GVS: Zameen.com has proved to be a great success for Pakistan, its real estate and property markets; new concepts and ideas have branched out from Zameen.com, new entrants are trying to create online portals to emulate you, but we wonder what convinced you in 2006 when digital space in Pakistan was not much developed that this idea will be successful? Especially because most property dealers, contractors, and developers were not educated or net savvy?
Zeeshan Ali Khan: My brother Imran and I were studying in the UK, and while there, we, concurrently with our studies, had started to brainstorm ideas for various businesses. After graduation, we decided to move back to Pakistan and continued our efforts in building a sustainable enterprise. In the beginning, we had multiple ventures going, but soon we saw a gap in the country’s digital space, especially in the real estate sector, and decided to take advantage of this opportunity. While we did realize the incredible task that faced us in transforming the industry from an informal market to a more streamlined one, we knew that if we were successful, it could have a lasting impact on our ambitions and the country’s real estate industry as a whole.
Since then, what started as a mere portal for posting real estate listings, has grown into one of the biggest real estate enterprises in the country. Based on our code of trust, honesty, and hard work, and assisted by an enterprising and dedicated team of experts, the company has overseen the marketing, sale, and development of countless real estate projects across the country and beyond.
GVS: How has the progress of digital portals like Zameen.com changed and transformed the property markets or behavior of investors and property agents?
Zeeshan Ali Khan: Well, it was definitely tough in the beginning. There was no other enterprise in the market that was doing what we were doing. So we had no precedents to follow, no set path that we could emulate. We had to learn on the go and make the decisions that felt right to us at the time. In this sense, we have made it easier for others to follow in our footsteps. But initially, the onus of changing minds and helping people see the advantages of our business model took time and effort. Moreover, the country was luckily going through a technological awakening, which allowed us to gain the trust of our affiliate agents and customers.
Since then, Zameen has helped bring about a marked difference in the way the property market has progressed and the people that make up the sector. We facilitated property agents and the common public by educating them about the various online tools introduced by Zameen, and the effect of this endeavor is evident in our search metrics, which have exhibited incredible growth since our inception over 15 years ago. Today, through the help of our Operations team, our area teams, and almost a million listings and over 6.5 million site visitors, we are considerably farther ahead than any other similar enterprise in the market.
From doing work on paper, the industry is now transitioning into one that takes advantage of the various online tools available, and Zameen has played an essential part in that change. We pioneered the country’s digital revolution, especially in terms of the property market, and have done our part in ensuring transparency and gaining the trust of our customers, who can now use our curated data to make informed decisions regarding real estate trends and transactions. While Zameen did introduce a property index in Pakistan for the first time, it is imperative that the government also plays its part in this endeavor, as it is the state that provides these metrics in most other developed nations.
GVS: How do you see growth challenges ahead for Zameen.com, given that many others have entered this new market you created, and competition is intensifying?
Zeeshan Ali Khan: It takes years to build a brand, and it took us over 15 years to get to where we are today. In my opinion, there is still a huge gap in the market, and there is still a lot more that can be done in this space. As always, we plan to be the pioneers of this endeavor. We have already introduced several technological innovations to the property sector like search trends, Plot Finder, Propforce, the property index, etc.
These and more are aimed at facilitating buyers and investors and making it easier for agents to present their properties to potential customers, especially for non-resident Pakistanis. Additionally, while there is not much competition as yet, we have made it easier for new enterprises to enter this space, and for that, I am very proud. We welcome more innovation in the real estate sector, as I feel it will all ultimately positively impact the entire industry and, in turn, the country.
With close to five thousand employees spread across Pakistan and the Middle East, Zameen has the technological infrastructure and expertise required to be the country’s leading enterprise in the property market. We have seven offices in Lahore alone and several more spread out over every major city in the country, and we are constantly growing. There is no other company on a comparable scale that can match our reach and influence, especially when considering our international presence in the form of EMPG. Thus, while there may be some new entrants into this market, Zameen very clearly has no direct threat to its status as Pakistan’s largest real estate enterprise.
GVS: What is the relationship between EMPG and Zameen.com? Why do you need different entities in different markets like Bayut, Bproperty.com, Mubawab, and Kaidee? Why not just Zameen.com?
