In my previous article, I talked about the need to embrace change and reject conventional modes of thinking with regard to real estate development in Pakistan.
This instalment mostly has to do with concrete actions (solutions: the natural next step), instead of mere diagnosing and theorising. And don’t worry, I’ll explain the ‘RED’ part of the title shortly.
Revisiting the problem
But first things first.
In order to fully realise the positive impact of real estate development on the economy, we need to create the right policy framework for the sector. One that is centred on transparency, integrity, innovation, and inclusiveness.
To practically achieve this, it is first necessary to identify the fundamental weaknesses that currently weigh down on Pakistan’s economy. These, in my assessment, are as follows:
- An over-reliance on imports (especially foreign fuels) coupled with low exports – resulting in a balance of payments crisis;
- High utility costs – leading to uncompetitive industries;
- A manufacturing sector which does not make value-added goods;
- Poor quality of infrastructure (both utility and transport);
- Lack of foreign investment;
- Ad-hoc and unfriendly regulatory environments;
- Poor utilisation and the high cost of land;
- Lack of documentation of the economy, particularly in the real estate sector(resulting in low revenue collection);
- Unemployment, a poorly skilled workforce, and the inefficient use of labour resources.
All of these are structural issues which have proven to be very difficult for our successive governments to solve throughout our national history.
Solutions: what effective land utilisation can bring
As such, a big part of the solution to these problems lies in making a coherent and efficient use of our country’s land resources. By exploiting our existing land efficiently, we can hope to attain the following advantages:
- Investments (both foreign and local) in a wide range of sectors, including industry, infrastructure, residential, and leisure/hospitality.
- Essential infrastructural development through public-private partnership agreements; thereby reducing the financial burden on the federal and state governments.
- Soft infrastructural development (amusement parks, hotels/resorts, shopping malls etc.) to enrich people’s lives.
- Job creation – to build, market, and operate new projects and developments.
- Documentation of the economy, and reduced tax evasion through the creation of a modern property registration system accessible to all relevant revenue authorities.
- Availability of more government land for development – and to add value to our unproductive land bank.
- Establishment of a streamlined regulatory framework to encourage investments and facilitate development, based on international best practices and successful project precedents.
- Infrastructure creation for a knowledge-based economy – with a particular focus on export-led industries to revamp our unimaginative manufacturing and service sectors.
- Enhanced tourism and hospitality sectors through the creation of the necessary tourist infrastructure.
To realise these goals, we need to get serious on how we approach the property sector. Narrowly speaking, the piecemeal ‘ad-hoc’ nature of property development needs to change – for which we need to get real and organised.
At this stage, formulating a dynamic real estate development policy in consultation with the major stakeholders is essential for Pakistan’s economy.
The primary aim of a federal real estate development policy should be to maximise the potential of real estate development in the country – for achieving any number of essential common goals. In other words, the proper exploitation of land and property is key to improving people’s lives.
This calls for a development policy intervention, and this is how I propose we go about executing it:
- Make more government land available for private development; with strong executive oversight through a dedicated real estate regulator (see 2 below). All projects on government land should be transparently awarded and assessed in terms of their public-utility and revenue-generation potential.
- Devise effective and appropriate regulation, structured as follows:
- Install a regulatory framework with dedicated regulators on the federal and provincial levels
- Update laws and regulations as per the following considerations:
- Establish investor confidence through measures such as opening escrow accounts and project registrations;
- Adopt international property management laws/regulations to ensure continued maintenance and value of existing properties;
- Revamp title registration system in accordance with modern technologies and concepts;
- Manage and regulate private developers;
- Streamline dispute resolution proceedings.
- Zoning – Provide guidelines to be followed by all provincial governments and municipal authorities, with an aim to:
(i) Protect our land resources; particularly our natural parks, beaches, and areas of natural beauty and/or intrinsic strategic value;
(ii) Redevelop and rebuild our cities along spatial development concepts.
- Encourage and manage private developers by:
(i) Streamlining the approval process (which is currently arbitrary and cumbersome, involving multiple authorities);
(ii) Handing out systemised incentives for developers to build infrastructure (roads/utilities) through public-private partnership;
(iii) Facilitate the issuance of REITs (Real Estate Investment Trusts) and other investment tools in local and international markets; achievable only fixing our regulatory system.
- Establish government-owned companies or ‘master developers’ to sell fully integrated and serviced tracts of land in newly created mega-communities. Such large organisations will – through the proceeds attained from selling serviced plots – develop costly infrastructure on a large scale which will benefit private developers and residents, along with lessening the financial burden on the federal and provincial governments. Let’s call it the Emaar model!
- Regulate and ensure a mix of housing stock to cater to all investor profiles. There is a need to build upon the Naya Pakistan Housing Programme to meet all investor requirements.
An expression of concern (the things we need to own)
For far too long, we have neglected the transformational effect that optimum use of land resources can have on our economy.
The lack of any coherent development policy will simply not stand anymore.
We live in a global economy, where people can invest anywhere they want to (in the world).
We cannot afford to take investor dollars, particularly from overseas Pakistanis, for granted anymore.
I am certain that if the tenets of the above policy framework were in place, we would not today be faced with a grim situation where the investors of a 200sq km master planned community are left in legal limbo due to irregularities concerning the original sale of land. We need to ensure that incidents of this type do not happen ever again.
While we have been content with standing still, other countries and cities have prospered.
At this point, if anyone is in any doubt how real estate development can change the global profile of a nation within a relatively short time period – all they need to do is visit Dubai, Singapore, or Kuala Lumpur.
Taking inspiration from the Gulf
I have lived in Dubai for well over a decade. I have seen first-hand how the efficient use of land has completely transformed the gulf city –not just by creating thousands of new homes, but more importantly, by creating a new lifestyle which truly embraces all nationalities and cultures.
Through the judicious use of coastal areas to build luxury villas and tall towers to providing astonishing views for offices and general city-living, world-class restaurants/hotels/malls to create lifestyle destinations, all as well fantastic roads and utility infrastructures to promote local commerce and industry – Dubai really seems to have it all!
Because Pakistan is blessed…
And here is the really good news (saved for last)!
Unlike Dubai, our country has all the natural resources that the Gulf States and most places in the world can only dream of.
A temperate climate with four full seasons– check.
Thousands of miles of unblemished coastline – check.
Natural lakes and freshwater streams – check.
Stunning sceneries and landscapes, including some of the world’s most beautiful mountain views – check.
Massive natural reserves of minerals to power not just ours, but the world’s new renewable economy – check
An under-employed and unskilled population base which has still not been tapped for its full potential – check
- A strategic location which has the potential for transporting 10% of the world’s goods and natural resources.
And I can go on and on…
So what are we waiting for?
Let’s work on developing Pakistan today, and paint the country RED: for Real Estate Development.