The Competition Commission of Pakistan (CCP) has decided to regulate real estate sector, estimated to have value of around Rs 7 trillion, covering private housing schemes and societies operating without any strict monitoring and regulations.
Sources told Business Recorder that the CCP within the laid down mandate of the Competition Act, 2010 would fully regulate the real estate sector. Pakistan's real estate sector, estimated to be around Rs 7 trillion in value, remains practically unregulated with little or nearly no regulatory check on the private housing schemes where millions of Pakistanis invest their lifelong savings with the hope to own a personal home.
According to the CCP, Pakistan is facing a shortage of around 9 million housing units thus offering great potential for investment in the real estate sector. Seeing this potential, big investors are buying mostly agricultural land by paying nominal amount to the owners and announcing housing schemes. However, due to an effective regulatory oversight, there is no check on the authenticity of these housing schemes. Small investors get lured by their marketing campaigns, invest their lifelong savings with the hope to get a piece of land to build own home, but mostly end up getting nothing in return.
The Competition Commission of Pakistan (CCP) recently took the lead in providing a platform to all stakeholders including the consumers, investors, real estate developers, marketers, and the concerned government bodies to discuss the issues surfacing in the real estate sector. The CCP's open hearings on 'Competition Issues in the Real Estate Sector,' held in Islamabad, Lahore, and Karachi last week were attended by stakeholders in consumers in large number.
The Competition Act, 2010 empowers the CCP hold open hearings on matters affecting the state of competition in Pakistan. While the Act also empowers CCP to keep a check on the businesses that market or advertise their products or business ventures so that they don't deceive consumers through fraudulent or false claims.
The CCP was receiving a large number of complaints and concerns from consumers against the housing societies for making high claims in their marketing and advertising campaigns but offering very little on ground. The CCP took certain enforcement actions against housing societies as well. However, it decided to consult all stakeholders at large to get their viewpoint and form its opinion on pertinent issues.
The CCP concluded the three open hearings on the Real Estate Sector. The CCP's bench, comprising the Chairperson Vadiyya Khalil, and members Dr Shehzad Ansar and Dr Muhammad Saleem, conducted the open hearings in Karachi on Thursday, 19 April, and in Islamabad and Lahore on 11 and 17 April. The representatives of real estate associations, builders, developers, marketers, regulators, ministries and other relevant government offices, and consumers in large number attended these hearings.
In her opening remarks, Chairperson Khalil said that the real estate sector plays a crucial role in contributing to economic growth and in helping people achieve a lifelong aspiration of their own home. However, she said, the CCP continues to receive a number of concerns and complaints from consumers about deceptive marketing practices and other pertinent issues in the sector. The open hearing, she said, has been organised to discuss those and other relevant issues so that CCP can take necessary measures under its mandate to help resolve those issues.
The attendees complained of being subject to deceptive marketing practices by the developers and marketing companies and said that, in most of the cases, the facilities being promised in the marketing campaigns were not provided. They also highlighted other issues such as overbooking of plots, delay in giving possession of plots, and approvals - or lack thereof - by the relevant authorities for various housing schemes and societies.
The marketers and developers claimed that because of no regulatory oversight of the real estate sector and no effective monitoring of real estate development projects, all stakeholders were suffering. They strongly recommended that there should be independent and effective regulation of the sector. The concerned government entities gave their perspective and said that they were aware of the issues faced by public and were trying to resolve those issues.
In her concluding remarks, the Chairperson Vadiyya Khalil thanked the participants and said that CCP will analyse the deliberations of the open hearings and other pertinent facts and issue its opinion into the matter.