The real estate industry acts as a backbone for a country’s economic growth. According to a report by Mckinsey and Company, almost two-thirds of the entire global wealth is stored in the real estate sector. The industry has grown by over 350 trillion dollars from 2000 to 2020, an increase from $150 trillion to $500 trillion.
According to the World Bank, real estate assets constitute 60 to 70 per cent of a country’s total wealth. However, in terms of the challenges that the sector faces, Pakistan experiences a mushroom growth of illegal housing societies and the challenge of capital trap for local and foreign investors. More than 5000 societies were identified as illegal in 2018 in Pakistan, with their growth showing no signs of abating with every passing day (PropSure OPVS, 2018). People have also lost a colossal amount of about PKR 5200 billion trapped in illegal housing schemes in Islamabad alone. (Pakistan, 2017) These housing schemes neither have proper land ownership documents nor do they have the necessary approvals required for development, such as the No-Objection Certificates (NOCs). Malpractices such as getting approval for a fraction of the project and selling properties beyond the approved area have also increased.
Overseas Pakistanis are an important asset to the country’s economy, with a significant number of remittances being sent yearly. About 10 million overseas Pakistanis living around the globe send about $13 billion to Pakistan every year, with the minimum share being invested in the real estate sector due to complicated and non-transparent processes prevalent in this sector.
On the other hand, the 2021 report of the Association of Foreign Investors in Real Estate (AFIRE) suggests that the world’s most secure and stable countries in the real estate business include the US, Germany, Canada, the UK, and Australia. This stability is attributed to modern technologies and websites like Zoneomic, Zoopla, grdics.com etc., ensuring safe and secure investment.
It is a common belief in Pakistan that the real estate sector is the safest asset class to invest in. Contrary to this perception, there are several vulnerabilities like fraudulent property transfers and allotments, poor and unreliable record-keeping, and inconvenient registration processes. Despite being the most potent sector of the country’s economy, a blatant disregard by the concerned authorities has badly impacted its potential to be fully realized. These factors are responsible for investor capital being trapped in fraudulent practices resulting in many disputes and court cases. Nearly 60 to 70 per cent of pending court cases in Pakistan belong to land-related disputes. These predicaments are primarily attributed to four major factors listed below.
1) Lack of Planning
2) Lack of regulation
3) Lack of access to information
4) Malpractices
Pakistan’s First ever Online Property Verification System
A manual Property Verification Center had also been launched by the Office of the Deputy Commissioner, Islamabad. This property verification report is instrumental in decision making while purchasing property within the Islamabad Capital Territory. As per the official source from Islamabad DC’s Twitter account, 1881 people visited the website in 2 months. Three hundred twenty-nine requests were entertained, including 41% approved/legal and 23% unapproved properties. Keeping in view all these shortcomings, it is time to intervene and take pertinent corrective measures to resolve these longstanding issues. PropSure Digital Solutions Pvt. Ltd has recently launched a Digital Database of verified properties of urban areas of Pakistan to act as a panacea to these illnesses. This system currently includes 4 million verified properties in its database available on PropMap, while continuously adding more data and attributes to its database. Data of each property is physically verified by expert surveyor teams working across the country. Each property is labelled with 50 attributes like address of the plot, area of the plot, Layout Plan Approval status, plot layout plan approval status etc. One can inspect the legal status of his property from anywhere around the world with the help of one click.
If there is an Online Property Verification System (OPVS) launched that will help in digital transformation in the real estate sector, the system will certainly counteract all the predicaments created by the traditional Patwaar system and bring transparency and practicality to land ownership and transfer mechanisms. By enabling anyone across the globe to verify property with the help of an online platform, OPVS will help to revolutionize the real estate sector. It will certainly play a pivotal role in enhancing overseas Pakistanis’ investments and give a much-needed impetus to the country’s economic growth. By enabling developers to follow approved development plans, the system will also help planned development and discourage illegal developments from taking root.
The writer (Abdul Raziq) is a Research Analyst at PropSure Digital Solutions Pvt Limited.
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