Zeeshan Ali Khan: As Zameen.com and Bayut (our UAE portal launched in 2008) helped transform the local real estate sector in Pakistan and UAE, we realized that the natural progression of our business should be to expand to other countries that could also benefit from our expertise in this domain. We saw the potential for expansion to other territories, and thus Zameen’s parent company EMPG was born. Since then, it has emerged as a pioneer in bespoke online classifieds solutions in emerging markets worldwide, particularly in Asia, Africa, and South America. A series of new initiatives, mergers, and acquisitions have provided us with an international outreach that extends to over 18 countries and allows us to share ideas and solutions across borders for optimal performance and business growth.
As for the second part of your question, the word Zameen has a special meaning in Pakistan, as it represents something much more than a piece of land. However, the same word might not translate well in another market, which is why we either used a name that best encapsulated each county’s heritage and culture, or we acquired existing businesses with existing market recognition — all united under the banner of EMPG.
GVS: Zameen and EMPG have been expanding in the Middle East and the GCC countries; what is the future of these markets for South Asia? Is real estate a reliable investment in Pakistan? What will you advise young Pakistani entrepreneurs?
Zeeshan Ali Khan: While Investing abroad has its own benefits and can be very valuable for some, there needs to be a renewed focus on investing in our local industries. Even though large amounts have been invested in the local real estate sector in recent years, it still needs regularization through the banking sector, mortgage as well as consumer financing.
Historically, real estate investments have been considered the most reliable and safe investment in Pakistan, and for good reason too. Between 2013 and 2019, prices per square feet for plots and residential homes grew by 156%, while land prices grew by a rate far greater than construction costs during the same time period. No wonder then that people in the country prefer to invest in the property market more than anything else.
Amongst Pakistan’s peer countries, the real estate sector in India is expected to reach a market size of USD 1 trillion by 2030 from USD 120 billion in 2017 and contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs. Bangladesh on the other hand has a real estate market size of USD 6.7 billion, which contributes approximately 7.96% to the country’s GDP. Keeping in perspective the population growth rate, the sector is expected to grow at a rate of 15 – 17% per annum.
For Pakistan, the real estate sector contributes about 2% to the country’s GDP, which is significantly lower than our neighbors to the East. However, in light of the increasing population of the country, cities are getting larger and becoming increasingly difficult to manage. This has led to the recent uptick in the development of vertical housing in Pakistan.
Coupled with increased government support, and a renewed focus on the development of high-rises and affordable housing units, the size of the local real estate market is expected to increase exponentially over the next decade. This, in turn, tells us that the real estate industry is going to see unprecedented investment over the coming years, and presents an excellent opportunity for entrepreneurs and potential investors.
GVS: What are your thoughts on the ongoing housing shortage facing Pakistan today?
Zeeshan Ali Khan: Real estate investment has long been the preferred choice of asset class for the masses in Pakistan. It provides the holders with an advantage of appreciating over time, in addition to providing a steady cash flow as well a natural hedge against inflation. However, real estate can be a little problematic at times with the properties having inherent issues which can lead to losses for the investors. Furthermore, a well-performing real estate industry leads to economic activity in more than 50+ allied sectors of the economy.
With the increasing urbanization in Pakistan, the housing shortage is being further exacerbated in the country. Pakistan’s population is expected to reach 242 million by 2025, which shall form the main demand driver across sectors. Furthermore, by 2030, 44% of the country’s population is expected to be inhabiting the urban centres of Pakistan. This shall invariably lead to an increase in the demand for housing and further exacerbate the housing shortage prevalent in the country. The current housing shortage in the country stands at 11.4 million units, which is expected to increase to 17.2 million units by 2025.
Moreover, with regards to the housing shortage problem, Pakistan lags far behind its peer countries in the region i.e. Bangladesh, Sri Lanka, and India. The housing shortage in Pakistan stands at 31% of the total population of the country, whereas India has the lowest in the region with 11%, despite it being amongst the most populous countries in the world.
In order to better utilize the land resources available in Pakistan, the focus is turning to the construction of vertical developments. In addition, while there is no quick solution to the housing shortage issue, one long-term solution could be the promotion of mortgage financing in the country.
GVS: Why housing mortgage markets did not develop in Pakistan, when even in neighboring India, very similar to us culturally and historically, mortgage markets constitute almost 11% of GDP? With your 15 years plus of professional interaction with property and related financial markets what do you think was our failure? What went wrong?
Zeeshan Ali Khan: Pakistan’s mortgage finance to GDP ratio is currently at 0.23%, compared to the South Asian average of 3.4%. It is clear then that the introduction of the mortgage facility in the country is absolutely imperative for the real growth of the housing market. And, as I stated before, there is also an urgent need for the country to make the shift from the informal market (cash) to a more streamlined and documented market.
