The advent of digitization can be attributed to the discovery of programming languages introduced in the 20th century. This new technology disrupted most of the existing patterns and pathways of the then industry and economy, driving a change towards a more digitized future (Europeanproperty, 2020). Since then, efforts towards digitization have transformed many industries, including revolutionizing the core values of the real estate industry through fast-paced technologies like proptech, contech and fintech. Pakistan is no exception to the rapidly digitizing world. With a booming real estate industry, real estate assets amass 60 to 70 percent of the country’s total wealth. As of now, real estate is the second largest sector in Pakistan’s economy after agriculture, generating jobs through more than allied industries. Moreover, construction and asset management are important aspects of the real estate sector. With land being the most valuable commodity in an economy, transactions constitute a major part of real estate sector. Even though progress has been made in terms of digitization, however, land records are not yet digitized on a macro level, leading to multiple malpractices in the real estate sector.
This article by the Iqbal Institute of Policy Studies will discuss digitization in the context of the real estate sector of Pakistan, proptech, and the importance of digitization of land records.
Digitisation in the Real Estate Sector
Pakistan has emerged as the 5th most populous country in the world (Worldometer, 2021). The country reached its highest ever recorded statistics for urbanization, 37.17%, in 2020, urbanizing at the rate of 3%, which is the fastest in South Asia (Statista, 2020). These demographic realities reflect the real estate sector’s potential in a developing country like Pakistan. More importantly, there is an influx of young, bright and educated minds in this sector. However, in real estate development, the lack of a digitized and consolidated database has contributed to numerous problems in terms of capital influx into the economy. Due to an unregulated real estate market and sham projects, “capital trap” has become a major issue in the real estate sector. Looking more closely, it is appalling to note that most of the horizontal and vertical real estate projects launched in Pakistan to date are unapproved by the regulatory authorities. (Complaint Cell, 2021). (Tribune, 2021). Therefore, digitization of land records is of paramount importance to streamline real estate transactions and make the process transparent, which will, in turn, contribute to investor confidence and an increase in investment in the real estate sector in Pakistan.
Importance of Digitisation of Land Records
The digitization of land records will ensure transparency and accountability in land management and real estate transactions. A digitized land record should ideally provide a potential investor with the certified digital copy of the Periodical Record of Land Rights (fard or jamabandi) and the Mapping Sheet (field map or mussavi) along with the relevant details of the landowners, co-sharers and stakeholders of the property. For a nationwide digital database of land records, the digitization should begin from the local government level, covering the tehsils and districts, up to the federal level. The digitization in the real estate sector has given rise to a new term, ‘proptech’, which refers to startups offering technologically innovative products or new business models for the real estate markets. In this regard, proptech companies can play their role in the adequate digitization of land records in Pakistan. For example, Propsure Digital Solutions Ltd. is a one-of-a-kind proptech company that uses disruptive technologies to conduct spatial analysis of land to create visualizations of geospatial information of a particular property in a specific area in the form of a map. Thus, providing an in-depth real estate market analysis that equips the clients to make informed decisions about a property, including but not limited to its price, dimensions, permitted land usage, by-laws, plot status, building height, and adjoining road etc.
In essence, through digitization of land records, the government can amplify the market knowledge with the true impact of location-based data to better understand the real estate market and the factors that drive growth and avoid the capital trap.
Digitization of land records is the need of the hour for the rapidly urbanizing Pakistan. This will guarantee transparency and accountability in real estate transactions while building confidence in the real estate market. The issue of the capital trap will be mitigated to a certain extent as the digitized land record will eliminate the operations of illegal and unapproved housing societies. It will also make the transfer of property easier by restructuring the processes through the digital database. Digitization will also make the process of real estate transactions cost-effective for the consumer, eradicating the extra-legal territory of land brokers. In short, the digitized land records of Pakistan will decimate most of the issues related to real estate transactions. They will restore the confidence of consumers in the real estate market.
Asad, M. (2018). Over 1.8 million cases pending in Pakistan’s courts. Retrieved 19 November 2021, from https://www.dawn.com/news/1384319
Complaint Cell – OVERSEAS PAKISTANIS FOUNDATION. (2021). Retrieved 19 November 2021, from https://www.opf.org.pk/complaint-cell/
Pakistan – urbanization 2020 | Statista. (2021). Retrieved 19 November 2021, from https://www.statista.com/statistics/455907/urbanization-in-pakistan/
Remittances remain strong over $2b | The Express Tribune. (2021). Retrieved 19 November 2021, from https://tribune.com.pk/story/2284309/remittances-remain-strong-over-2b
Why Real Estate Digitalization is the Way to Go?. (2020). Retrieved 19 November 2021, from https://www.europeanproperty.com/news/why-real-estate-digitalization-is-the-way-to-go/#:~:text=Real%20estate%20digitalization%20helps%20to,your%20customers%20feel%20more%20appreciated.
World Population Clock: 7.9 Billion People (2021) – Worldometer. (2021). Retrieved 19 November 2021, from https://www.worldometers.info/world-population/
What is the brief history of digitization in the real estate sector of Pakistan?
Why is digitization important in the real estate sector of Pakistan?
Why is the digitization of land records important in the Pakistani context?
The digitization of land records will ensure transparency and accountability in land management and real estate transactions.
The digitization in the real estate sector has given rise to a new term, ‘proptech’, which refers to startups offering technologically innovative products or new business models for the real estate markets.
The issue of the capital trap will be mitigated to a certain extent as the digitized land record will eliminate the operations of illegal and unapproved housing societies.