The prime minister has promised small low-cost housing under Pakistan’s Naya Housing Scheme. Seizing the opportunities brought about by the coronavirus, a strong Association of Builders and Developers has promised to send some of them and start talking with its members to build houses in Karachi, Islamabad and Lahore.
ABAD Chairman Mohsin Sheikhani told SAMAA Digital that they would propose 200,000 low-cost housing in Karachi and 200,000 for Islamabad and Lahore in the first phase of Pakistan’s Naya Housing Scheme. Prime Minister Imran Khan may want to immediately accept their proposal, because there is not much to show so far for the scheme, but the builder cannot assume the Murad Ali Shah government will be as enthusiastic.
In Karachi, ABAD is targeting the North Bypass, National Highway, Super Toll Road (between Toll Plaza and DHA City) and Hawkesbay. “Members of ABAD have their private land in these places,” Sheikhani said. “We don’t need to buy land from the Sindh government there.”
This was strengthened by the Chairman of Pakistan’s Naya Housing Authority Zagham Rizvi who told SAMAA Digital that the federal government had planned 200,000 houses on the outskirts of Karachi in the first phase. But when asked if people even wanted to live in locations that were somewhat remote, far from urban transportation and work, he replied that ABAD must have done his homework. “This is the ABAD program,” Rizvi said. “They are experts in the field and I am sure they must have conducted a market study at that location.”
The reality is that people who want to be targeted by PMs, low-income families, cannot afford to live on the outskirts of Karachi. As many housing studies have said, they prefer to live close to their workplaces that tend to be in the city. If they live in the suburbs, commuting to work takes too much income. This is precisely one of the reasons why katchi abadis have sprung up in densely populated urban areas next to affluent residential or industrial areas.
Size and cost
The plot is 120 square meters. The house will cost Rs2.95 million which decomposes as:
Construction: Rs 1,7,750
Other costs: Rs 200,000
ABAD members will need 900 hectares for 200,000 residential units and these are available: Super Highway, 500 hectares, Northern Bypass, 100 hectares and behind N. Bypass, 200 hectares. It is not clear, as some architects have shown, how very little a house can be built. It is not clear how the builders will want to give up their land for this price too.
Sheikhani said that their proposal would be sent to the government for approval after Ramazan. “We need adequate road infrastructure, sewerage and other utilities in this area,” he said. The Malir Development Authority and Lyari Development Authority are already working to put it down because the Sindh government is also working to introduce cheap housing schemes in these areas, he added.
But why does ABAD, whose one thousand members enter some of the most powerful names in business, want to build houses for people who are basically poor? They were very excited, apparently, because the federal government had just given a stimulus package to the construction industry to reduce the impact of coronaviruses on the economy. The thinking is that construction provides work.
“Prime Minister Imran Khan’s move is a historic step for the development of the national economy,” Sheikhani said, “because the construction industry is considered the backbone of the economy throughout the world.” One must show, however, that there is a possibility that many economists will disagree with it.
So what’s so interesting about a stimulus package? For starters, the easing of the rules includes this: builders who set aside a third of their housing project for Pakistan’s Naya Housing Scheme will give them a 90% income tax relief.
According to Sheikhani, this package will only last until December 31, 2020. The government will also not ask anyone to buy property what is their source of income. And the government will not investigate investment in the construction industry until December 31, 2020, he added.
To sweeten the agreement, the federal government even set aside Rs30 billion in subsidies to the scheme. The subsidy will pay bills for people who buy houses. People will be able to buy a house in Rs25,000 monthly installments and half of this amount will be subsidized by the government.
Sheikhani said, however, that builders would find challenges to get their permit certificates from various Sindh government agents on December 31. About 20 objectionable certificates must be issued by several departments before the builder can start working: Sindh Control Authority Building, Karachi Development Authority and Master Plan Department, CAA, SSGC, KE, KW&SB, PAF. This process can even take one year.
“Under these conditions, it will be difficult for builders to execute and complete Pakistan’s Naya Housing Scheme,” he said.
Some people assume that because Pakistan’s Naya is a PM scheme, the Sindh province will ensure its authority cooperates. However, housing is a provincial subject since 18th Amendment. It is unclear whether the federal government can encourage Sindh authorities to provide NoC at the desired speed. In fact, relations between Sindh and the federal government worsened in March, April and May when their policies did not agree on the struggle to curb the spread of the corona virus. “Seventy percent of the economy is based on Karachi and 80% of ABAD members come from Karachi,” said the former secretary of the Association of Defense Real Estate Agents & Clifton Asif Karim. “So it will be a challenge for builders to implement the plan of the federal government led by PTI because the Sindh government is controlled by the PPP.”