However, the challenge lies on the supply side; the banks in particular need to take leading role in this regard, but the struggle is convincing people about the efficacy of the relatively new mortgage and home loan system. People need to be educated on the incredible potential of these loans for solving Pakistan’s housing shortage, which presently stands at a staggering 31%. To put this into perspective, this figure is 13% and 20% higher than Bangladesh and India respectively. Therefore, it is evident that the best possible solution to bridge this gap is by further expanding the country’s housing finance facilities.
Mortgages are usually utilized by the country’s salaried class. However, the mortgage rates being offered currently are beyond the common man’s means. In addition, our economy is still cash-based and the government needs to do more to expand the tax net and record credit histories. Once we have the laws in place to regulate the mortgage industry, we need their proper implementation. Only then can we ensure that the banks and the public have enough confidence to utilize these loans. We also need to look into the implementation of subsidized mortgages — with the initiative finding some success in India.
The bottom line is that without a flourishing or at least a stable economy, people do not have the buying power to utilize this facility. The government’s ultimate aim should be to first stabilize and then grow the economy, in addition to providing better financing facilities to the public and educating them on their benefits, as well as introducing a regulatory body that can oversee and protect the interests of the end-users and the banks.
GVS: Sindh, and Karachi in particular, embraced the vertical development trend quite some time ago, while other major cities in the country seem to have been reluctant to do so, preferring to instead focus on horizontal development; which suits Pakistan best given its culture, environment, and youth bulge?
Zeeshan Ali Khan: While investors/buyers across the country preferred investments in horizontal developments, which make up over 70% of the real estate assets in the country, the demand for housing in Karachi was primarily focused on affordable accommodation and lots of it. This has caused massive migration to take place in the city, and led to the development of the infrastructure required to support the rising population.
In addition, land rates in Karachi have traditionally been quite high, as compared to other parts of the country, hence the demand in Karachi for relatively cheaper vertical housing options. As an example, in 2019, the price of residential property in Lahore was, on average, PKR 5000 per square feet, while the price for the same in Karachi was more than double, at around PKR 12,000 per square feet. When combined with the prevalent mind-set in Punjab to construct horizontal developments and the prevailing plot-based market in the region, vertical projects just never took off in the province in the past. However, now, prices of horizontal developments have almost doubled over the past few years and this has led to a rise in demand for vertical living options in the country.
Moreover, the government’s support for the development of high-rises has made developers and consumers more confident in investing in such construction projects. It is also the best option we have to mitigate the urban sprawl that threatens to destroy our environment.
There is a constant rise in the demand for vertical residences in our major cities including Lahore, Faisalabad and Multan, and we are not surprised to see that high-end projects are being well received by genuine buyers. Even a few years ago, Zameen.com was marketing and selling only one vertical project in Lahore. Today, this number has grown to above 35,
and a similar trend is being observed in other cities across Punjab and KPK.
I strongly believe that real estate builders determine real estate trends, and as an increasing number of major developers shift their focus to vertical developments, the buying trends in the local property market will change accordingly. Combined with the changing demand for housing amongst the youth, and their growing understanding of the positive environmental impact of vertical developments, we will soon see a shift in the market that may have a long-lasting impact on the construction industry.
So, with just the right push, Lahore has the infrastructure in place to easily support the development of high rises, as do all the other major cities in the country.
GVS: What happened to RERA? Zameen had strongly welcomed the idea in 2019; but apparently there is not much progress. Has the idea collapsed?
Zeeshan Ali Khan: Real estate in Pakistan has operated informally for a long time and Zameen.com takes great pride in its efforts to change that trend. This is why the company has always supported reforms that may have a positive impact on the local property sector. However, we should be aware of the fact that at the ground level, the mechanisms that govern this sector are still steeped in tradition and will improve gradually, although only through constant attention and upgradation. Additionally, we are a private entity and there is only so much we can do – in the end the onus is on the government.
The Islamabad Real Estate (Regulation and Development) Act, 2020 has already been passed, and the process of establishing the authority is underway. However, as with any new policy, there are still a lot of questions that need to be answered in order to determine the efficacy of this initiative. Currently, it is not clear how the provinces are going to react to this law, as they may prefer amending the law based on their specific needs. In addition, the rules and policies that govern the authority have not been drawn up as yet, so we do not know what the practical impact will be on developers and real estate agents. While the authority has been established to comprehensively regulate developers, builders and real estate agents, its main purpose is to protect the buyers and investors. However, the rules and regulations are being drawn up without consulting with any of the developers, estate agents or other relevant stakeholders, which may cause friction and undue problems down the line.
