CEO & Co-Founder of Emerging Markets Property Group (EMPG), Imran Ali Khan is a renowned and respected expert in the real estate sector of Pakistan. Under his leadership, the EMPG Group of companies owns and oversees property portals in the South East and Middle East Asia region, including; Pakistan, United Arab Emirates, Saudi Arabia, Bangladesh, Morocco, Algeria and Tunisia. In Pakistan, the EMPG Group runs the famous property portal, Zameen.com and its sub-company Zameen Developments.
In his recent interview, Imran Ali offered his insights about the housing industry in Pakistan and where it is headed in the future. He presented his analysis of the real estate situation in the country after the elections, the subsequent revised government policies, and especially the launch of the Naya Pakistan Housing Programme (NPHP). It is noteworthy that under the NPHP initiative, the government of Pakistan will develop 5 million low-cost houses for the low-income sections of society. The government has reached out to local and international private companies’ to help construct these homes. This mass-scale project has stemmed from a shortage of housing units that has contributed to an increase in the number of slums and Katchi Abadis across the country. Despite the promises made by politicians in each pre-election campaign, the lack of housing has only gotten worse till date.
Naya Pakistan Housing Programme: Practical or Ambitious?
When asked about NPHP, Khan maintained that the initiative ought to be run by a national-level, independent authority that operates without any political influence. He suggested that such an authority should elect its board members based purely on merit and experience. People with ideas should be brought together with people who have done the leg work if we hope to make this initiative a success. There is one such institute on the cards now.
The housing models borrowed from other countries will not work here. He stressed on the need for a localized model for housing strategies that address the unique concerns of Pakistan. Coming up with the right plan and getting the right people on board is essential to NPHP’s success. He also revealed that he believes that the 5 million houses initiative (appreciated and much needed) might be too big a target for the present resource pool of Pakistan.
Impact of the influx of low-cost houses on real estate market
Speaking about how the addition of these houses will impact the real estate sector, Ali stated that the demand for construction materials will skyrocket for the short term. This will lead to a hike in their prices as well, but he reassured that the demand-supply chain always perseveres and will bring the prices back to normal. The individual capacity to buy a house might also be adversely affected, he conceded, but market forces have a way of working themselves out, and people always regain their buying power eventually.
On the plus side, he ventured that the industries will have to grow their capacity to keep up with the supply required to develop these houses. The added industrial potential will turn the economic wheels in the nation’s favour. Foreign investors, always interested in real estate ventures, are sure to invest in the growing and popular Asian market.
Housing Sector and Economic Success
He said that over 40 industries are now directly involved in the real estate market and opportunities for more arise every day and that the housing construction sector alone contributes around 1% of the GDP, and even has the potential to rise up to 5 or 6 %. Obviously this will have a significant impact on efforts to improve the national economy. Not to mention, the employment opportunities are beyond remarkable if the housing sector expands its scope to its full potential, he added.
The Home-Finance Situation
On the subject of the legal and financial framework, he remarked that its revision and enforcement is long overdue. As for house financing, there are various courses of action that should have been adopted by Pakistan (which have already been adopted by its neighbours).
Home loans are all but non-existent, he said. Again, he stressed for the need for localised fixes, saying that world-adopted mortgage policies aren’t feasible, owing to religious implications. He lauded the mortgage initiative launched by the State Bank of Pakistan but expressed that banks might not want to deal with individuals without fixed paychecks. (He was referring to the State Bank’s Mortgage Refinance Company (PMRC) that offers assistance to banks in exploring fixed-rate or hybrid models of mortgages).
Legislation and Enforcement of Better Laws
As for the housing laws, he stressed on the proper enforcement of foreclosure laws. He mentioned that in Pakistan, the proceedings for the vacation of foreclosed property and documentation take up to 5-8 years, which is disastrous. The non-performing loan rate is abysmal and can only be helped through improved foreclosure laws, he added.
He also highlighted that the government is aware of the situation and is taking steps to correct it. He also suggested the establishment of a special forum and the formation of a regulatory authority to resolve all property-related disputes. Contrary to the popular opinion of realtors, he expressed hope that a regulatory authority to enforce tenant protections, landlord protection, pricing and rental laws can really help turn the housing sector around in the long run.
Nearing the interview’s end, Imran Ali suggested that the government needs to depoliticise the housing sector and focus on modern (more efficient) policies. He also asked for the involvement of Information Technology tools to improve the sector, saying that e-governance can eliminate corruption and make everything transparent, accessible and convenient for everyone.
