By Kazim Alam, The Express Tribune
KARACHI: Developing a low-cost housing scheme on a massive level in order to lure lower-middle class residents of the most populous city of the country away from illegal housing settlements – better known as katchi abadis – is a dream that successive chairmen of the Association of Builders and Developers of Pakistan (ABAD) have tried to fulfil. Unfortunately, affordable housing is still a distant dream for those currently living in Karachi’s slums.
According to Anwar Gagai, who was elected ABAD chairman a few days ago, ABAD has already prepared a comprehensive plan to construct up to 25,000 single-storey housing units at per-unit selling price of Rs600,000 with each plot measuring 120 square yards.
“We’ve proposed that a special coordination board be formed under the leadership of ABAD that has representatives of all stakeholders, including land development agencies,” Gagai toldThe Express Tribune in an interview.
He added that builders were willing to extend unconditional support for this project provided the government took practical steps to encourage people to move away from illegal settlements.
“There’s a ban on new gas connections in high-rise residential projects whereas there is absolutely no restriction on new gas connections in illegal settlements,” he said, adding that the ban was discriminatory and only encouraged people to stay in the unregulated housing sector.
Reacting to an earlier story published by The Express Tribune that claimed that the annual rental yield – the annual rent collected from a property divided by its total saleable value – in Karachi is even less than what an ordinary savings account at a bank offers, Gagai said few investment modes in Pakistan offered results better than real estate.
Based on a market survey, the story had stated that investment in Karachi’s real estate was far less lucrative than what most people would like to believe mainly because there was no official data available on the issue.
“Property offers many benefits, which other investment modes don’t. Its value appreciates over time unlike a corporate bond. Secondly, it’s safer than investment in the equity market,” he said.
He added that while the annual rental yield for residential units was far less than the benchmark six-month Karachi Interbank Offered Rate (Kibor), commercial units could yield between 7% and 15% in some city areas.
Refuting the findings of zameen.com, a real estate website, according to which most Pakistanis prefer buying land and building their houses themselves instead of buying a readymade house, Gagai said there was no truth behind this claim at least in the case of Karachi.
“An overwhelming majority in Karachi buys flats in vertical structures. That’s because land is expensive in the city, which is witnessing ‘internal migration’ now due to poor law and order in certain areas. You can’t build your flat in bits and pieces,” he said.
According to data maintained by ABAD, Karachi has up to 1.3 million residential addresses while the number of commercial addresses is roughly 400,000. Taking into account the city’s population and the average size of a household, ABAD claims that Karachi has a shortage of one million housing units, to which approximately 125,000 units are added every year due to an estimated influx of up to 6% new residents in the city annually.
Over 50% of the legal housing units in Karachi are in vertical structures, according to ABAD. Gagai says almost three-fourth of the new housing development currently taking place in the city is in the shape of apartments.
“The pace of residential development schemes will be much faster only if the government can ensure better law and order,” he added.
Published in The Express Tribune, October 11, 2012.