KARACHI: On any given day one hears, for the umpteenth time, of a new housing society being launched, with state-of- the-art facilities, a lucrative geographical location, and the very best in construction. The facade of the city is fast evolving, seemingly overnight, with a surge in congested apartment complexes, cookie-cutter houses, or sprawling, plush constructions.
Ironically, this is in sharp contrast to the squalor in low-income housing and slums the city is home to, and the question that seems to arise is what factors are contributing to the widening disparity between housing in Karachi.
Though a similar dynamic is seen in other cities of Pakistan, Karachi’s growth appears to be all-encompassing. Just take a trip down any part of the city, from Clifton to Defence, Saddar or further on to North Nazimabad, and you will see high-rise buildings mushrooming all over without any apparent blueprint to predict, or control this growth.
An unplanned city, as many refer to Karachi as, can be a nuisance to all. The city does provide jobs to millions and its ability to accept even those belonging to the lowest rungs of society has strengthened its outlook as a metropolis. However, this has led to deterioration in almost every aspect of its infrastructure, and housing has suffered the most.
However, at one end of the spectrum the city narrates a tale of dynamic growth and improving standards of living. Though development is happening throughout the city, it becomes more potent when you head towards the Clifton beach.
Areas such as Clifton and Defence have experienced soaring property prices and though there may not seem to be a rhyme and reason behind this, real estate agent Mustafa Memon disagrees. “Despite high transaction costs, demand in the real estate market is too attractive as it yields marvellous returns on investment. This is further driven by investors than by the end users.”
And there seems to be no end to this investment.
“Real estate is durable,” he added. “A building can last for decades, and the land underneath it is practically indestructible.”
On paper this sounds like a master plan, but the durability of real estate has been taken to the far end of realism. With the increasing cost of living, the stock market wavering, and an unpredictable trend of violence persisting in the city, one can only wonder about the individuals who are investing heavily in land in Karachi.
Mr Memon says “local and international investors are investing in anticipation of high returns. With the decline in real estate prices in Dubai, a drop of almost 10 to 15 per cent over the past year, investors are taking their money out from the Emirates, especially Dubai, and investing it in Karachi.” And with the latest drop in oil prices due to sanctions on Iran being lifted, the future seems more unpredictable.
However, is Karachi expected to bear this deluge of investment and cough up returns the way Dubai has?
A stock broker, on condition of anonymity, admitted the extent to which the stock market is dependent on Karachi’s real estate, and vice versa. “Manipulations are rampant when it comes to both markets,” he said. “You can see how prices of plots and property files change within days. One day a piece of land is priced differently, and days later there is a large difference in its original price.”
Despite the upwards trend happening throughout the city, the price-jumps in areas such as Clifton and Defence defy comprehension, especially for the ‘end users’.
Many builders have started housing projects in these areas, and are building huge apartment complexes with better infrastructure, posh and modern construction, thereby providing the illusion of a better lifestyle. And they are priced accordingly too.
And with the increase in smaller family units, young professional couples are opting to move into an independent place. However, they are in for a rude shock with property prices beyond their reach. As a result many opt to rent apartments, or portions in homes. Unfortunately for them, rents are skyrocketing too.
Rent of a three- or four-bedroom apartment in an upscale neighbourhood can charge anything between Rs50,000 and Rs100,000. The rent falls on the lower end of the spectrum if it’s located in a heavily commercial area, and devoid of proper parking facilities. It goes even higher for newer constructions, especially if fitted with ‘imported fixtures’.
With the city experiencing better days politically and socially ever since the Rangers’ operation has helped curb violence, Karachi has seen internal migration amp up considerably.
Many from the interior of the province have set up their base in Karachi and thereby driven up prices. Mr Memon says that as there are “no mortgage payments to make, the cost of property insurance is nominal (if you have it at all) and property taxes are extremely cheap, many decide to park their cash into property and simply forget about it.”
Also, with the crackdown to reduce illegal activities in land acquisition, investing in areas such as Clifton and Defence is a more reliable option than in other parts of the city.
“Land grabbing has been common in the past decade or so, and mostly takes place in areas where the law and order situation is poor, such as Landhi, Hawkesbay, Sohrab Goth, Gulistan-i-Jauhar, Gadap Town, Surjani Town, Memon Goth and the National Highway. Usually corrupt politicians and officers are involved in illegal activities that generate hundreds of billions of rupees annually through land-grabbing, illegal water supply, extortion and smuggling,” he says.
With the increase in raids by the paramilitary force, a serious operation is underway against land grabbers in the city, and the success of the operation, according to many, is reinforced by the steadily increasing prices of property. However, looking at the trend in Karachi, it feels like in the next few years owning a house will remain a dream for a large percentage of the population.
Published in Dawn, January 18th, 2016