Significance of Professional Education and Specialist Training in the Real Estate Sector
Real estate activity in Pakistan has been booming in recent years. It has become a lucrative investment field for both local and overseas investors. However, there is a shortage of professionalism and academic research and development in the real estate industry. Most investors in this sector have previously experienced a scam investment or a fraudulent investment scheme. Pakistan’s real estate sector also lags in technology adoption and transparent practices, which increases the chance of speculation-driven price increases rather than letting market forces regulate it. Lack of formal education in real estate is directly responsible for most of these problems. To make the real estate sector a professional and intellectual field of study, Graana.com is leading the formal education sector in Pakistan. The company has collaborated with the National University of Sciences and Technology (NUST) to provide a real estate certification course. In addition, Graana.com has partnered up with the University of Central Punjab to start a four-year professional bachelor’s degree in real estate. These developments mark the beginning of professional education in the real estate sector of Pakistan.
Growth of the Real Estate Sector in Pakistan – Incentives and Opportunities
Compared to the real estate sector in developed countries, the perception of real estate in Pakistan is primarily negative due to a lack of transparency, regulations, and widespread malpractices. Pakistan is the fifth most populous country in the world. The demand for real estate development is growing exponentially, citing population trends and growing economic and industrial needs. In the next ten years, nearly 120 million people will require homes in Pakistan. Considering that the average family size in Pakistan is around six individuals, the actual requirement for homes will be around 20 million housing units. To cope with this demand, the Prime Minister of Pakistan envisions 1 million housing units every year. Although many remain sceptical of this tall claim, it is not impossible. Real estate has the highest potential of all other sectors of Pakistan’s economy. More than 80 per cent of a country’s total asset value is based on real estate. Pakistan’s total real estate assets are valued at USD 1 trillion. According to the Ministry of Commerce, the real estate sector was valued at around USD 600-700 billion seven to eight years ago. There is also more than 25 per cent year on year growth in terms of value in planned areas of Pakistan.
Pakistan’s currency is shedding its value at an annual rate of 5 per cent compared to the US Dollar. This is a massive challenge for the country’s economy. Even if the economy grew, in 20 years, the actual worth will be equal to half of the estimated value. The real estate sector can help change this situation. However, the industry is the biggest challenge for the country and, at the same time, holds the greatest opportunity too. Currently, more than 70 per cent of court cases in Pakistan have to do with real estate. However, in terms of opportunity, the demand for real estate expansion is calculated at USD 1.5 to 2 trillion, which can be fulfilled through construction, real estate development, and allied industries. There are around 4.5 million units in planned areas of Pakistan, which makes 0.5 per cent of the total land of Pakistan. This planned area is worth USD 500 to 600 billion. If the required demand for housing units in the next 20 years is met using planned areas, it only requires an additional 1 per cent of the land area of Pakistan. Consequently, it will add USD 1 trillion in value to Pakistan’s real estate sector, and most of this will be in the form of low-cost housing.
In order to make 1 million homes every year, Pakistan requires USD 29 billion annually to be invested in real estate. Looking at overseas investments in Pakistan, a total of USD 25 billion was invested last year in the real estate sector in remittances and direct investments. However, up to 70 per cent of these investments get stuck due to a lack of regulation and lack of best practices. If Pakistan realises the potential of its RE sector using effective regulatory measures and introduction of professionalism, issues of economy, employment, industry, and agriculture can be solved.
It is estimated that in the next 20 years, Pakistan will spend USD 750 billion in construction activities alone. However, more than 70 to 80 per cent of building material is currently being imported by Pakistan. This can be tackled by allowing foreign companies to establish their manufacturing plants in Pakistan. It only requires the availability of a proper framework under which these companies can perform. Therefore, the real estate sector holds the key to revitalising the economy and providing jobs and employment to the over burgeoning youth of Pakistan. Although Pakistan is gifted with a knowledgeable and talented youth base, a lack of self-confidence remains the most significant factor in implementing positive changes.
