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Builders eye Karachi outskirts for PM’s Naya Pakistan housing scheme

SAMAA | - Posted: May 20, 2020 | Last Updated: 3 months ago
SAMAA |
Posted: May 20, 2020 | Last Updated: 3 months ago
Builders eye Karachi outskirts for PM’s Naya Pakistan housing scheme

Image: Samaa Digital

The prime minister has been promising small cheap houses under Naya Pakistan Housing Scheme. Seizing the opportunity ushered in by coronavirus, the powerful Association of Builders and Developers has promised to deliver some of them and has started talking with its members to build the houses in Karachi, Islamabad and Lahore.

ABAD chairman Mohsin Sheikhani told SAMAA Digital that they are going to propose 200,000 low-cost houses in Karachi and 200,000 for Islamabad and Lahore in the first phase of Naya Pakistan Housing Scheme. Prime Minister Imran Khan might be keen to accept their proposal immediately, as there isn’t much to show so far for the scheme, but the builders cannot assume Murad Ali Shah’s government will be as enthusiastic.

Location
In Karachi ABAD is eyeing the Northern Bypass, National Highway, Super Highway (between Toll Plaza and DHA City) and Hawkesbay. “The ABAD members have their private lands in these places,” Sheikhani said. “We do not need to buy land from the Sindh government there.”

This much was corroborated by Naya Pakistan Housing Authority Chairman 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 would even want to live in those rather remote locations, far away from city transport and jobs, he responded that ABAD must have done its homework. “It is ABAD’s program,” said Rizvi. “They are experts in the field and I am sure they must have done a market study of the locations.”

The reality is that the people the PM wants to target, low-income families, cannot afford to live on the outskirts of Karachi. As countless housing studies have said, they prefer to live close to their places of work which tend to be in the city. If they live on the outskirts the commute to work eats up too much of their earnings. This is precisely one of the reasons why katchi abadis spring up in the dense inner city areas that are next to affluent neighbourhoods or industrial zones.

Size and charges
The plots are 120 square yards. A house will cost Rs2.95 million which breaks down as:
Land: Rs500,000
Development: Rs500,000
Construction: Rs1,750,000
Other charges: Rs200,000
Total: Rs29,50,000
ABAD members will need 900 acres for the 200,000 residential units and this is what is available: Super Highway, 500 acres, Northern Bypass, 100 acres and at the back of the N. Bypass, 200 acres. It is not clear, as some architects have pointed out, how a house can be built on so little. It isn’t clear how the builders will be willing to give up their land for these prices as well.

Sheikhani said that their proposal would be sent to the government for approval after Ramazan. “We need proper infrastructure of roads, sewerage and other utilities in these areas,” he said. The Malir Development Authority and Lyari Development Authority are already working on laying it as the Sindh government is also working on introducing low cost housing schemes in these areas, he added.

Incentives
But why would ABAD, whose one thousand members include some of the most powerful names in the business, want to build houses for essentially poor people? They are particularly eager, it turns out, because the federal government has just seen given the construction industry a stimulus package to mitigate the effects of coronavirus under the economy. The thinking is that construction provides jobs.

“This step by Prime Minister Imran Khan is a historic one for the development of the national economy,” said Sheikhani, “as the construction industry is considered the backbone of an economy all over the world.” One must point out, however, that there is a possibility many economists would disagree with him.

So what is so attractive about the stimulus package? For starters, the relaxation of rules includes this one: builders who set aside one-third of their housing projects for Naya Pakistan Housing Scheme will give them a 90% income tax waiver.

According to Sheikhani, this package will last only till December 31, 2020. The government will also not ask anyone buying a property what their source of income is. And the government will not investigate investment in the construction industry up till December 31, 2020, he added.
To sweeten the deal, the federal government even set aside a Rs30 billion subsidy on the scheme. That subsidy will foot the bill for people who buy the houses. People will be able to buy the houses on Rs25,000 monthly instalments and half of this amount would be subsidized by the government.

Sheikhani did say, however, that builders will find it a challenge to get their clearance certificates from different Sindh government agencies by December 31. Roughly 20 no-objection certificates have to be issued by several departments before a builder can start work: the Sindh Building Control Authority, Karachi Development Authority and Master Plan Department, CAA, SSGC, KE, KW&SB, PAF. This process can even take a year.
“In this condition, it would be difficult for builders to execute and complete the Naya Pakistan Housing Scheme,” he said.

Some people assume that since Naya Pakistan is the PM’s scheme, the province of Sindh will ensure its authorities cooperate. However, housing is a provincial subject since the 18th Amendment. It is not clear if the federal government can push Sindh’s authorities to grant NoCs at the pace it wants. In fact, relations between the Sindh and federal governments deteriorated in March, April and May as their policies disagreed on the fight to contain the spread of coronavirus. “Seventy percent of the economy is based on Karachi and 80% of ABAD members are from Karachi,” said the former joint secretary of the Defence & Clifton Association of Real Estate Agents Asif Karim. “So it will be a challenge for the builders to execute a PTI-led federal government plan as the Sindh government is controlled by the PPP.”

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