Real estate – Paying price of an economic gimmickry

Billions of rupees black money was thrown to the real estate basket when former Premier Imran Khan announced incentives for tax evaders, paving way for whitening their black money and resultantly creating an artificial boom in this sector. Seeing the market dynamics hundreds of thousands common people with moderate income also stepped in having a desire to buy some property for their kids and future needs. But, they were mistaken as the bulk investors sold out their properties to individual buyers and made their way leaving them in turmoil. If some invested their retirement dues, the others invested their savings or the provident fund money – they were accumulating penny after penny over the decades with an innocent desire of getting their children married after earning some profit by selling their plots. But, swayed by desire to have an abode, they fall prey to real estate tycoons least knowing about their exploitive tendencies and plans to suck their hard earned money. Some developers and builders described the PTI era boom in real estate as a bubble that when burst, washed away the belonging of hundreds of thousands small investors leaving them in dire desperation. “This policy of the previous government was a severe blow to real estate sector as the tax evaders escaped by whitening their money and faulty policies supplemented by economic recession struck billions of rupees of common people,” said a builder Falak Khan. “The previous government ruined real estate sector. The artificial bubble has burst leaving hundreds of thousands investors in lurch.” He opined that a gradual development in this sector could have ensured sustainability. “But, abruptly forging ahead has trapped local investors as well as overseas Pakistanis. Therefore, the government should seriously look into this crisis and bail out small investors.” Seeing the series of events, one can easily understand how the poor people are deprived of their money. Firstly, there is a bobby trap of small down or advance payment; then an affordable installments payment plan and promises of early delivery of plots. But, when there is good response in buying files, the society owners oversell files meaning that more files than the actual land acquired for a society. Once the bulk stock of files is sold out, they themselves float rumors that society does not have required land that result in panic selling of files by the investors. Here step in the cronies of developers who artificially down the prices and buy back these files on lesser rates for the same developer, inflicting loss on average investors. For example if somebody has paid Rs 600,000 for a file, its market value is dropped to 20 to 40 percent and files are bought back by the same societies through their front men, eating up this 20 to 40 percent hard earned money of small investors and discard oversold files. Then, the actual buyers in accordance with acquired land remain in field and start paying installments. Then comes the second phase wherein buyers are charged in the name of revised land rate, development charges and plots allocation in different sectors. Faulty balloting mechanism by many societies on a pick and choose basis also affect common investors. “This is an engineered propensity. All this is done by a few property giants willfully to eat up poor people money,” said a real estate agent Aamer Chaudhry. “These societies keep changing their policies, perplexing the buyers as well as agents.” “This is a vibrant sector and can contribute well to national economy if the major players in real estate and the corrupt government officials are reigned in properly,” he remarked. “After agriculture and industrial sectors, this sector was an equal hope for common people and low income groups. But, its recession has left them in a miserable condition.” The most painful segment of the story is that some developers who launch a housing society, does not have land compatible to sold out files as many among them purchase small patch of land, construct an attractive entrance and some development to attract investors. Then after selling files they purchase the remaining land with the investor’s down payment money and except the initial investment on small patch of land, they extract rest of money for land purchasing from small investors. This vicious circle keeps benefitting the rich and inflicting losses on common investor as in many cases they are totally deprived of their money when the developers vanish from the scene. “Certain modalities must be specified for real estate sector ensuring that no small investors are trapped again by property tycoons,” said an investor Asif Mahmood. “If after every few years, people will keep suffering massive losses in this sector, it will shake their confidence. Where should we go after investing money in these societies and then keep waiting for years for plots.” “Every society must bound to legally acquire land, restricted from files over selling, introduce affordable payment plans without hidden charges, judicious balloting and on time development and possession,” he added. This gloomy picture calls upon the federal and provincial governments to lay down a strict mechanism for developers, societies’ owners and real estate agents by completely overhauling the rules and laws for this sector to save the hard earned money of small investors.