Housing conference: The day Kaiser Bengali felt out of place but not words

Economist criticises commercialisation of housing sector.


Kazim Alam March 23, 2012

KARACHI:


What happens when a development economist takes part in a panel discussion on the housing and construction industry along with the country’s leading real-estate developers? In the words of noted economist Dr Kaiser Bengali, he is bound to feel like a fish that is out of water.


Sitting besides developers of mega projects such as Naya Nazimabad and DHA City Karachi during the I&M Conference on Pakistan’s Housing and Construction Industry on Thursday, Bengali bluntly criticised what he termed the absolute commercialisation of housing and construction in the country.

“Don’t demean housing by calling it a commodity. The market economy responds to purchasing power. It doesn’t respond to the need,” he said while referring to the surplus in housing units for the upper class at a time when the overall housing backlog in the country is estimated to be between four and eight million units.

Commenting about Naya Nazimabad and DHA City Karachi, Bengali said these projects were financially feasible, but they were far from being economically feasible. He said a large number of housing units were lying vacant in DHA. “About 20% housing units in PECHS are unoccupied. I live in Defence Phase 8 where most houses and apartments are vacant. That’s because no one can afford to live in them. Yet DHA is building a whole new city on the outskirts of Karachi,” he said, adding the demand in upper-class housing was mainly driven by speculators in the real-estate market.

He said the housing shortage was getting more acute with the passage of time because unlike other economies, “filtering” in housing did not take place in Pakistan. By definition, filtering means the change in occupancy as the housing that is occupied by one income group becomes available to the next lower income group as a result of the decline in market prices.

He also said that selling completely built houses to low-income groups was not an effective way to address the housing problem. Instead, he said, low-income groups should be provided with “serviced” plots, which the families could themselves build incrementally over an extended period of time.

Taking part in another panel discussion, Bank Islami Pakistan head of consumer banking Muhammad Imran said it was wrong to assume that banks favoured only the rich customers when it came to home loans. He said the size of an average home loan was between Rs500,000 and Rs1.8 million at his bank. He added that while conventional banks were shying away from home financing after the financial crisis, Islamic banks had become major players in Pakistan’s mortgage market.

Published in The Express Tribune, March 23rd, 2012.

COMMENTS (1)

Day-Dreamers | 12 years ago | Reply

Thanks Dr. Kaiser Bengali for the true picture. The speculators, money launderers, take full advantage of the taxation aspect of construction industry which constructs houses, flats, apartents, for low income groups. Filtering, compliance to code of conduct for KBCA, KBCA adherence to facilitation of seismic zone, utilities, waste water recycling, solar energy, developing bus stops, circular railway station access, and no parking for cars, or motor cycles. The prices of solar PV (Photo voltaic) cell international prices has come to a rock bottom low of 17cents per KWH. Dr. Bengali will know exactly would mean to a utility an, d a utility immune housing network, withsout generator, or wind power. All on your roof top, or wall of the buildings. This would be for poor, and low cost housing, with no place to park car, or motor cycle. Only for those who travel by public transport, bus, or train. Waste Water Recycling within the building mean the water is scientifically processed/treated for use of gardening, washing, cleaning, laundery, bathing, toilet use, etc., etc. The water for drinking an RO Reverse Osmosis low cost unit is required to drink the water. Thank you Investment Marketing Conference, and thanks a million to Dr. Qaiser Bengali to think and concern for poor, deprived.

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