Pakistan witnessed a real estate boom after the 9/11 and war on terror. Property prices skyrocketed across the country and to buy a home resembled something beyond the bounds of possibility for an ordinary Pakistani. The expatriate Pakistanis invested their money in the real estate and the continuous flow of dollars swelled the volume of market.
According to modest estimates during past four to five years the money invested into the real estate market was nearly equal to Rs.250 billion rupees and this resulted into an upward and sharp increase in the prices which produced a hyper effect on the market. But now market analysts are of the view that the real estate bubble had come to an end and market is going through a slump. What really happened is that a conventionally unorganized and unnoticed sector at once recorded such an amazing potential which was unsustainable and slowing of massive money influx can’t be termed as a crash.
Historically our national psyche itself is an obsession with land and property and is well reflected by this old Hindi maxim, “Uttam Khaitte, matdham beopar nikdh chakree” meaning that farming is the best, trade is next and the service is the worst or better “land is truly the one thing that is not being made any more.”
At the same time the country’s housing situation is aggravating with each passing day. Our bourgeoning population, its stunning 2.4 annual growth rate and strong inward migration (rural-urban migration) trends are compounding the problem. The decrease in the average household size or the nuclear family notion is also gaining popularity in the urban centers. It is also resulting into more houses for small number of people.
There are nearly 19 million houses in the country against the population of 149 millions and the required number of housing units for the population is 25.83 millions. Thus we are falling short of nearly more than 6 millions. This is huge number if seen against the backdrop of the housing units being built annually.
The bulk of existing 19 million houses is consists of 67 percent rural houses, while kuccha and semi pukka houses account for the 39 and 40 percent of total housing stock respectively. In the same vein the room density for India and Pakistan is nearly 3.5 persons per room while it is 1.3, 1.1 and 0.5 in the case of Turkey, China and USA respectively.
At present the urban housing demand stands at 8 percent per annum. In addition to this rural- urban migration is also gaining momentum. Although Urban- rural population migration is a global phenomenon and mega cities are facing the challenges caused by the deluge of the rural migrants and Pakistan is no exception to this rule. Only Karachi is attracting more than 250,000 to 300,000 people annually. This is adding to already tightly crowded population and scarce resources of the cities and in case of Karachi it deprives nearly1/3rd of population of the potable water. As cities are already over populated, so, these peoples are inhibiting in the squatter settlement or shanties called katchi abadis in the local jargon. According to the reports there are nearly “539 squatter settlements across Karachi” and nearly 49 percent of the city population lives in these squatter settlements.
We have to construct more than 500,000 housing units annually to meet the backlog in 20 years. We have not taken the factors of population growth and stock depletion into account, only what I have tried to show is current backlog. At present he number of housing units being constructed is only 300,000 which is really a fraction of the gigantic demand.
The demand and supply gap is resulting into serious repercussions for the society as it had changed the more than half of Pakistan urban land into squatter settlements and is eating away the agricultural land of the country.
What is the need of the hour is that to exploit the hidden potentials of the housing sector. It is a two prong strategy to fight against poverty and raise the standards of public living.
As in the first place this strategy provides public with house which is a basic necessity and in the second revive the industrial sector. As more than 40 industries are directly related to the construction industry. The growth of housing industry is a sure recipe for the economic growth. As it also entails the growth of construction and allied sectors which includes, “ceramics, cement, paints, electrical goods, floorings, carpets, tiles and marbles, stone crushing etc….”
Moreover it will boost the banking sector by utilizing the mortgage facility that banks provide. At present the mortgage finance was 18 billion rupees for 2005 and it has growth potential of Rs. 135 billions at 35 percent urban housing needs.
In addition to this many foreign real estate investors has announced heavy investment in the residential sector including the Dubai’s construction giant Emaar which is going to construct housing projects worth US$2.4 billion in Islamabad and Karachi, Diamond Bar Island City Karachi will obviously help in restoring the confidence of local investors.
In the words of the UN Center for Housing Development (Habitat) report, “an active housing policy should be seen as a strategic economic and social investment that will generate large multiplier effects in backward and forward linkages and in productivity.”
If we take into account all these factors then the real estate sector emerges as major contributor to the economy. So, keeping in view all facts and figures it is imperative to develop this industry to utilize its full potential. And this way we shall be able to utilize the real estate and housing industry potential for the economic development of the country and certainly it has the necessary potential to become the engine of change and progress for the economy of Pakistan.
Sorce: The News