OVERRIDING COMMERCIAL MOTIVE IN HOUSING AND CONSTRUCTION
TARIQ AHMED SAEEDI (email@example.com)
Aug 18 - 24, 2008
Enormity in construction of residential apartments in pivotal urban hubs and outskirts across Pakistan in last few years seemed to succeed in easing ever-increasing housing demands triggered by grave urbanization and trend of population shift from rural to urban localities. To an extent this may be true, but in real term the volume failed in providing proper dwelling facilities to a major portion of the population due to number of reasons prominent among them was an overriding commercial motive behind the construction of living places, making house purchase callously unaffordable for the low income group.
Without profit determining mechanism housing and real estate sector of the country unleashes source of bonanza for private constructors and speculators stormed in to earn unlimited profits on investments. Aggravated by burgeoning annual ratio of population the demand and supply gap of housing units is getting further widened thereby low income group is surrendering dream of own house to contracting income level.
Government housing policy formulated after monitoring and analysing demographic dynamics contains impact of probable population rise on needs of national housing units. According to last census of 1998 average household size was 6.6 persons. Since that census it is certain that population has much increased and so has the backlog of housing units. However, census 98 is referred for an actual demographic estimation. Economic survey mid 2008 estimates country's population has touched to 160.9 million. National Database Registration Authority has so far issued 152 million CNICs to male and female age group of over 18 year. The population of Pakistan is said to be growing at an annual rate of 1.8%. It is enlisted amongst countries where population is rampantly increasing. It is said that areas which are forming Pakistan at present had abode of 16.6 million people in 1901 and at that time the growth rate was 2 to 3 %.
Intense family planning struggles then onwards helped pulling down the population graph rate to a today's level. Note that during 107 years population of the country increased by over thousand percents. Obviously, large scale migration in these areas at the inception of Pakistan can not be absolved from its causing population burst. Fortunately, this migration proved good for socio-economic developments as people emigrated from India were educated and skilled as compared to that of the host country and got administrative system run efficiently in the face of troublesome beginning.
Social and economic betterment of metropolitan cities causes industrial advancements and many locals living nationwide get hold of their shares in running industrial operations. As they come across working in cities far beyond their home place they need to have living place for instance. Unavailability of low cost housing facility in urban areas leads them to makeshift abodes that result into civic problems. Interestingly, they are the very people who are engine of housing and construction sector and without their labour force construction could not take place. National housing stock comprises of Kuchha 39%, Semi-Pukka 40%, Pukka 21% while rural areas have highest portion of the stock.
Housing and construction sector plays a crucial role in an economy. Its progress implies growing economy. Pakistan has been witnessing promising and robust housing and real estate progresses which generate massive employments not only in the sector but also in score of other large scale and vendor industries. According to an estimate, housing and construction catalyses industrial process of 40 allied industries.
Though no latest study has been conducted to recognize the updated shortfall in demand and supply of housing units in the country, it was tabulated in census 98 that 300,000 units were constructed against annual demand of 570,000 units that currently is estimated to have surged to 650,000. Government has announced to construct one million houses annually for low income strata and if it happens then that would make up the backlog. For meeting this financially hefty assignment, government has earmarked Rs. 10 billion including Rs. 2 billion out of PSDP. The accomplishment will be a great achievement on the part of government that confronts with financial crunch and has restricted release of funds for development projects to maximal 15% in order to contain fiscal deficit recently.
Pakistan's housing and construction sector has been a glaring attraction for local as well foreign investors. In fact, FDI in construction crossed over $75 million in last fiscal year. Big international names of construction industry are groping with metropolitan soils to erect skyscrapers. Foreign companies such as Al-Ghurair Group, Pak Gulf Construction Ltd., Emaar Group, Al-Bokhtir Investment Group and Damac Group UAE, Eden Developers from Malaysia and MCC Group China are actively working in housing and real estate sector of Pakistan. While few of them are constructing residential buildings, the unit price offer is far more than range of middlemen, let alone low income group. It was reported that Malaysian construction company showed its interest to start low cost housing project in Pakistan. Indeed this is urgently needed. Malaysia has played wonders with housing sector in different countries.
Another main reason behind people inaccessibility to own houses is limited numbers of government funded housing projects. While ministry of works and houses keeps track of national housing demands and provides funds to its subsidiary organizations for constructing low cost houses, apparently it is unable to cope up with the rising houses shortfall. For instance, for its new projects completed in Peshawar, Lahore, Karachi, and Islamabad only 4,476 housing units have been sold. Its offering of unequal prices for government and general public creates division and does not go along with its objective of public service as every one is not government employee. Even then cost of government constructed housing unit seems to be determined by the sensible parameters instead of speculative market forces.
Government would be clearing backlog by building flats and residential apartments, but the anomaly in free market system promoting sale of land at rate in steep excess of government's prescribed price on the back of speculation is clearly detriment to self-help or private partnership in housing and real estate sector of Pakistan.
Local and foreign investors should be motivated to shoulder national housing authority in buying and building apartments for slums dwellers instead of upgrading Katchi Abadies, vacant land of which could be commercialised. It is said government should perform as facilitator and private parties should come forward to meet the backlog of national housing units, but at least government could mobilize investment in improving lives of slum dwellers. Also, it must ensure builder's commitment to client and transparency in real estate transactions.