very scarce foreign exchange reserves.
Creation of a class
Most of the large developers cater to the need of the wealthy. They offer plots of large sizes, farm houses, luxury apartments and very expensive commercial properties. There is no comparison between the housing facilities of those living in DHAs or Bahrias and those living in adjoining localities. Housing schemes developed by the governments are also far inferior in facilities to these posh private sector housing schemes. Previously such display of class and wealth was not so widespread throughout the country as it is today. There cannot be a national harmony in a country with such large and manifest differences between haves and have nots.
The way forward
The government should immediately demarcate agricultural land and any change in its status should be allowed only by a high-powered commission under very strict conditions. Property development companies should only be allowed to build and sell houses and sale of plots should not be allowed in cities where population pressure due to migrations is high. A maximum size of houses should be fixed to discourage owning houses bigger than one’s need.
Construction by these developers should be under strict regulations and special courts should be formed to resolve issues of quality, final pricing and delay. We all know the quality of houses constructed by both government contractors and private housing schemes. Therefore, strict regulations and speedy resolution of disputes is necessary for the protection of customers.
To promote local industry, builders should be required to use locally produced material in the construction and finishing of the houses thus promoting local industry and lessening the burden on foreign exchange. The transfer of houses and already developed plots should be restricted to change the nature of houses as commodity.
Land has been a place to hide black money for a long time in Pakistan. This part of the black money either remains dumped rather than remaining in circulation or is whitened either free or at a lower tax rate thus discouraging a tax payer who pays tax on all his income.
All these measures will help in diverting investment to industries and other social sectors that will generate productive employment and will lead to increased GDP. It will also help in reducing display of class difference and will provide food security to an already starving nation. Those at the helm of affairs should be mindful that this land is not for the present generation only; our successors on this earth also have a stake in it.
Will the powerful people who run these businesses let a weak political government do this?
Housing is a basic need of every human being. One of the measures of poverty of a country is the number of homeless people in that country. Everyone remembers Bhutto’s famous slogan of ‘Roti, Kapra aur Makaan’. Every political party in Pakistan has promised a decent shelter for masses in its election manifesto. But what is the reality? Barring a few small schemes here and there, most of the housing sector has been left to the private sector and that unfortunately has mostly been interested in development of land rather than providing an affordable home. Today the country is full of DHAs, Bahrias, Smarts, Citys and a hoard of other similar projects. Is this something good or bad? The answer is not simple. However, it will be worthwhile to look at some unintended consequences of this policy.
The commodification of land
In Pakistan land is being sold and purchased as a commodity and its price varies, during the boom period, almost daily and sometimes many prices of the plots prevail in a day. This is more like the prices of shares in the Stock Exchange and gold in the international and local markets. The most popular investment in Pakistan is that in open plots. Like every commodity market, this market is also rife with speculation and arbitrage. Since many promotors of housing schemes have a perpetual business of land development, they play their part in ensuring that prices of plots continue to rise or are at least maintained to make their future projects attractive.
The effect of it is that the housing has been taken beyond the reach of middle class and lower middle class. A salaried person if he wants to build his own house of some sorts will now have to involve himself firstly in the trading of land to make some money to provide the requisite funds for building a house. Salary alone is not sufficient for this project.
Land that was supposed to be for the purpose of housing of the general public of this country is now being owned by investors. Over 80% of the people’s wealth is dumped in the land
Erosion of agricultural land
You start travelling from Peshawar to Karachi via GT Road, you will see a new housing scheme coming up in the outskirts of every town and city through plotting of lands that were previously used for agriculture. Pakistan has one of the fastest growing populations in the world. During the last 50 years it has increased to four times. Our agriculture is still primitive. We have a very low per acre yield of all crops as compared to India and China, our two neighbors with large populations to feed. This erosion of agricultural land has led to food shortages and reduction in the production of cotton that supports our textile industry which is the largest export industry of the country. We have now started importing both wheat and cotton. We have also been importing pulses and vegetables from neighboring countries.
Look how we have destroyed mango orchards on thousands of acres in Southern Punjab where world’s finest mangoes are grown and rice fields in the Gujranwala Region where world’s best rice is grown. We all know how land of Chak Shahzad, near Islamabad, was misappropriated by the powerful elite to build their farm houses on land that provided vegetables to the twin cities.
Wastage of national resources
Mania of land development and investing in it is so high that we see several large housing schemes being promoted simultaneously in the same city. Sizes of such projects are based on the capital and other resources available to the developer rather than the demand for housing in that area. Developer has no problem in selling as investors are too eager to buy. But the irony of the whole situation is that it takes decades to bring residents to these housing schemes. The entire money spent on development remains unutilized during all this period.
Living in an under-occupied housing scheme is always expensive due to lack of public transport and non-availability of commercial facilities near one’s residence, thus requiring more than one car in the house and increase in the fuel bill. A country where automobiles are assembled from imported parts and are run on imported fuel, such housings are creating additional pressure on our very scarce foreign exchange reserves.
Creation of a class
Most of the large developers cater to the need of the wealthy. They offer plots of large sizes, farm houses, luxury apartments and very expensive commercial properties. There is no comparison between the housing facilities of those living in DHAs or Bahrias and those living in adjoining localities. Housing schemes developed by the governments are also far inferior in facilities to these posh private sector housing schemes. Previously such display of class and wealth was not so widespread throughout the country as it is today. There cannot be a national harmony in a country with such large and manifest differences between haves and have nots.
The way forward
The government should immediately demarcate agricultural land and any change in its status should be allowed only by a high-powered commission under very strict conditions. Property development companies should only be allowed to build and sell houses and sale of plots should not be allowed in cities where population pressure due to migrations is high. A maximum size of houses should be fixed to discourage owning houses bigger than one’s need.
Construction by these developers should be under strict regulations and special courts should be formed to resolve issues of quality, final pricing and delay. We all know the quality of houses constructed by both government contractors and private housing schemes. Therefore, strict regulations and speedy resolution of disputes is necessary for the protection of customers.
To promote local industry, builders should be required to use locally produced material in the construction and finishing of the houses thus promoting local industry and lessening the burden on foreign exchange. The transfer of houses and already developed plots should be restricted to change the nature of houses as commodity.
Land has been a place to hide black money for a long time in Pakistan. This part of the black money either remains dumped rather than remaining in circulation or is whitened either free or at a lower tax rate thus discouraging a tax payer who pays tax on all his income.
All these measures will help in diverting investment to industries and other social sectors that will generate productive employment and will lead to increased GDP. It will also help in reducing display of class difference and will provide food security to an already starving nation. Those at the helm of affairs should be mindful that this land is not for the present generation only; our successors on this earth also have a stake in it.
Will the powerful people who run these businesses let a weak political government do this?