The mushroom growth of fake housing societies owes its origin to the absence of adequate laws to regulate them, dealing a serious blow to estate business and people’s trust
Credible and posh housing societies have completely transformed the concept of real estate, mainly the land. Earlier, people would buy land for a permanent shelter. Now they do it to become rich overnight. Every Tom, Dick and Harry with a few millions in the kitty will buy land in a posh housing society and double his money within months.
Earlier, people would buy private land in mohallas in city centre. They would visit the patwari, check the fard (ownership paper), ask for lattha (map) and buy the land. But still there was no guarantee that the land was free of all encumbrances. With the connivance of patwaris, landowners could sell the same land to more than one buyers simultaneously.
The societies introduced a transparent and buyer-friendly system of land’s sale and purchase, saving the buyer from patwaris’ exploitative tactics. Societies keep the record of each plot. They immediately verify the land to the buyers and the transfer takes place peacefully within days in the presence of buyer and seller, with no question of any fraud!
People prefer to buy land in societies because they offer 100 per cent safe investments. People don’t need to chase the government offices for amenities like water, sanitation, electricity, gas, etc. Societies provide these facilities, including others like pavements, parks, mosques, schools, hospitals, etc. Elitist entities such as the Defence Housing Authority offer luxurious facilities like swimming pool, golf club, health club, sports complex, revolving restaurant and so on — still at a price that is much lower than the market value of similar land in any posh sector of Islamabad. A 500-yard plot in DHA costs around Rs5.5-7.5 million. A similar plot in a posh sector of Islamabad will cost over Rs20 million!
A plot of 250 square feet in Satellite Town — the once-posh area of Rawalpindi — costs Rs8 million, and is riddled with broken roads, heavy traffic jams, indecent locality, overflowing gutters, polluted and noisy environment, etc. A similar plot in a nearby society would cost only Rs2.5 million, with wide roads, decent locality, parks, clean and healthy environment. The chances of price appreciation in societies are greater compared to the land in cities. Societies have yet to grow and further develop, whereas the infrastructure in cities is collapsing.
Moving away from the city center seems to be a fashion these days for those with a bit of cash in their pockets, as people have even started investing in Green City, a society located near the propsed site for the new airport in Islamabad.
The fact is that the 9/11 incident was a blessing in disguise for these societies of all shades and hues. Before 9/11, the ratio of the price of land and the construction cost was 50:50. After 9/11, the market saw a high inflow of money. There were only a few areas to invest. Sale/purchase of land became the hottest business itself — not for the sake of construction, but for the sake of business.
There are only a few cities in Pakistan. Overseas Pakistanis started investing in good and reliable housing societies. This made the citizens believe that land is the best and easy business. Then speculations also came into it. Thus, the prices of land increased manifold.
Today, the land is 10 times greater in value as compared to the cost of construction. That is the reason the owners of commercial plots in Blue Area are hesitant to build a few storey plazas only. “CDA had to amend its rules and allow highrise buildings so that the owners could start construction and ensure a reasonable profit,” disclosed by Kamran Lashari, who heads the Capital Development Authority (CDA).
Commercial property in Islamabad has reached a figure that most of us could only imagine on computer screens. The Sardar Group and Tamimi Group have purchased a plot of 6.8 acre (27,200 sq yds) at a whooping Rs6.9 billion in front of PIMS (Pakistan Institute of Medical Sciences). The two groups, under a joint venture, will construct a five star hotel, shopping mall and services apartments. This is believed to be the most exorbitant price ever for a piece of land in the country.
Lashari has a point when he says that the government will have to permit highrise buildings so that the multi-storey construction could offset the huge imbalance between the prices of land and the cost of construction. However, some environmentalists have serious concerns over the highrise buildings in Blue Area.
“The price of commercial property has increased to an unbelievable extent because of CDA’s inability to develop the Blue Area in other sectors of Islamabad e.g. F-8, F-10, G-11, G-11, H and I sectors. The highrise buildings will further congest the present Blue Area. I am not sure how the CDA will ensure enough parking space in the commercial plazas. Will the highrise buildings meet the international standards?
Some high-end projects like Silver Oaks, however, are trying to take all these factors into consideration and are moving ahead with proper CDA blessings.
