By Fareeha Qayoom
We have three major problems as a nation in Pakistan – high import bills, energy/food crisis and no savings. Since everything is connected, this impacts all sectors of our economy including real estate and our personal lives – that is, our spending and saving habits.
Ever wonder why people have turned real estate into commodity trading? They are trying to find short cuts to save some hard earned cash for a rainy day and future generations; so obviously, the value of land has gone up, as there is a demand for more land and housing; in real terms, money and assets are only changing hands so no new or real jobs are actually getting created; only the banks and lawyers benefit since this is a pure speculative activity. Yes, there is some genuine real estate activity going on too. However, the builders and developers are also in it for the money, they want maximum returns on their investments so they are ignoring 90 percent of the population as well to go after the seriously rich folk and upper middle classes only, who can still afford to buy their products in these hard times.
Middle income groups don’t even exist for them. All this frantic activity is not actually accomplishing anything except widening the gap between people who own their own houses and people who don’t. When we talk about rental vs mortgages, we come across two more issues – role of financial institutions in Pakistan and the impact of globalization on money and financial markets. There is a growing demand for small to medium sized town housing schemes; some people have also started exploring the condominium and apartment living options, even the rich can’t afford to run large mansions in the city so they are choosing to build weekend retreats outside the town for entertainment and image building exercise.
This leaves two other problems on the table that still demand discussion – high import bills and energy and food crisis. Apparently we don’t have money to mine or cultivate more lands. Our irrigation systems are practically obsolete and need to be overhauled. We are already fighting a war with India over water (Kashmir) with no end in sight, so how can we increase our crop production yields? We don’t have enough water to irrigate or cultivate more lands. We refuse to mine and explore for coal so thermal power generation is out of the question; we are left with hydro, solar, wind and nuclear power generation options – obviously, this technology is not indigenous, so again a hefty import bill to import this technology. What about fossil fuels? Well, since we refuse to explore our lands, importing it is the only option. Rapid industrialization to pay off our import bills means we are converting our fertile lands to set up industries that face stiff competition from the global economy. Take the textiles sector as a case in point, we grow cotton; we sell it to the highest bidder in the global markets, (yarn and fabric), the western economies use our raw materials to get their goods manufactured cheaply from various parts of the globe, (China, India, Bangladesh, Pakistan, Malaysia, Middle East and Africa to name a few); their designs, our labor, we do a bit of value addition and re-export, they buy them cheaply and sell their brands all over the world including Pakistan. How many foreign brands stock their products in our stores? You don’t have to think hard. All this means more import bills. Most industrial units have started thinking in terms of their own branding and retail since competing in the global markets is getting harder. So what does all that have to do with real estate?
To put things in context, people are looking for more lands to develop – to set up industry, to set up housing and to set up more commercial spaces to generate more income so they can pay their bills. Since no one is actually keeping an eye on this rapid development, we are rapidly laying waste to our farmlands by converting them into housing, industrial and commercial real estate. This issue of Valuemag explores some aspects of these issues including industrial zoning taking Lahore as a case study. Unfortunately, LDA doesn’t play any role in containing, rezoning or correcting the infrastructure issues facing Lahore or impact of this ad hoc commercialism. Are we planning to waste all our agriculturally – productive lands by converting them into ugly housing schemes or industrial spaces that are an environmental hazard?
This article was originally published in the print edition of Valuemag, July 2008, issue 3 – under the section, ‘from the editor’s desk – July 2008’