The real estate industry in Pakistan began from Karachi though it was present before the partition. Property tycoons constructed buildings but the selling of plots was atypical. The industry started progressing in the 1950s and Defence Housing Authority (DHA) came into being.

In 1960, plots in DHA flourished. The industry was making headway from 1970-1974. Zulfikar Ali Bhutto Bhutto launched the Amnesty Scheme and the market boomed till 1977. The catastrophic deluge in DHA and post-election insurrection doomed the industry till 1982. The Afghan war brought a bulk of finance to the market from 1982-1988. The sudden death of the then president halted the industry from 1988 to 1992.

The market lingered leisurely from 1992-1994 and caught its next thrust from 1994-1997. The market suffered a recession from 1997-2001. The industry got its major boom after 9/11. The upturn broke all the past peak records. The gigantic price hike brought forth the money mongers in the early 2000s. The next recession toppled the market from 2005-2010. The market retook in 2012 until 2015.

The patterns of market trends remained the same for 43 years out of its 69 years. The boom ratio is 4 to 5 years. The proportion of price increment in urban areas is 4-5 per cent and for rural areas, it is around 9-10pc. During the recession, the prices in urban areas fall from 0.5-1pc and in rural areas, it is almost 5pc. Globally, the real estate industry normally follows a stable escalation rate of 5-8pc yearly.

Only 1pc of the housing units are developed yearly for 68pc of the total population consisting of people with monthly incomes of mere Rs 30,000

The year 2016 was an extremely promising one for the industry as in 2015, the outlay in the residential property increased by 5-7pc while commercial property saw a boost of 15-20pc across Pakistan. The Federal Budget 2015-16 brought much-needed tax relief to the sector until 2018. Customs duty on the import of construction machinery was also abridged to 10pc.

Data by the Federal Board of Revenue and industry surveys guesstimate the industry is worth more than $700 billion. The industry accounts for roughly 2pc of GDP. It not only spawns a high level of direct employment but also stimulates more than 250 subsidiary sectors. If the bucolic to metropolitan exodus persists at the existing rate, the urbanisation level to an unprecedented 53.3pc.

The trend of buying luxury apartments has increased nearly by 7-9pc during the last decade. Therefore from 2010-2016 apartment prices increased 120pc, while houses registered an increase of 80pc. Pakistan has a housing surfeit of almost 12 million units. Even more astonishing is that for an industry that had been registering double-digit growth since 2010, with new suburban projects proclaimed almost weekly, more than 50pc of the metropolitan population lives in slums and squatter settlements that lack basic necessities.

Only 1pc of the housing units are developed yearly for the 68pc of the total population, consisting of people with monthly incomes of mere Rs 30,000. On the other hand, almost 56pc of housing units target 12pc of the population, comprising individuals with a monthly income of Rs 100,000 or above.

The mortgage rates are still considerably higher compared to the region: Hong Kong (2.15pc), Japan (2.7pc), China (7-8pc) and India (8-12pc). The real estate seems dispatched to Mount Caucasus. The property in cheap parts of Islamabad during the early 1980s, for a 1,500sqft house in G sector, was $10,000. In a decade it tripled to around $30,000, then in the 2000s it tripled again to $100,000 and now it’s around $200,000 at least for the same old house in decrepit shape. So the price in the previous 30 years has risen 20 times. This is unimaginable anywhere else in the world.

In the USA after the 2008 Housing bubble burst, the house prices came crashing down but over here it is quite the opposite. Covid-19 played a vital role in the economic slowdown of the whole world and affected the sector gravely.

The worst part is that financial tycoons have made the industry a cradle of corruption, land mafia, land grabbers and blackmailers. The black giants have even grappled with the state via real estate. The mafia of the real estate sector is way powerful than others. They have set up charity institutions, trusts, and print and electronic media houses to apply pressure on the state.

The writer is a professor of English and a columnist based in Lahore

Published in Dawn, The Business and Finance Weekly, December 20th, 2021