By involving all the relevant stakeholders and asking them for suggestions and feedback, the government can help grow confidence in RERA and the real estate industry. The government will also have to work out a method to ensure that RERA works in tandem with other parallel authorities that oversee the country’s property sector, and to ensure that all requisite NOC’s, approvals etc. are issued within the predetermined timelines.
Once RERA has been introduced, it should then take a leading role in the promotion of mortgage finance in the country, by bridging the gap between the banks, consumers and developers.
GVS: How do you look at Imran Khan government’s initiative for low-cost housing, being spearheaded by Naya Pakistan Housing Authority (NAPHDA)? What have been its strengths and challenges?
Zeeshan Ali Khan: Urbanization in Pakistan is on the rise and according to certain metrics, it is on track to cause the population numbers in the country’s major cities to double over the next decade. This, in turn, is expected to make the ongoing housing crisis faced by the country’s real estate sector to get exponentially worse over the same time period, as housing options are already limited for a large section of our public.
Trying to resolve a housing shortfall of over 5 million units is a huge challenge for any country. Keeping in mind the present economic conditions and the rising inflation, this task becomes even more daunting. However, the current government has intelligently involved the banks in order to resolve the situation — a standard pattern followed worldwide — and we are hopeful that this initiative will help provide a resolution that is beneficial for all parties involved.
So far the banks have set limited criteria for issuing home loans, and as a result, a large percentage of our population will still struggle to meet the requirements for receiving a loan. In this case, a workable solution could involve providing developers that are working on low-cost projects with subsidies on construction material so that they can ensure that the per-unit price remains affordable for the majority of the public. Providing subsidies on land and taxes is an even better option, although banks would have to be more forthcoming and willing to take greater risks for this initiative to be a success in the long term. The government can also look into public-private partnerships to help fund the initiative but will have to offer private entities sizable profits in return for their investment and expertise.
GVS: Political opposition taunts: where are the five million houses? Do you think this dream of five million housing units was realistic given that Dubai has made only around 2.5 million units in last 20 plus years? What are Pakistan’s challenges in terms of capacity, demand and supply? Why housing shortages could not be resolved over past seventy years?
Zeeshan Ali Khan: As I said earlier, the scale of the housing shortage problem is immense and cannot be resolved in a relatively short period of time. One of the major problems facing the industry is a lack of regulatory authorities and the absence of actual implementation of existing regulations. The authorities that do exist are slow moving and each process involves a lot of red-tape. Project approvals can take months and even years, and may involve high processing fees or other unforeseen costs. Additionally, a weak economy and the limited spending power of our public further limits the potential of the real estate sector.
Fortunately for the country, the current government is aware of these issues, and has made several positive moves to mitigate the effects of rising urban migration. They have announced policies that have empowered the local property sector and the banks, and allowed for the development of cheap and affordable housing, as well as led to a renewed focus on the construction of high-rise developments, particularly in areas where traditionally they have not been popular like Lahore.
While the construction of 5 million housing units may appear to be an ambitious undertaking, considering the extent of the housing problem in the country, it is the absolute minimum target that the government has to set if they want to make even a small dent in the country’s housing shortage issue. Even if they fall short of their target, any move to try and provide disenfranchised communities with a roof over their head is a positive initiative in my opinion, no matter how long it may take.
GVS: What affects does the gap between current inflation and supply have on the market?
Zeeshan Ali Khan: Inflation has been a long-standing problem of Pakistan’s economy. This has been further aggravated in the last few months which has led to an unprecedented increase in the prices of commodities. The rampant inflation has also affected the cost of housing, and as such the ongoing development in the sector is in danger of fizzling out if the existing trend continues.
Like other industries, real estate is also heavily dependent on imports of raw materials and as inflation rates grow internationally, they will have an obvious effect on local prices. In
addition, Pakistanis already have low buying power and exports are stagnant. However, even though rising inflation negatively affects the demand for real estate, construction costs in Pakistan are still the lowest in the region, which has enabled developers to maintain a steady supply of projects. In short, the rising inflation has a bigger impact on the demand for real estate than it does on the supply side.
The government amongst other measures needs to have a price control mechanism as well as encourage the development and establishment of industries for producing the required construction material locally. This shall not only provide an impetus to the economy but will also reduce the import bill of the country thereby addressing the balance of payment issue.
