Ever wonder about the burgeoning of housing societies across Pakistan? What is the purpose of these housing societies? Who establishes these concrete oases? I am sure you would also have a plot in one of these, if not, then you must be planning to have one. Did you ever think why we are compelled to live in these enclaves? Who regulates such societies? Most importantly, why do we need these in the first place?

For starters, let me tell you, a housing society means a society aiming to provide its members with open plots for housing. If that has already been acquired, then it focuses on providing its members with the common amenities and services. Housing societies may happen across the world in a certain context, it is only in Pakistan that they have become a magnetic force, pulling huge chunks of the so-called economic activity towards them.

Now, let us go back in history a bit to decode the idea. The concept of housing societies emerged out of a plot culture that was handed to us by the British. The colonial government would give out land as a gift to those who were loyal to the colonisers. These people were then free to utilise the given land as they deemed fit, without any tangible checks. So, using state land for vested interests is old wine in new bottles. In parallel, there also exists a system of cooperatives – set up in law to help poor farmers or workers to come together and do things that are more difficult to undertake individually. Soon after the inception of cooperatives, some bureaucrats started using the cooperatives law to grab public land in their name and erect housing societies, which the poor would not get a chance to peek in.

The usual modus operandi is that housing societies use the loopholes in the institutional mechanisms and use the government’s authority to acquire land at exceedingly low prices to transfer to rich and powerful agents in the dominant coalition. This is despite the fact that the Land Acquisition Act does not allow the taking of land for anything other than public purposes. The real model of taking over the peasants’ land forcibly and handing it over to the rich began with Islamabad. Even today, Islamabad develops through these harsh and non-market means.

Pakistan is a strange country in the sense that almost every government organisation is into real estate development. In fact, housing societies were started by mafias within these organisations; in cahoots with city administrations which give permissions and turn a blind eye to what happens afterwards. It is a scheme for self-enrichment at the cost of the losers who buy into those societies. Side by side, city administrations run with old school approach have consistently forbidden free-market real estate, high rise and mixed-use construction inside cities. Since we continued the British tradition of gifting plots to government officials, suburban development was favoured on the basis of housing societies. What we have today is an expansion of such colonial societies, rather than urban development. Dr Nadeem ul Haq, the Pakistan Institute of Developments Economics (PIDE) vice chancellor, recently wrote a Twitter thread on this. The points in that thread are briefly explained below.

Let there be a free and transparent real estate market. Let people transact and register the sale of a piece of real estate on a website. Let anyone offer more and take it. This could make the whole market open and transparent. 

It is pertinent to note that there are some invisible string-pullers in this sector. Some of the colonies are not guaranteed by those in whose names these were established in the first place. These societies are run by smoke-screens with no skin in the game. In parallel, housing societies typically take decades to develop, starting with false promises. On occasions, the initiating team runs away with funds. On others, the initiator is a crook.

The ones functioning have management issues. For example, there are no timelines of commitments by housing societies. Their delivery dates are elastic, and their commitments meaningless. Courts are uninformed and end up favouring housing society managers. People wait for plots for decades, and still, the returns are not that high. An idea of the situation can be drawn from the fact that over the past 25 years, the CDA has not issued even a single completion certificate to any housing society. This speaks volumes about the gravity of the situation.

The people who talk of spectacular returns are looking with a narrow lens at a few developed areas like Islamabad and some famous housing societies, such as Bahria and the DHA. What about the average housing society, the time it takes, the false promises as well as the sustainability of the overall post-completion services? In most cases, the returns are not that high, especially when you take inflation and the exchange rate into account. A lot of money is lost to fraud. Hence, we can say that the real estate sector in Pakistan has not evolved as a real corporate sector despite contributing greatly to the labour market and the GDP of the country. In Pakistan, developers at times advertise housing societies having little or no land. Anecdotal evidence suggests that 80 percent of developers in Pakistan fail to deliver.

Let there be a free and transparent real estate market. Let people transact and register the sale of a piece of real estate on a website. Let anyone offer more and take it. This could make the whole market open and transparent. The government too, could offer to buy the property if it feels a low price is quoted. Pakistan Institute of Development Economics (PIDE) has initiated internal work to devise such a mechanism. It will be out soon.

Set the market free—let the laws of supply and demand work. Housing and plots are expensive because old school forces with colonial mindsets are all in for housing societies. Inner-city real estate is locked away into government ownership (government housing), Auqaf, Evacuee, poor titling extreme land fragmentation. If inner-city land is released, transactions made simpler and fragmentation not incentivised, the supply of flats, offices, commercial real estate will make downturns attractive. Sprawl will be prevented and housing societies would go to the dung heap of history. As long as downtown supply is killed by regulation, housing societies will thrive. To feed the housing societies, we build highways and flyovers in the heart of town, further devaluing downtown. Why are we not allowing downtowns to grow vertically? Why are city centres full of spaces killing downtown?

Not allowing high rise and city centre redevelopment will slow down country development. It is time inner-city redevelopment is prioritised. It is time mixed-use is allowed. It is time permissions to high rise mixed-use are liberalised. It is time government, including governor’s houses, move out of cities leaving commerce to take over. Dense living on contemporary urban infrastructure is the need of the time.

Why? The “why” part is explained in my previous article: The Opportunity in Cities, published on June 27 and available online. City administrations need to learn. The ingredients are known. We don’t have to do everything from the start. We just need to learn from international prototypes and contextualise them a bit. Are we too dense to learn even what is out there in the open?

The writer is a research economist at Pakistan Institute of Development Economics, Islamabad