Ranked as the second largest city in the world by population size and generating about 35% of Pakistan’s tax revenue, Karachi is not a city to be taken lightly. The former capital has seen its share of changes both good and bad. From the Karachi Circular Railway (KCR) to the road linking Malir 15 with Bakra Piri road along with flyovers at the intersections of Shaheed-e-Millat Road and Tipu Sultan Road and Khalid Bin Waleed Road, all have contributed to the increased economic activity of the city of lights.
The impact of these seemingly functional developments is revealed upon a closer inspection. The impact of these developments is far-reaching.
Read on below to examine the implications these developments have for the realty market of Karachi.
As is the case with any area that has decent amenities and facilities, there is a large number of people around it. While Karachi has already been quite overpopulated for some time, it surprisingly saw another increase as people found affordable housing in and around the city. With the roads being widened and signal free corridor being constructed, it means a direct impact on the commute time – something which has plagued the people of Karachi for a very long time.
Talking to Moin Qureshi of Emkay Consultants, we found that some of the least populated areas have seen a slight increase in the population following the developments such as re-carpeting of Sharah-e-Faisal, underpass construction and the widening of the roads. The areas mentioned during the discussion were New Malir, Bahria Town, Scheme 33, and DHA Phase VIII. Moin further added that this influx is due to the better infrastructure development since a while ago these areas were not this populated.
While discussing the overall impact of the new developments, it came to light that since a lot of people had started moving, the prices in those areas have increased. This resulted in a domino effect since the increased sale and purchase resulted in higher rates which led to more property taxes being paid and as a result, the economy gained. Not only this but in fact, the developers also realised that in a highly competitive market, the only way to get genuine buyers is to provide good amenities and facilities.
Doing a quick stakeholder analysis, it becomes very clear as to how a lot of stakeholders stand to gain. The most important stakeholders include genuine buyers, investors, builders and the government itself.
For the investors, the increasing prices are the most attractive feature. They stand to gain the most when it comes to areas like DHA Phase VIII as confirmed by Muhammad Furqan of Z. N Associates. He further said that since it was a well-planned area, a lot of people prefer moving there.
For the builders, the earning lies with regards to the genuine buyers. The better the facilities, amenities and design of the structures they build, the more investors and buyers will generate income for them. It is a simple demand and supply phenomenon that dictates their earnings.
As far as the government is concerned, the primary source of income is the tax paid at the time of house buying. Not only that, the government also earns from the fee paid to the development authorities and other taxes levied on the builders and genuine buyers. The more development takes place in an area, the more business and services the government can earn from. This propels the government to be conducive to infrastructure development since it drives a whole cycle of ancillary development as well. Therefore, the government provides incentives in the form of infrastructure such as Metro, good road network, and connectivity and so on.
When it comes down to the genuine buyers, the primary incentive is to live in the most happening and vibrant city of Pakistan. Touted as the electronic media capital of Pakistan along with being the industrial hub, it only makes sense to have a home here. This coupled with the fact that there will soon be a Special Economic Zone (SEZ) in the near vicinity due to the China Pak Economic Zone (CPEC). This makes the city all the more lucrative.
This has also led to the development and further expansion of Karachi with regards to new schemes and extensions. Some notable names include Scheme 33, DHA City Karachi also known as DHA Phase IX, and New Malir and so on. This is a direct indicator of the development that will take place over the course of time since a population influx means new businesses, services, jobs and opportunities.
These are some of the potential impacts on the realty market of Karachi as a result of the infrastructure being developed in the former capital. What other changes do you think are possible? Talk to me in the comments below or head over to our Forum for a bigger discussion.