GVS: Zeeshan, usually the Pakistani people who receive higher education from overseas tend to work for Investment banks, multinationals or World Bank etc. So, looking at your profile, I was wondering how you came to choose the real estate sector? How did you hit upon the idea of Zameen.com when there was no such service provider in the country?
Zeeshan Khan: We are in an IT enabled sales transaction business. IT has always been our basis so we can build systems that can ease the process of transactions and at the same time, make people more aware of what they are doing. We started back in 2006 before which, there was no database of information available to help people deal with properties.
I was in UK with my family where I started my first IT business for buyers and sellers. Globally, IT was growing and different housing portals were being developed for better consolidation of information. The public was becoming more aware and educated and then the internet introduced classified portals where people could work for agencies and the buyers could use the available data to make a good decision regarding buying or selling of properties.
In Pakistan, however, there was a lag to the extent that there were no categorized sectors or information available on properties. So, after spending around a decade in the UK, I and my brother moved to Pakistan and started Zameen.com which, for the first 5 years, was more like a call centre. The property sector is quite unique in Pakistan as there are more plots here as compared to built properties whereas in the world, people are more inclined towards buying built property.
GVS: Are housing societies that sell plots only popular in Pakistan?
Zeeshan Khan: No, there are developers outside as well but they mostly sell houses on mortgages. Making your own maps and building your own houses is not as popular in foreign countries as is in Pakistan. Here it is only for the elite class who has enough money to hire architects and builders.
GVS: Talking about the investment vehicle, the prices for properties keep increasing. For example, a plot that was worth 1.5 crores back in the day could be sold today for 40 crores. Why does this happen and will it continue?
Zeeshan Khan: Yes, it will keep happening unless and until we change the property market dynamics. Globally, the property markets are usually prone to volatility where they see an upward trend, then a downward trend and sometimes the markets crash. There are trends where a property bought ten years ago would come back to its original price, the reason for which is the economy. People here tend to hold on to their property because it is dear to them. People have no liabilities, no mortgages and no leasing and that is why there is no pressure on people that would keep them from holding on to properties. Hence, when they do sell their property, they expect profits.
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GVS: So, the absence of banking market and mortgages is responsible for the current property market dynamics in Pakistan?
Zeeshan Khan: Yes. This is why the property prices keep increasing in Pakistan. However, the prices of properties in Pakistan are still low as compared to other countries. But since our per capita income and purchasing power is low, more people in Pakistan are now feeling the pressure of ever-increasing property prices.
GVS: Why is there no concept of mortgage in Pakistan?
Zeeshan Khan: It is too much of a risk for banks since the decision making in Pakistan is weak. This makes our market non-volatile. On the positive side, it makes our property market very strong and resilient in the face of any changes. As a result, in weak economic situations like the present one, this market becomes our hedge against inflation and default.
GVS: Looking back at 75 years of Pakistan, do you think Pakistan is in the right direction when it comes to property market and real estate vis a vis the rest of the world?
Zeeshan Khan: Recently, we have seen the right kinds of trends popping up. Karachi is one of the biggest cities in the world and it was rightly undergoing vertical development. But then, issues arose and infrastructure was not developed in a way as to enable Karachi to vertically develop further. Instead of one big city of Karachi, two separate cities should have been developed. Looking at Lahore, we can see it was only developed horizontally which is not good in the long run. Lahore is around 18,000 km2 with a population of around 12 million whereas Mumbai is 6-700 km2 with a population of around 18-20 million.
GVS: So, is it right to say that besides Islamabad, no other city was planned as it should have been?
Zeeshan Khan: There have been efforts to do so but even in such cases, the plans were not long-term as they did not consider future possibilities. We have often missed the target by ignoring infrastructure, road networking, logistics management. As a result, only developers have worked in real estate in our country and no authorities have come forward to contribute seriously. That is why housing societies are popular in Pakistan.
GVS: So, what do you think the development authorities of different cities have been doing all this time?
Zeeshan Khan: They are more focused on receiving approvals and in doing so they have ignored future possibilities and population growth in terms of planning and development. While bringing in international methods to deal with the issues here, it should be kept in mind that the local needs are very different and require different solutions. This is one reason our real estate market did not evolve the way as it should have.
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GVS: What do you thinks should be the government’s role in helping the real estate market of Pakistan?
Zeeshan Khan: The more developed the country and the market is, the bigger the role of the government. Government has to make and enforce regulatory laws, work on bylaws, make sure that housing can be affordable for the general population. The authorities should also take proper measures to accurately forecast the future. For low-cost housing, building cost of houses have to be reduced by bringing in innovation and new technology.
GVS: What happened to the previous government’s lowcost housing programme?
Zeeshan Khan: The success rate was low because construction cost cannot be significantly lowered. Instead of the low-cost housing, people should have been given subsidized loans and bank mortgages should have been introduced. The State Bank of Pakistan was asked for loans of about 406 billion rupees in total out of which only 200 billion was approved. At the end, only 500-600 properties were made affordable.
GVS: As you suggested, there is an ongoing housing crises and affordability issue in Pakistan. What do you think is the solution?
Zeeshan Khan: The solution to these problems is to create subsidized schemes, promote them and make them affordable for people while keeping in mind that the construction cost in Pakistan is low as compared to other countries. An apartment in Mumbai, for example, would cost about 60-70 thousand rupees per square foot for an average apartment whereas a very high-end apartment in Gulberg would cost your around 20-25 thousand rupees per square foot. So, the point is, creating opportunities to get better properties by working on bylaws and mortgage is important.
GVS: Many people are concerned that the real estate sector will stop growing due to the depreciation of rupee against dollar and according to what you are saying, that will not happen.