GVS: Coming back to Zameen; what is the significance of joint ventures or merger with OLX? How has it helped you given that Zameen itself was drawing more than 5 million visitors on its sites?
Zeeshan Ali Khan: The OLX merger was announced in April 2020, and was prompted by our pursuit to constantly evolve. Now, in light of the merger, EMPG is valued at USD 1 billion. In Pakistan, Zameen and OLX are being operated as two separate entities, and the main aim of the merger was to help EMPG diversify its portfolio. The merger has been quite beneficial for both companies, as they recorded a growth in their traffic numbers and listings and hopefully more synergies will eventually lead to facilitating our clients and the public by offering them better products.
GVS: Zameen came up with the Real Estate Price Index (REPI) in 2016; what is its significance? How has it helped the property markets and investors so far?
Zeeshan Ali Khan: A real estate price index is usually curated by the government, as seen in several other developed countries. Due to a lack of support, Pakistan does not have any such facility available, which is why we decided to introduce it for the first time ourselves. The process to set up a price index was a difficult one, especially being a private enterprise and the fact that the market is unregulated. However, with the help of our dedicated resources, we have managed to set up a system that now features over 400,000 new properties every month, and is unequivocally the most accurate price index available in the market today.
The index provides real time fluctuations in property price and buying trends. Since most of the users on Zameen.com are potential buyers and investors, that data presented through the index is aimed at keeping them up to date with the various developments taking place in the property market, and to ensure the transparency of each real estate deal. In addition, the index also provides a pretty good idea of where the market is headed and I personally know many real estate agents and developers that make business moves based on the assessments made from these trends.
GVS: In Nov 2019, Zameen introduced, a new tool, “Plot Finder” but many wonder how is it any more useful than standard Google searches? What are you offering that Google is not offering?
Zeeshan Ali Khan: Most google services are aimed at audiences within developed countries, which is why google creates and updates data and develops services that are mostly used in these regions. So, as a result, home addresses are easily searchable in the US or the UK. However, this is not the case in developing nations like Pakistan. Services like Google Street View work quite well in other countries but are still not available in Pakistan due to a lack of relevant data available here. Similarly, google provides photogrammetry services for developed countries only.
The idea of Plotfinder is to provide a utility that will fill the gap of map based services for Pakistan. Property agents across the country actively use this service to showcase their properties and their surrounding areas to potential customers online, including non resident Pakistanis. Currently, we have launched the basic version that allows people to search for addresses, but we have plans to significantly add to this service in the future. For companies like Google, it seems that Pakistan is not a priority but for us it is.
Plotfinder is offering searchable house addresses within Pakistan, data for which even Google does not possess. To date, we have covered 42 cities, 4000+ housing societies, 2.6 million+ house addresses and this data is growing day by day. In addition, we have a dedicated team of engineers, and digitizers and surveyors for the collection of data for the service.
GVS: You started the concept of Property Exhibitions with Pakistan Property Expo in 2013, since then you have organized 16 such Expos in Pakistan and abroad, now you are holding “Pakistan Property Event” in Dubai in December; what has been the impact in measured terms for your Zameen and property markets?
Zeeshan Ali Khan: The Pakistan Property Expo was an initiative that we undertook in order to showcase the best that the local property market has to offer under one roof. It gave the developers signed with Zameen a chance to interact with potential investors and buyers face to face, and it gave our customers the opportunity to explore various real estate projects and avail special event-only discounts.
While we have organized events like these across Pakistan multiple times, we have also managed to do so in Dubai on three previous occasions. The first Property Expo in Dubai took place in 2017, with two more events taking place over the coming two years. The last Dubai Expo featured over 64 exhibitors and managed to record a footfall of over 21,000 in just two days. The event was a smashing success and Zameen managed to generate thousands of new leads, particularly from non-resident Pakistanis interested in investing in their home country.
Now, we are busy planning our upcoming Pakistan Property Event, which is the international iteration of our local property events that we have held over 50 times in various cities across the country. This will feature only the projects that are signed on with Zameen for marketing and sales services, as well as projects developed in-house by Zameen Developments. Considering the amazing response received by the recent Dubai Expo 2020, and in particular the Pakistan Pavilion, we expect the upcoming PPE — scheduled for December 3 and 4 at the Pakistan Auditorium, Pakistan Association Dubai — to be a smashing success.
In addition, after a break due to the COVID-19 pandemic, we have already begun work on resuming our Property Expos from 2022 across Pakistan and abroad. This presents an excellent opportunity for non-resident Pakistanis living in these regions to explore some of the best real estate options available back home.