Inside Karachi's Real Estate Scene with Abdul Karim Adhia

In this insightful interview, Abdul Karim Adiya, former Vice Chairman of Abad, offers a comprehensive view of Karachi's real estate and construction challenges. He discusses the impact of bureaucratic delays, high land prices, and infrastructure issues on construction costs. Adiya emphasizes the need for better regulatory frameworks and affordable housing solutions to address the disparities in Karachi's property market. His perspectives shed light on both current hurdles and potential improvements for the industry.

Mohammad Mohsin: Assalamu alaikum! You are watching The Wire Pakistan, and I am your host, Mohammad Mohsin. Today, our guest is Abdul Karim Adiya, a former Vice Chairman of Abad and a prominent figure in the development and construction industry. Assalamu alaikum.

Abdul Karim Adiya: Walikum Assalam, Mohsin.

Mohammad Mohsin: Let’s dive right in. Could you start by explaining what Abad is and how it serves both its members and the public?

Abdul Karim Adiya: Thank you, Mohsin. Abad stands for the Association of Builders and Developers of Pakistan. We represent the construction sector, particularly in Sindh. The Sindh Parliament has granted us the authority that no one can build or get approvals from the Sindh Building Control Authority (SBCA) without Abad membership. We play a crucial role in regulating the sector and ensuring that only qualified builders operate.

Mohammad Mohsin: Is Abad focused solely on protecting the interests of builders, or does it have responsibilities toward consumers as well?

Abdul Karim Adhiya: Abad is primarily an association for builders, but we do consider consumer interests. If a builder takes money from people and fails to deliver, Abad can question them. While we can't impose penalties, we can cancel their membership if they don't meet our standards and commitments.

Mohammad Mohsin: Is there any escrow system in place to safeguard consumers' money?

Abdul Karim Adhiya: Unfortunately, escrow systems are not widely implemented in Pakistan. Enforcing such a system would be challenging with the Sindh government, federal government, or central bank. However, Abad works to hold builders accountable through internal committees.

Mohammad Mohsin: Recently, the Nasla Tower issue has been a major concern. A person invested their life savings in an apartment, got all necessary approvals, and then the project was demolished due to a court order. What are your thoughts on this?

Abdul Karim Adhiya: The Nasla Tower case is indeed very sensitive. It highlights the need for a more accountable system. Despite having all approvals from various government departments, the Supreme Court ordered its demolition. This situation not only tarnished the builder's reputation but also severely impacted the residents, many of whom cannot afford another home. It's time we address such issues to prevent them from recurring.

Mohammad Mohsin: What was Abad's role in the Nasla Tower case?

Abdul Karim Adiya: Abad appointed a lawyer to defend the legality of Nasla Tower. Despite our efforts, the court's decision was final. Our association aims to protect both builders and consumers, but in this instance, higher authorities overruled our position.

Mohammad Mohsin: How does the construction scene in Karachi compare to Lahore?

Abdul Karim Adhiya: Karachi, being an international metropolis and the fifth largest city in the world, requires high-rises and a beautiful skyline, which demands proper regulations and facilitation. Unfortunately, Karachi faces more bureaucratic hurdles compared to Lahore. Starting a construction project here can take months due to various approvals, whereas Lahore's process is quicker.

Mohammad Mohsin: Why is construction so expensive in Karachi compared to cities like Dubai?

Abdul Karim Adhiya: The high cost of construction in Karachi is due to several factors, including bureaucratic delays, high land prices, and labor costs. While premium properties in Karachi are expensive, they are still cheaper than those in Dubai. However, Karachi's living standards, environment, and security situation are not as favorable as Dubai's.

Mohammad Mohsin: From a builder's perspective, why is construction easier in other cities compared to Karachi?

Abdul Karim Adhiya: Karachi often gets neglected despite being Pakistan's economic hub. The city faces significant bureaucratic challenges and doesn't receive the attention it deserves. This results in higher costs and delays in construction projects.

Mohammad Mohsin: If you were a decision-maker in the government, what changes would you implement to improve Karachi's real estate sector?

Abdul Karim Adhiya: I would start by regulating the prices of raw materials. When raw materials are expensive, housing costs increase accordingly. Regulating these costs could make housing more affordable.

Mohammad Mohsin: How does the high cost of land affect builders?

Abdul Karim Adhiya: When land costs 10-15 lakhs per square yard, builders seek higher profits. If they don't achieve this, they may turn to other markets like Dubai. Often, the quality of construction does not match the high prices.

Mohammad Mohsin: How does civic sense impact the quality of construction?

Abdul Karim Adiya: Civic sense is crucial. Without regular maintenance, buildings deteriorate quickly. Unlike in places like Japan, where people are trained to maintain cleanliness and order, we lack this practice, leading to buildings looking rundown in a few years.

Mohammad Mohsin: What impact has a company like Emar had on the local market?

Abdul Karim Adhiya: Emar has set a new standard with premium products that people are willing to pay for. This has encouraged local builders to improve their quality to compete, although the market still has room for improvement.

Mohammad Mohsin: What options are available for the lower middle class in Karachi for buying land or apartments?

Abdul Karim Adiya: The lower middle class often looks to areas like Surjani, Scheme 45, and the outskirts of Karachi. These areas are more affordable, but transportation issues make them less accessible.

Mohammad Mohsin: Could the concept of satellite cities work for Karachi?

Abdul Karim Adiya: Satellite cities are a great idea, but they need to be affordable and well-connected. Currently, places like Bahria Town and DHA City are too expensive for the average person. The government needs to create more affordable housing schemes with good transportation links.

Mohammad Mohsin: What about home financing? How viable is it for the average person?

Abdul Karim Adhiya: Home financing is crucial but underdeveloped here. Recent government initiatives were a good start, but there's still a long way to go. Many people can't afford the high down payments and long-term commitments.

Mohammad Mohsin: In terms of investment, how do you see the real estate market in Karachi right now?

Abdul Karim Adiya: It's currently a buyer's market. This is a good time for buyers to negotiate and get properties at better rates. However, both buyers and sellers are facing challenges due to economic instability and lack of interest from expatriates.

Mohammad Mohsin: Illegal funds and their impact on the market have been a concern. How has this been addressed recently?

Abdul Karim Adhiya: The FATF and IMF have pushed for stricter regulations, which has curbed some illegal fund flows. However, the gap between white and black money remains significant. Until this gap is reduced, the market will continue to face challenges.

Mohammad Mohsin: Finally, what's your view on Bahria Town and the concept of selling portions of land? Is it legitimate?

Abdul Karim Adiya: Bahria Town's legitimacy is a complex issue currently under Supreme Court judgment. Personally, I'm not in favor of demolishing existing structures. As for selling portions of land, it's not something I support. I believe in maintaining full ownership and transparency in transactions.

Mohammad Mohsin: Thank you for sharing your insights, Abdul Karim. It’s been an enlightening conversation.

Abdul Karim Adiya: Thank you for having me, Muhammad. It’s been a pleasure.

Mohammad Mohsin: And thank you to our listeners for tuning in. Stay tuned for more insightful discussions on our next episode!

Watch Full Discussion on the link below