Value Extraction from Land and Real Estate in Karachi

Since the 1960’s, there has been an increasing gap in the demand and supply of housing in Karachi. At present, the demand is of 80,000 housing units as opposed to a supply of 30,000 by the formal sector per year.  This supply gap is made up by the supply of 32,000 housing units in the informal settlements known as “katchi abadis”. These katchi abadis have been developed on the Board of Revenue lands through an informal agreement between government officials, politicians, informal developers and village elders who also lay a claim on the pasture lands around them. 62 percent of Karachi’s population lives in such settlements today. These settlements began as shacks but over time have built proper houses and acquired physical and social infrastructure through government programmes, through lobbying political parties or self-help supported by NGOs and informal developers. The value of land as a result of this development has increased enormously and so have rentals. In 1991, land in the katchi abadis on the periphery of the city was Rs 176 (US$ 1.76) per square metre or 1.7 times the daily wage for unskilled labour at that time. By 2008, this had increased to Rs 2,500 (US$ 25) per square metre or 10 times the daily wage for unskilled labour (Hasan, 2008).

More recently, the government has initiated what is known as the “Goth Abad Scheme” (village rehabilitation scheme). According to the scheme, the villages on the periphery of Karachi are given ownership documents if they can prove that they are the original inhabitants of the village. Once regularised, the land of these villages comes into the Karachi land market. This land is either formally or informally developed through a “joint venture” between the community, an informal developer and relevant government officials. Again, communities have benefitted from the sale of this land while also holding onto land for their homes. But again, there is a major difference between the skills that the original inhabitants have as compared to the livelihoods opportunities the city offers. 

A large number of communities have been displaced to the periphery of the city due to infrastructure projects, especially roads. As a result of this displacement, they have become poorer. However, the value of the properties along the roads has increased considerably. In much of the land which has been vacated and its neighbourhoods, informal and low income formal housing is being replaced by what is known as commercial “plazas” and higher income housing (Urban Resource Centre Website). In addition, parks and amenities are also being occupied illegally for commercial and residential purposes. In this process government agencies and even the international corporate sector are involved. Communities and concerned citizens have sought relief from the courts against these encroachments (Shehri Website).

Two other phenomena are taking place in Karachi. One is the bulldozing of settlements on government land by a powerful nexus of developers, bureaucrats and politicians. This development is for formal sector commercial and residential purposes for lower and lower middle income groups. These bulldozings take place on small lots of land which are marked for development under local government schemes. Their residents relocate to the city periphery (Urban Resource Centre Website). The second phenomena is the legal and illegal conversion of residential areas into commercial zones. Legally, the local government declares a certain residential corridor as a commercial one. This means extra floor area ratio, a larger number of stories and mixed land-use as compared to residential only land-use. Illegally, people also start opening shops, schools, clinics and offices in their homes. This congests the neighbourhood, taxes the infrastructure but brings considerable economic benefits to the house owners. However, there are always those individuals and families who go to court against such legal and illegal land-use changes (Shehi Website / Hasan et.al; 2013). Over time, the illegal changes are regularised and as in the legally commercialised areas, high-rise construction catering to the corporate sector and high-end local businesses, often designed by the top architects of the city, begins to replace the old architecture of the area.