Sharing 1st time for zameen.Com readers
I have been hearing about ordinary pakistani’s losing money in fake property development schemes since i have been a kid. I could never understand why the relevant authorities did not put a stop to such duplicities, until i found out how these schemes are operated. All these fake development schemes are created by a criminal mastermind, called a developer, who pays off many government employees and hires a bunch of property dealers to help him sell fake properties files to investors without possessing any property or doing any development work.
First a fake new property development scheme is announced with a catchy and safe name. The new scheme is heavily promoted in the media and the relevant government authorities are paid off to look the other way and not verify the new scheme authenticity. A bunch of property dealers are hired, who start selling “plot files” to investors, through initial draw and then through payment of “on” commission, which can range from 1-10 lacs rupees extra per plot-file.
Using the business model of the stock exchange, where share prices change daily, the plot-files also change the rate of “on” commission daily as well. Similarly, this high amount of money is exchanged over a piece of paper and there is no involvement or requirement to procure any land. The developer takes away all the initial down payments and the monthly regular payments for his/her own use, which is normally invested in other businesses or deposited in long term investments in other countries.
The property dealers convince investors to buy the plot-files, in hopes of getting guaranteed return on their investment in short time. But after purchasing, the investor is told the value has plummeted, forcing him to either sell at loss or pay the monthly scheme payments, in hopes of plot-file value going up in the future. This way the property dealers get heavy commissions from sale of plot files, without doing any real work.
Brother this bull market saga will continue regardless of all these genuine concerns as long as people believe real estate as safe heaven against printed and borrowed money.