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Real estate of affairs

Efficient and scientifically-structured land management is the first step to improve and reform real estate market

Real estate of affairs
All in the name of development.

State Bank of Pakistan reports inform that there has been a steady rise in the remittances sent by overseas Pakistanis during 2014. Much of this ready capital is finding its way into the real estate sector. There are several reasons for this state of affairs.

Very high risk in other sectors such as trading or manufacturing; absence of advice and information regarding parallel opportunities; aggressive marketing by realtors of different ranks and profiles and the psychological affinity of people towards property investments are a few reasons. Given the fact that there is an overall boom in land and property enterprises across the country and beyond, the trend of investment is likely to remain stable in this direction. However efficiency in the real estate market is constrained due to some basic handicaps.

An element of doubt always lurks behind the validity and veracity of transactions, both for buyers and sellers. Complicated procedures of documentations, spread out web of corrupt practices, weak legal safeguards and above all, limited access to information, are some barriers that adversely affect the performance of real estate market. Whereas the sector is in dire need of a comprehensive reform, few basic factors have to be improved without any delay.

Creation of an efficient and scientifically-structured real estate information system is the first step in the proposed process of improvement. Let us take the Karachi urban region as an example for focused review and analysis.

The foremost consideration is the political mandate to initiate this task. History is replete with half-hearted attempts to launch projects for structuring a data base of urban properties. In 1990, the erstwhile Karachi Metropolitan Corporation (KMC) undertook an urban land management study with the assistance of local and Australian consultants. The objectives were to take stock of land utilisation patterns, available land reserves, identification of vacant/unutilised land parcels as well as the future land in the hinterland. The documentation was aimed to scientifically predict the trends of construction and real estate development. The study had also recommended the creation of a centralised database with a view to serve multiple clients. Unfortunately, not much could be undertaken afterwards.

Donor agencies attempted to streamline this sector through various projects during the 1990s, but not much could be achieved in the end. In 2003, an attempt was made to computerise the records of registered properties by the Excise and Taxation Department of the Sindh government. The initiative had an active start but could not continue at the desirable pace to complete the assignment of even the properties in the planned settlements.

Complicated procedures of documentations, corruption, weak legal safeguards and limited access to information are adversely affecting the real estate market.

Whereas individual land management agencies do possess records of ownership and other variables, they are reluctant to share it for the fear of losing control over them. At times, some of these agencies fall prey to clandestine pressure which results in non-transparent transactions. The construction of a residential settlement for high-ranking military personnel next to National Stadium Karachi; construction of the head office of National Highway Authority on land owned by Pakistan Railways and the construction of a high profile tower on Railway land by a consortium of realtors smack of the dubious affairs that can only be streamlined through better information systems.

The wild proposal of converting 60,000 acres of Karachi’s coast into “sugar land city” — a fancy real estate programme — is not very old to be forgotten. More powerful venture capitalists have begun acquiring large swathes of peri-urban land in Gadap area and other locations in Karachi for the same purpose. Ordinary property buyers are bewildered whether it is safe and legal to invest in such projects or otherwise.

It is common knowledge that real estate sector has many overt and covert stakeholders. International investors of various backgrounds and their front men; military agencies; local investors; brokers; builders; personnel of land management agencies; infrastructure development agencies; bankers; contractors; legal practitioners and individual owners and users are some of the key categories. As obvious, the status quo suits to the interests of some of them. But the pre-requisites of good governance demand that an effective legal and administrative framework is promulgated without delay. This move will help stem the clandestine muscle men and manipulators and shall help create a level playing field for all, especially the weaker proletariat in the society. It will also help in the rationalisation of choices by all the interest groups for self benefits. In other words, a mechanism of transparency shall evolve itself in a gradual manner.

The subsequent step is to collect, examine and verify land ownership records. In Karachi and elsewhere in Pakistan, it is an extremely complex task. Multiple formats and procedures of ownership; willful tampering, concealing and destruction of some records; poor record keeping and rampant corruption are few handicaps that continue to affect the sector. However, the only way to begin the exercise is to launch this initiative after consultation with all the institutional stakeholders.

After completion of pre-development phase of ownership records, a process of reconciliation needs to be structured. This can remove the anomalies and incompleteness from the information that is being collected. Such a settlement exercise essentially requires legal cover to make it efficient and effective for a worthwhile database preparation.

The more crucial phase arises at the stage of development-based information on land. This stage pertains to the variables such as development permissions, amortisation of land uses, disputes, violations, penalties, conversions, regularisations and related information. Experiences have shown that this information cannot be collected without well-organised field surveys by teams of competent professionals. It is a continuous task as there is an increase in properties and land development schemes periodically.

The records available with building control authorities and related departments are also important to be scrutinised and made available for public access. Public agencies and departments, some of which are owners and managers of large tracts of high value land assets, need to be advised to prepare and publish authenticated versions of their land holdings. This measure alone can remove many corrupt practices and illegal transactions.

It will also be useful for different planning assignments such as demarcation of ecological assets, establishing right-of-ways for different proposed modes of transit, densification of certain identified neighbourhoods and protection of sensitive properties particularly with respect to military operations.

A sound and user-friendly information system in real estate is essential to help the common people in their choices and transactions of properties. Much of these transactions take place in an informal manner without involving necessary paper work. It usually harms those weak and simple folks who fall prey to shrewd brokers in different contexts.

A well-managed information system will also help identify important pending assignments such as property registration procedures/revisions; property taxation systems; land and property acquisition for development projects as well as the administrative measures of managing vacant property assets. However, much of Karachi’s law and order menace shall be neutralised by streamlining land and property markets in an open and transparent manner.

Dr Noman Ahmed

Noman Ahmed
The author is Chairperson of Department of Architecture and Planning at NED University, Karachi. He can be reached at [email protected]

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