The first
100 days plan of the PTI Govt says ‘Launch
the Prime Minister’s Housing program, to build 5 million housing units for
the middle and lower income segments in 5 years through the private
sector. This will boost industry, create jobs and provide shelter.
Very
good intentions. The challenge is how to do it?
First,
let’s define and analyze the Problem
/ Issue that we need to solve. More often than not, we start discussing and
even implementing the “solution’ before stating the problem. The State bank (2015) and other agencies
estimate a ‘shortage’ of around 9 m
houses in the country, with an additional yearly unmet demand of 300,000.
My question is, ‘Where are these people
living at the moment? On the street. Perhaps NO. This is actually a latent
demand, people living in slums, low quality housing, overcrowding, make shift tin
sheet roofs in lower income areas, men working in cities and families in
village etc etc. The point is that whatever housing we develop should be of at
least a reasonable quality / standard and yet affordable. Creating poor quality
and crowded houses in the shape of 2 marla units, incremental housing &
such like make shift schemes are more likely to end up in slums, as have many
initiatives in the past.
2nd; the Housing Market; most of the housing in Pakistan is provided by
the private sector through a semi regulated (I would say, wrongly regulated ) market
mechanism. The market however, caters mostly to the upper middle and upper
segments of society, where there is abundance of developed plots / houses available,
while for middle and lower income families, there is a dearth of affordable
units. It makes more sense to analyze and initiate policy & Regulatory
reforms in the Housing & Land market that should tilt the balance in favour
of middle and lower income segments. This could be supported by a program of
providing housing units in the lower range, using some targeted subsidies,
either in land development or financing. My suggestion is that both Policy & Regulatory reforms and housing projects need to be implemented simultaneously,
with a time horizon of five years, to achieve the objective.
3rd; we have promised Providing Houses
which should be differentiated from ‘plots’’. A house could be a standalone
unit, or a rented apartment in a multistory building. Since cost and availability
of developed land at suitable places are key challenges, I would strongly
advise to build apartments, on state land, which s lent on 50 years lease.
Providing affordable shelter should be the objective, including rental apartments;
against the erstwhile dream of a plot and owned house, that has created the
shortage. In most of the developed world, upto 50% families live on rental
housing, while we have around 10%. We need to facilitate & encourage rental
housing.
4th; we should be clear, houses
for whom? As per the 100 days plan, it’s for middle and lower income
segments. Very well targeted, as this is the segment with the highest gap
between the supply and demand, while there is abundance of housing options for
the higher income families which being the most profitable segment, is the
darling of formal private sector. So we need to build houses of a range of
income from lower to middle and hence careful market segmentation is needed.
5th;
point is where to build these houses. Two step analysis; which cities
and where within the city? My suggestion is to carry out a brief study on
assessment of the need, as probably it’s more acute in large cities, compared
to smaller ones and rural areas, so focus these cities rather than spreading
across the country. Within the Cities, there is less likelihood of finding
state land for housing, and whatever is available is at the peripheries or away
from jobs. This location would be less attractive and would lead to further
sprawl and hence counterproductive. Much better option is to use already
developed land that should be within the
city boundaries and closer to jobs and markets.
6th; point is to opt for Urban Redevelopment
rather than green field projects. Wahdat
Colony Lahore is a prime example, where 2000 kanals of state land is
occupied by just 1800 very low quality 70 years old quarters. This should be redeveloped,
into medium and hi rise apartments and commercial properties. This would not
only provide thousands of houses, including the current occupants, but
significant economic activity and would pay for itself. This kind of derelict housing
and underutilized lands are available in almost all the cities. Target families
like Government officers of BPS 1-14, in Education, Railways, Health etc could
be preferred, especially on departmental lands. This would also help to target
lower income families. Dozens of Kachi
abadies on state land also exist, which could be redeveloped in the second
phase, once the occupants get a confidence that if they vacate, they would get
a house.
7th;
point is the kind of housing. Suggested that instead of single story houses,
it should be apartments, ranging from 1000 to 2000 feet, as any housing below
this would not be quality housing. If the land is state land, and is not
charged to cost of housing, the average cost would be from 2m to 4m @ 2000 /ft.
An apartment building of G+4 is possible without lift, while a 2000 ft
apartment can be managed even in G+8 buildings, as maintaining lifts and amenities
could be affordable for this segment. Most of these buildings could be multi
use, with shops at ground floor and offices at 1st & 2nd
floors & apartments on 3rd, 4th & 5th. Good
design is needed to ensure quality of social life. Even some manufacturing activities
could be allowed in some buildings, like garment stitching, software houses,
call centers, computer assembly etc; largely non polluting, non noise producing
units, where females can commute and work in safety. This mix use would not only add to economic activity,
but would also reduce load on commercial activity in residential areas. Jobs
and shopping at walking distance would reduce burden on traffic and congestion.
For complexes of more than a 1000 apartments, all associated amenities like Mosque,
schools, Marriage halls, Gym, and playing grounds etc would be ideal and would
generate revenue. All commercial development within the Project would be subsidizing
the redevelopment cost, if done smartly.
To make sure that the smaller units remain with the lower
income people, a 3 bedroom flat should have just one or maximum 2 Washrooms,
and absolutely no facility for car parking, just for cycles and motor cycles. Exposed
wiring and pipes also reduce the cost of maintenance, and can look quite
decent, if properly done.
8th;
issue is the financing of these houses. In my opinion, this should be
from prospective owners, some down payment, and installments after Bank financing.
Considering the current land & housing markets, a decent house in PKR 2-4m @
Rs 2000 / sq ft; and that too with financing is quite affordable, especially if
within city limits. However to make it more affordable, Government may just
subsidize the cost of financing, bringing it to the range of 5-7 %. In case of
Government employees, their Pension / Gratuity etc could add to the financing.
9th;
point is the Institutional Reforms; Instead of jumping to making a new
authority (Pakistan Housing Authority etc), we should carefully assess the existing
institutions, which are numerous, with overlapping functions and idle
capacities. Let’s try to refurbish / use existing ones, after suitable reforms
and capacity enhancement.
For maintaining multistory apartments, an absolute must is
the Condominium law, that protects
their ownership rights and makes Owners’
associations mandatory, regulated by a Divisional level registration
authority. This will prevent these units
from becoming derelict and dirty, as usually happens.
10th; is the Policy reforms
that would not only facilitate this project, but would expand the Housing &
land market in general and make it affordable for majority, ushering in a large
scale construction boom, which in the medium to long term should minimize the
shortage. Reforms include; Computerized
Urban Land records to improve the quality of titles and make them
bankable. Making the property tax rate
same for self occupied and rental properties, which is currently five times
higher. Incentivizing house building
and renting and discouraging /
taxing open land and plot hoarding for speculation. Reforming the building regulations in the large cities to
allow medium and high rise development, unlike the current 38 ft restriction. Declaring
special development zones within a
radius of 400m around all mass transit stations in major cities. Master
planning of all cities above 100,000 population, and promulgating provincial Planning Act. Reforming and updating the National Reference Manual & National Building Codes which are outdated. Reforming the Building Control & Zoning Regime,
using private sector Licensed Building
Control officers for meaningful implementation. Making Fire Insurance mandatory for all commercial
and high rise buildings, to ensure that standards are implemented. A kind of
comprehensive Urban Land & Housing Reforms is need of the hour.
