An alumnus of University of Cambridge and Queen Mary University and an established businessman in the UK, Shafiq Akbar began his professional journey in Pakistan five years ago with the aim to revolutionize the real estate sector in Pakistan. Under his leadership, the Imarat Group launched a real estate online marketplace, as well as a real estate certification programme in collaboration with NUST. BR Research recently had a virtual conversation with him to learn about Graana.com and its potential within the context of the growing real estate industry. Following are edited excerpts:
BRR: What made you create graana.com?
Shafiq Akbar: I have worked in the real estate sector nearly all of my professional life. Returning to Pakistan and seeing the enormous potential of the sector, I wanted to bring my knowledge and research to the real estate industry in Pakistan.
Despite its potential, the sector’s image is limited to buying and selling through a broker, when in reality, it is quite expansive. It has several sub sectors; construction, tourism, hospitality, are all part of real estate. Within construction, there are many associated manufacturing industries that feed into the larger industry. Cumulatively, I would say, the value of real estate of Pakistan is $1.4 trillion, of which $900 billion is planned. As a country, we should be looking to build the real estate sector which can become a foundation for economic growth and revival of the country’s economy.
As far as Graana.com is concerned, we are digitally mapping each and every land. Lets say that there are 8 million units within the planned area; of those, we have digitally mapped more than 4 million units. When I say digital mapping, I mean we are mapping the title register of the land as well as its title plan. These provide proof of ownership and details of property ownership.
Why is that important? In Pakistan, about 60-70 percent of the court cases are related to real estate, primarily due to ownership. So, with Graana.com, we are creating a digital register, working with all the stakeholders across the value chain: estate agents, online property portal, conveyancing etc. In developed countries, you can also get inspection reports when a real estate transaction happens, which is also something we are working towards. We believe that by incorporating this, a lot of malpractices will be eliminated.
BRR: Regarding the clarity of land titles and proper demarcation, the problem is that the chain of ownership is not visible and clear. The historical reference of transfers for every parcel of land is not captured by existing records which means the new owners of the land may not possess a good “root” of the title. This makes title deeds insecure. How do we tackle this problem?
SA: There are two main classifications of land in Pakistan: planned and unplanned. In planned lands, the approval comes from the local regulating authority. When you have the title register, it includes information about the property ownership and that if it is free from litigation, etc. However, the problem you have highlighted arise in unplanned locations, regardless of whether it is computerized or functioning manually.
Digital mapping is the start of the solution. After that, land registration data must be centralized and it should communicate across departments, planning agencies and registries so all transactions are captured. This is the only way to combat the issue of unclear title deeds.
BRR: What are the major challenges that are holding the real estate sector back?
SA: I identify four overarching issues: lack of planning, lack of regulation, lack of access to information and malpractice. If there is proper planning and regulation, the client makes an informed decision, then there is no room for the existence of malpractice. Do you know that 40 percent of the real estate capital gets stuck due to malpractices?
Developed countries have removed these four hurdles and unlocked the potential of their real estate sectors. At least for the planned lands, these issues can be eradicated within six months. For unplanned areas, we need to give it at least 5 years.
The Prime Minister is aiming to build 5 million houses in five years, of which some will be low-cost. If we construct 1 million houses every year till 2040, we will only be able to fulfill 60 percent of the demand. By the third year, 2.5 million jobs can be created. Since construction will cover both urban and rural areas, people at the rural level will also empowered, that would otherwise look towards urban migration. I believe, the PM’s mantra of 10 million jobs and 5 million houses can actually add up. Reviving the economy through the real estate, what we refer to as “reconomy” will help to unlock the true potential of this sector, given the regulatory, planning and legislative challenges are dealt with.
Planning and effective implementation would mean planning for urban and rural alike, and implementing policies in a way that it is easily acceptable by developers and agents.
BRR: Tell us about the business model and your future plans.
SA: Along with Graana which is for marketing and sales, we work with our estate agents, through our company PropSure Digital Solutions that does digital mapping. We are working with all the stakeholders, to capture all kinds of real estate transactions. We ensure transparency through inspection reports and conveyancing services all from the same window. In order to do all of this, we have offices all over Pakistan, with five different technologies, with the aim of bringing best practices to our country.
BRR: What kind of real estate development are you doing through Imarat?
SA: As the Imarat Group of Companies, we have partnered with Marriott International in Islamabad to bring two hotels. We are setting up industrial zones as well and have partnered with a big group from Turkey to build construction material factories; six projects are being developed in Islamabad and seventh one is also on the way. We are present in the entire value chain of real estate, from land acquisition to sales and marketing, to operational and facility management.
BRR: What success have you achieved so far in capturing real estate transactions through Graana?
SA: Unlike other real estate portals that exist in the market which typically only work as classified or market properties through real estate agents, we take a step forward. We don’t just bring the buyer and agent together or list properties on the portal, we can also oversee the entire process of the transaction. We have already conducted thousands of real estate transactions where we have key real estate agents part of this program. Within that scope, we are providing different services including inspection reports and conveyancing services which will allow us to seamlessly and transparently transition real estate transaction online. We earn a service charge on transactions happening both in the primary market as well the secondary market.
BRR: How have you funded this venture? Is it entirely in-house or have you received external funding too?
SA: I was an established businessman in the UK. I started off with my own savings, and have not acquired any external funding so far. However, in the future we when we launch the service in other countries of the world, we may obtain it.
BRR: The Prime Minister has been very vocal about promoting the construction and housing industry for which the construction amnesty was announced earlier this year while the Naya Pakistan Housing Scheme was announced right at the outset aiming to build 5 million houses. Where do we stand in accomplishing this target?
SA: Intelligent policy design and effective implementation are a fix to all the problems. The construction package is part of the solution. But to achieve what we aspire; we need a comprehensive plan. How will the people get these housing units under this scheme? They have to be enabled first.
Pakistan has immense potential in terms of labor and land. Pakistan has the highest per capita demand for housing. During the next decade, it is estimated that there will be 60 million more youth between the ages of 25-35 waiting to enter the labor force. If not utilized productively, these may turn out to be a burden. Do we have enough jobs for them? The government needs to have a long-term focus on planning for industrial growth and employment. I believe, if real estate and its allied sectors are leveraged to their potential, Pakistan can become a $1.5-1.7 trillion economy by 2040.