Zeeshan Khan: Yes, it cannot happen and if you ask me, I am least concerned about rupee depreciation affecting the real estate sector of Pakistan. It might slow down the transactions because consumer sentiment is affected by rupee devaluation. However, the transactions shall continue because as it is said, 50 percent of property dealings are documented while the other 50 percent are not. The dynamics of the real estate market are built in a way that the investments in this sector are safe so the cash-based market is non-volatile and stable. So, the property prices are either stable or go up, but do not fall.
GVS: Are transactions costs transparent throughout the world?
Zeeshan Khan: Yes, these are recorded and also have registries. You can also go on a portal and get the history about the price of a certain property. We have certain authorities and private housing schemes in Pakistan which sometimes do not like to share data publicly.
GVS: Zameen.com has been working for 16 years now. How do you think you and Zameen.com have contributed to the real estate sector of Pakistan?
Zeeshan Khan: First of all, through this medium I would to say that it is not just me, Zameen.com is a team effort and all of us as a family have done this. Zameen.com has made enormous contributions in the sense because we have mobilized the market and we have educated the people specially expats. People who are investing in Pakistan can receive so much information through Zameen.com. We launched an index a few years ago, so Zameen.com actually gives you complete insight into the property market because we have educated the market by skill, better research and we have search trends available. In this sense, Zameen.com has actually enabled the market to take better decisions and has also brought the trend of transparency into the market. We make sure all the tax compliance and there is a lot of hard work that has gone in. We have built latest systems for our teams so that Zameen.com can be more efficient.
GVS: Tell us about the Plotfinder that Zameen.com had launched some time back.
Zeeshan Khan: So, there is no data base of geo cognitive map available in Pakistan. Our Plotfinder is a work in progress and we have mapped over 2 million unique address points in the Plotfinder which will fulfil the need for geo cognitive map. With our Plotfinder, one can now find the exact location of a plot. We are also adding more address points to the Plotfinder. In addition, there are many localities especially old areas that do not even exist on a map. We are using Plotfinder to help solve these issues.
GVS: This actually brings me to another question. The land that is under CDA, DHA or any other authority is important in the sense that these lands have proper sectors, streets and house numbers. But the agricultural land only has khasra number, etc. and such things are not used elsewhere in the world. What is the solution?
Zeeshan Khan: The only solution is to build a complete database and map it out. There is work being done in this area but there are a lot of gaps that need to be bridged.
GVS: Could you make any recommendations in this regard to the government in order to generate new ideas?
Zeeshan Khan: It all comes down to the will of the government. If there is a good will to accomplish something good, the techniques or strategies that have to be implemented in order to resolve these issues are not that complicated. They have done some good work and we as a private institution are working on it too. But the database and transparency are something beyond our control and it is only something that the authorities can work on.
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GVS: Does Zameen.com have any other technological products in the pipeline, like the Plotfinder?
Zeeshan Khan: There is no database of geographically located properties in Pakistan. Our Plotfinder is a work in progress and we have mapped over 4 million address points across 40 major cities of Pakistan, which fulfil the need for such a digital map and searchable database. With our Plotfinder one can find the exact location of a property. Every month we are adding over a hundred thousand new address points to Plotfinder. In addition there are many localities especially old areas that do not even exist on a digital map and do not have designated house numbers. We are using Plotfinder to help solve these issues across Pakistan.
GVS: In Pakistan, around 65 percent population is less than 35 years of age. I do not see the young girls and boys owning houses of 1-2 Kanal. What is the future market structure? 5-10 Marla houses?
Zeeshan Khan: Yes, you are right. Maybe houses even smaller than 5-10 Marlas and smaller units that are more affordable. Apartments in Dubai used to be 1000-1200 square feet but now they are launching 600 square feet apartments. In the west too, there are small houses of 1-2 Marlas. There is an issue of community space here. Private developers create community space but it is not supported in Pakistan. To youngsters, I would say that property is a stable market because here, asset value is quite stable.
Sometimes it is not good for the market because we need more buyers coming into the market and in order to have that influx of buyers, we need a mortgage market. Youngsters should build up their plans and avail any loan opportunity to invest in real estate.
GVS: Zameen.com held a property expo back in 2019 in Dubai which I also attended. You are planning another expo for September 2022 in Dubai. Why are you organizing the expo after such a long gap and why is it taking place in Dubai?
Zeeshan Khan: The gap actually happened because of COVID-19. We had planned an expo last year but had to cancel just a few months before because of the uncertain situation regarding lockdowns. We chose Dubai because it is a hub and GCC has more expats than Europe and America.
So, taking about almost 60-70 developers from Pakistan, mobilizing them, putting them onto a platform in the world trade center, which is the place for all expos, then bringing in local masses to interact with. From what I think, there will be more discussions on the situation of our country as compared to the real estate market. The people who went with us on the 2019 expo very much liked the exposure, opportunity and interactive environment even though 70-80 percent of them had not previously travelled abroad. Many of them stayed back to conduct business and increase their market size. Due to the increasing negative consumer sentiment, it is the right time for an expo.
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GVS: You have presence in Middle East and North Africa (MENA region). Could you tell us more about it?
Zeeshan Khan: We are more focused in UAE which is a flagship market. We have presence in Morocco and then in Indonesia. We are also focusing on working in the far East and a few other countries like Egypt. We have learned a lot about classifieds and their working in the UAE. We also have our presence in Saudi Arabia whose market is not very structured. In Indonesia, we are doing property transaction business in primary space which no one had ever done there before. So, we are learning new things and applying and deploying them in order to build value which will make a stronger profile.