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Karachi in dire need of low cost housing

About one-tenth of Pakistan’s total population lives in Karachi. Its population is growing by around 6 percent per annum due to the natural growth of about 2.5 percent and another 3.5 percent due to the influx of people from other parts of the country. Since these people come to the mega city in search of employment, they usually seek housing units with low rent, mostly located in the outskirts of the city.

According to various estimates, about half a million new low cost housing units have to be constructed every year for the people falling in the category of low income group and those living below the poverty line. Since the government pays no attention towards construction of low cost housing schemes, there is a massive proliferation of katchi abadis. These localities are mostly devoid of basic facilities, i.e. clean drinking water, sewerage and waste disposal and inadequate public transport, but people are forced to live there as they have no other alternative.

As against this, skyscrapers and posh housing units are being constructed at a handsome rate. An interesting observation is that these units are sold at full cash payment and the pace of construction is reasonably fast. Depending on the locality, the price of an apartment having a covered area of 1,500 sq. foot ranges from Rs5 million to Rs50 million. Some of the readers may term these prices mind boggling but it is a reality. The officially fixed prices are often one-fifth of the market prices. This on one hand deprives the government of tax and on the other hand proliferate undocumented economy.


Some of the most noteworthy projects are Defense Housing Authority (DHA), Army and Naval housing schemes, which have been recently joined by Pakistan Air Force and Airports Security Force (ASF). On top of all is Bahria Township of Riaz Malik. Reportedly, a town house constructed on 120/240 sq. yards (at its super highway scheme) is being sold at Rs25 million to Rs50 million. Various cases have been filed against Bahria Town but there is a mad rush to buy these properties. In fact, once this project is completed it will be another ‘walled city’, where only richest of the rich will be living.

During the course of preparing this write up, I sat down with the experts to estimate per capita income of Karachi. The consensus was that per capita income of certain localities of Karachi ranges from US$10,000 to US$20,000. This looks grand because per capita income of Pakistan is still quoted below US$1,500. The credit of this disparity goes to the tax collectors. Since the income from agriculture is tax exempt, the millionaires and billionaires declare the source of income ‘Agriculture’. If one simply looks at the payments made through credit cards, the trail of these payments can be established. People having this kind of fabulous incomes don’t need any housing finance.

Hosing finance offered in Pakistan is paltry because of the multiple reasons that include absence of clean title, the embargo on the transfer of ownership and on top of all highly inadequate amounts disbursed by the financial institution. Without mincing words, it may be said that House Building Finance Corporation (HBFC), operating in the public sector distributes only a dismal amount as it neither has the funds at its disposal nor the capacity to satisfy the overall needs of the people of Pakistan. Despite the best efforts the private sector has not been able to establish housing finance companies. Commercial banks have ventured into this business, but still can’t meet more than a nominal percentage of the total demand.


Since the provincial government has stopped allocating/auctioning land for the construction of flats, the builders/developers have no option but to either purchase agriculture land and seek permission from the government to construct housing units or buy the single/double story houses and construct multi-story flats. Now at an average around ten-story buildings are constructed. The fabulous cost of land and construction deprives people from owning a housing unit. One can still find hundreds and thousands of housing units being constructed on encroached government land. The worst loser has been Pakistan Railways as hundreds acres of its land in Karachi has been encroached. There is a loud talk going on about the revival of the Circular Railway, but the policy planners are perfectly ignorant of the ground reality. It seems that they are confined to their offices and has never bothered to visit different areas.

The land grabbers’ business is also proliferating because, the law enforcing agencies keep their eyes closed. Then they regularize these dwellings by proving the owners with electricity and gas connections. These land grabbers are fully supported by political parties and linguistic and religious groups. The residents of these katchi abadis are also the pilferers of electricity and gas that goes on with the connivance of the staff of the utility companies. It is therefore suggested that the provincial government should sale/auction its land to the builders for the construction of low cost housing units and reinvigorate HBFC or establish another housing finance company through private-public partnership.

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