Karachi’s real estate market slumps
THE worsening law and order situation in Karachi has adversely affected all kinds of business activities and property markets are no exception.
Investment in land and property has been traditionally considered as the safest avenue for ordinary people. However, unabated encroachments and forced occupation of developed and demarcated plots have sent shock waves to builders and developers. Many of them have lost several completed units in their projects to criminal gangs.
Similarly, individual owners of apartments, shops and other dwellings are being continuously harassed in many localities in the city. Gun-totting gangs force hapless people to either surrender their property rights without any compensation or accept extremely paltry amounts under duress.
The worst hit include parts of Gulzar-e-Hijri (Scheme 33), Gulistan-e-Jauhar, North Karachi, Qasba Colony, Orangi Town, Baldia Town, Surjani and Korangi. Real estate agencies are coerced to report all proposed transactions to members of such gangs before finalising deals. It is alleged that some estate agents have fallen prey to target killings for not bowing to the demands of extortionists.
The swift rise in such incidents and trends has crippled the normal working of city’s property markets.
Like all other markets, land and property dealings require a peaceful environment where transacting parties have freedom to make choices. This is important to realise market’s full potential. The other attributes that support fair transactions include dependable land/property titles, error-free mutation procedures, articulated valuation mechanism, clear schedules of charges and taxation as well as transparency in management of records by land owning agencies.
The prevailing conditions are disappointing on almost each count. Incidences of fictitious and fraudulent allotments, duplicate and even multiple claims, dubious record keeping and cumbersome mode of registration are some of the common ailments in property markets.Even the high profile transactions are not free from such encumbrances.
Glaring examples of malpractice include Mehran Town, Shah Abdul Latif Town and various auctions conducted by civic land owning agencies. An outcome of this state of affairs is the long trail of litigation and court cases.
Stable and well-functioning property markets are the first building block as of any other sector of the economy. Policy makers and relevant stakeholders should mull over the scores of problems facing the real estate market. The first step is digitisation of ownership, transaction and mutation records. A concerted effort is needed to develop and manage credible database of properties and land parcels after due process of verifications and scrutiny. Crime against property rights must be severely dealt with.
Speedy administrative action must be initiated to vacate illegally occupied properties and land. A swift action team may be constituted to effectively move against violators of property rights. Creative professionals must be encouraged to realise innovative ideas and schemes.
Karachi offers vast opportunity for redevelopment and revitalisation of rundown properties in older parts of the city for cumulative benefit of owners, contractors, investors and even government agencies. Such schemes must be frequently launched and supported. And a pro-business taxation regime may be gradually formulated to encourage people enter into legal and formal transactions. A vibrant property market can help an economic turnaround.