Real estate trend: a threat to Pakistan's economic growth

The amount of real estate societies developed is enough to fulfill the demand for the next 100 years, yet new societies continue to be developed just to make money

The real estate sector has become a significant contributor to the economy of Pakistan. However, it also has a negative impact on the country's economy which cannot be ignored. On the roads of Lahore, the rise of luxury cars, particularly the latest model of Land Cruisers worth between 150 to 200 million Pakistani rupees, are mostly owned by real estate developers. Unfortunately, this trend has led to the demise of the country's industry.

In the past, industrialists preferred to invest in their businesses by purchasing raw materials or buying land for expansion, which would yield better returns. However, in recent years, many industrialists have turned to real estate development, which has resulted in the closure and shutdown of many industries.Lack of government support due to political turmoil in import and export policies have led the industrialists to take industries into different countries by selling the land or carving out societies.

Today, there are fewer industries in Pakistan than a decade ago. Furthermore, newly installed industries have not expanded due to the real estate trend and why would they expand when they make more money in carving out agricultural land?

The closure of industries has led to a decrease in production, resulting in low tax and GST collection with no revenues. The trucking industry has also been negatively affected. Additionally, Pakistan's once-excellent train freight system is no longer operational.

The regulatory and tax department have made things even more difficult for industrialists. Every new government changes the economic policy, making it difficult for industrialists to run their businesses. The lack of a regulatory one-window operation and coordination between government institutes has led to many industrialists closing their businesses and opting for real estate development instead.

As a result, the industrialists who owned an industry on 65 acres will close that industry and make a real estate housing society on the same land. They sell individual houses and plots and gather revenue of 6 to 7 billion rupees. After which, they send most of the money to other countries and say goodbye to the industry forever. This trend is increasing day by day, and the government needs to take measures to control it.

The situation in Pakistan is so alarming that even the newly installed industries such as Bolan Castings, Baluchistan Wheels, Pakistan Refinery, Frontiers Ceramics, Attock Refinery, Kohinoor Spinning Mills, Millat Tractors, Indus Motors, Fauji Fertilizer Bin Qasim, Suraj Cotton Mills, and Pak Suzuki Motors have already shut down. The closures have resulted in very low production in the industry, leading to very little tax and GST collection and no revenues. The trucking industry is also not flourishing due to this reason. Pakistan used to have an excellent train freight system, which is also closed now. All of these factors have contributed to the current economic crisis of Pakistan.

In Pakistan, Property Files are given to buyers when a society is created, however, they have no record of where the government can collect taxes from the sellers or brokers. The issue with this is that all the black money is parked in societies and remains there for years before the children grow up and it is up to them to sell. This results in money being parked in plots with no impact on Pakistan's economy, as it does not roll over and ends up being stagnant.

Currently, the amount of real estate societies developed is enough to fulfill the demand for the next 100 years, yet new societies continue to be developed just to make money through black money. This ultimately has a negative effect on the climate. It is imperative that the government intervenes and stops the development of new societies.

The development of new housing societies is a growing trend in Pakistan, with more and more land being acquired and developed for residential and commercial use.

However, this development often comes at a cost to the environment, as valuable fertile land is consumed in the process. The problem is compounded by the fact that societies tend to buy land in phases and then develop it gradually over time, often without any real plan for how the land will be used. This leads to a haphazard development process that can be damaging to the local ecosystem and the climate.

To address this issue, it is suggested that societies should adopt a more systematic approach to development. Rather than buying up large tracts of land and then developing them in stages, societies should focus on completing one phase of development at a time, before moving on to the next. This is the model used in many developed countries, where the government does not allow new phases of development to proceed until the previous phase is complete.

 Unfortunately, this is not the case in many parts of Pakistan, where developers are allowed to continue buying and developing land without any real oversight. This has led to situations where societies have gone through multiple phases of development, even though the first phase is still far from complete. This kind of approach not only puts a strain on the local environment, but it also leads to a waste of resources and an inefficient use of land.

To combat these issues, it is suggested that the government should intervene and put a stop to the development of new societies until a more systematic approach can be adopted. In addition, societies should be required to use no more than one-third of their land for residential construction, with the remainder being set aside for green spaces and other uses.

Finally, commercial areas should be subject to a floor area ratio (FAR) of 1:3, to ensure that they are not overdeveloped and contribute to the environmental degradation. By adopting these measures, Pakistan can begin to address the environmental impact of housing society development and move towards a more sustainable future.

In conclusion, the real estate sector has negatively impacted the economy of Pakistan. Industrialists are closing their businesses and opting for real estate development instead. The lack of coordination and consistency in the government's economic policy has made it difficult for industrialists to run their businesses. This trend has led to the closure of many industries, resulting in a decrease in production, low tax and GST collection, and no revenue.

The government must take appropriate measures to revive the industry and stop this trend from continuing. As mentioned by a famous industrialist, "We must find ways to promote industry and provide a conducive environment for industrialists to invest in their businesses rather than opting for real estate development."

ePaper - Nawaiwaqt