Before the 9/11, the posh housing societies were within the reach of the middle class people and there was a growing trend to buy land in them instead of city centres. Sudden investments in the societies after 9/11 increased the price of land to such an extent that it literally became impossible for a middle class man to purchase even a 125 yard plot in any posh society in Zone V. However, the housing societies in Zone II are still very cheap, and one can buy a 250 yard plot in AWT Sangjani for Rs2 million.
DHA has introduced a new trend in the quality of housing societies being developed. In collaboration with some foreign property developers, DHA is offering its clients multi-storey towers that offer a luxurious lifestyle.
Korang Town, PWD, Sawan Gardens, Police Foundation O-9 and Rawat, Naval Anchorage, AGOSH, Commoners Town, DHA Phase I, Phase II, Airport Housing Society, Judicial Colony, PAF Tarnol, Army Welfare Trust Housing Scheme Sangjani (AWT), Engineering Cooperative Housing Society (ECHS), Gulshan-e-Abad, and Gulshan-e-Sehat were the reliable and sound housing societies in the outskirts of Rawalpndi/Islamabad.
These societies came into being much before 9/11. They had the land and the possession. In some of these societies, people had even started construction before 9/11, and when the Twin Towers in New York fell these societies witnessed rapid transactions. The land was sold from one hand to another and very soon it became impossible for the seller to reinvest in the same society. He had to reinvest to make more money, and so he was tempted to invest in the cheaper societies that were bogus in most cases. The latest example in this regard is that of the Askaria Town — a housing society which did not have a piece of land. The developers sold plots worth Rs700 million through newspaper ads and ran away.
“The public could have been warned against fraudulent schemes like Askaria Town by the CDA, had there been some procedure regarding such cases. The societies would project any correspondence with the CDA as a No Objection Certificate (NOC) and trap the gullible public. Moreover, CDA, after issuing an NOC, would not bother to monitor the over-sale. A society could sell 5,000 plots though it may have land for only 500 plots,” says Mohammad Wakil, a real estate consultant.
CDA Chairman Lashari, however, differs with Wakil. “To monitor overselling is not CDA’s job. It is the job of Islamabad Capital Territory (ICT). CDA would issue an NOC after looking into the layout plan and other requirements.”
Lashari has introduced a new system at the CDA. “I have instructed my colleagues to issue only one NOC after all the legal requirements are fulfilled. Moreover, we have started putting ads in the national press that inform the public of the status of various housing societies. And, lately, the CDA has started reacting to unauthorized advertisements in the newspapers,” says Lashari.
The file system is another factor that has caused damage to the credible societies creating an artificial rise in the prices. The minimum price in any credible society for a 250yard plot is not less than 1.5 million rupees. Some dubious housing societies would sell files of plots at throwaway prices without purchasing the land. The file is just a piece of paper that would say that the bearer is entitled to a plot in the said society.
There are innumerable societies that would sell the files of a 250yard plot against a down payment of Rs100,000. The rest of the money that could be around Rs300,000 to Rs400,000 could be paid in quarterly investment. The file system encourages the small investors to enter into the land business. The bigger investors would buy hundreds of files and then sell it to the others. So, the files move from one hand to another and thus their prices increase artificially.
“File system is a good investment, provided the society is genuine like the one that we have,” says Mohammad Akhtar, Director Sales of Bankers City. The Islamabad phase of the Bankers City has yet to obtain an NOC, but it has obtained one for the Rawalpindi phase that is adjacent to DHA Phase I.
“We are committed to providing our clients a plot of 400sq yards at a total price of Rs1.2 million to be paid in six years. Our company is even registered with the Securities & Exchange Commission of Pakistan (SECP),” stresses Akhtar.
The land business has made the rich richer overnight. When the market was at its peak, a plot was sold twice in a day and within a week its market price had doubled. This trend and the absence of adequate laws to regulate housing societies gave rise to the mushroom growth of fake housing societies that has give a serious blow to the estate business and people’s trust. Though few, there are still some estate dealers who are offering genuine opportunities to laypersons as well as investors but it is difficult to distinguish them from the frauds.
Credible and posh housing societies have completely transformed the concept of real estate, mainly the land. Earlier, people would buy land for a permanent shelter. Now they do it to become rich overnight. Every Tom, Dick and Harry with a few millions in the kitty will buy land in a posh housing society and double his money within months.
Some high-end projects like Silver Oaks, however, are trying to take all these factors into consideration and are moving ahead with proper CDA blessings.
