'Land Mafias' And The Battle For Pakistan's Real Estate Boom

Perween Rahman was returning home one evening in March 2013 from her job as head of the Orangi Pilot Project, which for years has pushed land title claims for Karachi's poor, when she was shot three times by a gunman on a motorcycle.

Rahman died as she was rushed to hospital by her friend and colleague Anwar Rashid. "He was a sharp shooter," said Rashid, now 71 years old and white-haired, but still a director of the OPP, pointing to his throat and chest to indicate where Rahman was hit. "This is because of the land -- the police, the mafia, all involved."

Her death exposed the dark underbelly of real estate development in one of the world's fastest-growing megacities. Karachi is home to about 15 million people, two large seaports and Pakistan's financial infrastructure, making it the country's economic powerhouse. Its appeal is only set to rise as China pumps in more than $50 billion to boost infrastructure and transport links across the nation, spurring Pakistanis abroad to invest in their home market. 

"Public land has commonly been illegally regularized and sold," Brussels-based conflict watchdog International Crisis Group said in a February report. "It has become the city's most prized and contested commodity, with federal, provincial and local land-owning agencies, military cantonments, corporate entities and formal and informal developers competing to extract as much value as possible. Given the fiscal stakes, disputes are settled by bribery and political, bureaucratic and police patronage, and even deadly force."

Tapping into the Boom

House prices in Pakistan have more than doubled since 2011, according to Zameen.com, a listings website. Karachi values have jumped 23 percent since 2016 to a record high, outpacing other large cities and the national average of 6.3 percent -- though some of that cooled when the government started taxing real estate transactions last year.

Some 13 different government agencies are tasked with regulating laws and coordinating development, but slums have sprung up across the city with little regard for any of these. Ethnic clashes and gang wars festered since 1947, when the first wave of migrants poured into the city of 450,000 following Pakistan's violent partition from India.
 A military clean up in 2013 has to some extent pushed out political militias and insurgent groups and, on his first visit to the city as prime minister, Shahid Khaqan Abbasi, last month vowed to continue action "against terrorists belonging to banned organizations, target killers, extortionists, street criminals and land mafia." 

Karachi's real estate in recent years has offered better returns than Dubai and London, according to tycoon Arif Habib, who is building a $2 billion gated estate in the Naya Nazimbad district, neighboring an area that used to be controlled by Taliban militants. One of his units said on Monday that it has filed an application with the government to buy an extra 900 acres to expand the project.

Habib also pioneered and listed Pakistan's only real estate investment trust in 2015, offering a stake in one of Karachi's most prominent malls and office towers. Developers including Habib and rival builders such as real estate baron Malik Riaz Hussain and the military's property arms, are tapping into the price boom.

However most of the development is coming at the higher end of the market, crowding out middle-class families. The Karachi-based Urban Resource Centre estimates that more than 100,000 houses are required in the city every year to stem the shortage, yet less than 40,000 are being built by the formal sector.

"Pakistan is short of housing and that shortage is increasing day-by-day," said Habib. "Land grabbers also make problems for developers."

Land Grabbers

Rahman's family and associates suspect her work mapping Karachi's poor districts and helping residents gain land titles put her in conflict with powerful criminal networks. The OPP mapped more than 1,000 settlements between 2006 and 2013, though that stopped after Rahman's death and subsequent threats and attacks on the group's staff.

Helping Karachi's residents gain legal title means that developers "need to pay them about six times as much before you can get rid of them," Sahar Ismail, Rahman's niece and a trained economist, said at the OPP's office, which is decorated with murals and portraits of her murdered aunt.
 The Supreme Court in 2014 ordered Rahman's murder case to be placed in an anti-terrorism court with a judicial commission rejecting the early closure of the investigation after the police said they had already killed the perpetrator. Three people have since been arrested.

"It was probably the land issue," said Jamil Ahmed, the deputy inspector general of the crime investigation agency in the Sindh police department. It was difficult for the police to investigate at the time as the "Taliban were in full control of that area and it was easy for criminals to hide and land mafias to brow-beat people."

Some in the police have been involved in real estate-related corruption, but they have to be smarter now and fly under the radar because of closer media scrutiny and the judicial investigation, he said.

Closer Scrutiny

One example of heightened scrutiny is property mogul Hussain's vast city-sized Bahria Town development about an hour's drive from Karachi. Construction began in 2014 and, when completed, the enclave will boast a 36-hole golf course, theme parks, five-lane highways, Dubai-style fountains, and what it says will be the world's third-largest mosque.



A 125 square yard house in Bahria Town that initially sold for 1.73 million rupees ($16,000) is now between 2.4 million rupees to 3.5 million rupees, said M. Akmal Khan Khattak, a marketing manager at real-estate agent Athar Associates. He's been recommending the purchase to his clients.

Pakistan's top anti-corruption agency is investigating allegations that Bahria Town acquired land from a local authority illegally. The company denies the allegations and the disputed land is around 7,000 acres, Gohar Ali Khan, Bahria Town's attorney, said by phone in July. The National Accountability Bureau handed over a sealed interim report to the court in October 2016, but there's no clarity when the final investigation will be submitted. Bahria Town has already agreed to a third party audit to determine the land's market value and will pay any difference, Khan said.

Hussain also denied any wrong-doing and said last year the claims were just "twisted facts." Hussain declined an interview request from Bloomberg News and Bahria Town spokeswoman Nida Zahoor didn't respond to emailed questions and declined to comment on the phone.

'Important Positions'

In a country with a dire need for housing, large, secure and modern developments are needed, said Shamoon Tariq, the vice chief investment officer at Stockholm-based Tundra Fonder AB, who owns a plot of land in Bahria Town.

"They have provided security, they have provided electricity," Tariq said, referring to Bahria Town. "People see their success and they will follow."

Sindh province, of which Karachi is the capital, is now looking to computerize land records which may help curb corruption, Mohammad Zubair, governor of the province and a member of the federal ruling party, said in an interview in March. This was earlier done in Punjab, Pakistan's most populous region that's also governed by the same party.

"Of course the challenge will always remain," Zubair said when asked about land grabbing. "Because the political players and people in important positions are involved."