Value Extraction from Land and Real Estate in Karachi

The Case of Karachi:

Karachi is the fastest growing mega city in the world (Wendell 2012). It is Pakistan’s only international port and contains 10 percent of the total population of the country and 25 percent of its urban population. It generates 15 percent of the national GDP and 42 percent of value added in large scale manufacturing. It provides 25 percent of federal government revenues and 62 percent of income tax (Master Plan Group of Offices, 2007). In spite of being a major industrial city of Pakistan, 75 percent of the working population in a 1990 survey worked in the informal sector which mostly operates out of low income settlements mainly in the garment, leather, textile, carpet and light engineering sectors. It is unlikely that the number of persons working in the informal sector has decreased in percentage terms but a link between formal and informal sectors has been established with the formal sector sub-contracting work to informal establishments. The growing importance of the city in the national economy is reflected by the increase of cargo handled by the Karachi Port Trust (KPT) which was 2.8 million tons in 1951 and 32.3 million tons in 2005-06 (Government of Pakistan, 2007). All these factors play an important role in land and real estate conversions and contribute to the continuing migration to Karachi from other regions in Pakistan and from other countries, such as, Afghanistan, Bangladesh and Burma.

Karachi’s population in 1941, the last census before Independence in 1947, was 435,887 and its built-up area was less than 100 square kilometres. Today, its population is estimated at 18 million and its metropolitan area is 3,527 square kilometres (Master Plan Group of Offices, 2007). A major increase in percentage terms took place at the time of Independence when the population increased from about 450,000 to more than 1,435,667 in 1951 (Government of Pakistan, 2007 / Master Plan Group of Offices, 2007). This increase was due to the migration of Muslims from India. It was also accompanied by outmigration of Hindus to India from Karachi. 600,000 migrants had to be housed and most of them occupied the houses vacated by the departing Hindus.

Most of the departing Hindus came from the merchant and trading communities and lived in lavish homes and beautiful neighbourhood in what is today Karachi’s inner city. This beautiful inner city has been devastated because of severe social and physical degradation. The houses in which one rich Hindu family used to live are now inhabited by many poor Muslim families. To house the increase in population additional floors in concrete have been built over beautiful stone buildings. Many community buildings have also been occupied and converted into homes (Cheema, 2007/ Hasan et.al, 2013). Cargo terminals, the port and the intercity railway network were also located in the neighbourhood of the old city. Wholesale markets and small manufacturing units were within the old city but formed no more than three percent of its area. As Karachi grew, the wholesale markets and small scale manufacturing and their related warehousing also expanded. In the process the male only migrant working class population increased to serve these facilities. Most of the two to three storey homes were pulled down and replaced by warehousing and commercial and industrial activities on the ground floor with worker’s accommodation on the five to six floors above. These developments have also meant a large increase in the movement of the number of heavy vehicles in the narrow lanes of the inner city. This has meant further degradation and traffic congestion. As a result of this degradation, much of the better-off population of the old city has relocated to the new housing schemes developed by the Cantonment Boards and the Karachi Development Authority (KDA). Very few old neighbourhoods survive in the old city and that too in a very hostile environment (Cheema, 2007). 

The result of these changes has seen a massive increase in the value of land and property in the inner city because the markets and its working class is now located there. Attempts at shifting the markets to the bypasses of the city, which have been proposed many times by the local government, have been resisted by the market operators and the working class population.