Academia-Industry Linkage in Promoting Entrepreneurship and Job Opportunities in Pakistan
The contributions of Mr Shafiq Akbar have been tremendous in bringing innovation and revolution to the real estate sector of Pakistan. The University of Central Punjab has launched a BS program in Real Estate in collaboration with Graana.com and the Imarat Group of Companies. The industry-academia linkage is very important for the development of any sector. Since the first university in the 10th century in Morocco, set by a Muslim lady named Fatima, the first two generations of universities played a pivotal role in societies as creators of new knowledge and acted as agents for the dissemination of knowledge that already existed. Then came the entrepreneurial university, which focused on transferring the newly created knowledge towards the industry. And now universities have moved towards exercises in sustainability from a whole spectrum perspective.
As the universities grow better, they continue to strive to attain higher linkages between multiple stakeholders of society. In the first and second generation of universities, the industry required input on what research must be carried out. This usually meant that the challenges faced by the industry were highlighted, and research was carried out in order to mitigate those challenges. It also resulted in the establishment of further sectors. Industry academia linkages are also strategic. It is very important to have a national innovation ecosystem to promote innovation and economic development in any country. The industry, society, and government universities must come together in collaboration. Countries pursuing innovation and development can be seen as having a strong and intimate system of industry-academia linkages.
Industry academia linkages can bring a win-win situation for an economy in any country. A university’s essential function can be described as providing the human resource that the market needs. Human resource development is the first step towards uplifting a slow or stagnant economy. A strong linkage between industry and academia can ensure that necessary skills required by the industry are taught to students for better employment opportunities. At present, the universities are churning out students that are not fit for the market.
Knowledge transfer is another function of universities. However, most of the knowledge taught to students is either outdated or not relevant to the industry. Therefore, there is a need for strong industry-academia linkages so that only relevant and valuable knowledge is transferred to future generations. The concept of entrepreneurial universities has also become very popular over time. These universities focus on partnerships, networks, relationships with public and private organisations and force interaction, collaboration, and cooperation among the core elements of any national innovation ecosystem. For example, Stanford University, after the first world war, established the Stanford Research Park. They incentivised the industry to be located over there, which gave rise to what is now known as Silicon Valley. The research and innovation carried out at Stanford Research Park fuel the world of technology all over the world today. Coming to the United Kingdom, Cambridge Science Park was established nearly five decades ago. The purpose was to promote technology start-ups in the UK. More than 7000 people are working in that science park today, with more than 130 companies that operate worldwide. Moving towards China, their investments in universities in the late 1990s can be seen today as they emerge as a significant world power. A science park was established in 1994, which hosts more than 25000 employees and 400 companies now. All these universities aim to become a bridge between innovation and technology in the industrial zone.
Coming to Pakistan, its universities are primarily in the first-generation model, where the focus is mainly on spreading the already existing knowledge. However, they have begun to realise the importance of industry-academia linkages. A striking example is the National University of Sciences and Technology (NUST), which established it’s National Science and Technology Park (NSTP). Similarly, NED Karachi and IBA Sukkur. Bahria University and Air University are also moving towards establishing science parks for generating and cultivating a culture of innovation. However, there are some challenges concerning Pakistan, such as there is no national innovation ecosystem, public policy, or incentive that require industry-academia linkages to be formalised. Also, the industry shares its problems with universities and requires a perfect solution; however, students who are not exposed to industries cannot give a complete and integrated solution for such issues. Lastly, local industries are generally reluctant to spend money on research and development. They expect this to be done by public entities or the higher education commission.
If proper industry-academia linkages are established, it can not only lead to enhancement in entrepreneurship and generate employment, but it can also stem out entities that leverage on the reservoir of stronger industry connections. In terms of a way forward, Pakistan requires a national innovation action plan. A proper policy framework is the need of the hour. Industries can be given incentives and tax breaks if they collaborate with universities. Secondly, these linkages depend heavily on a country’s technological and institutional endowments, showing a willingness to contribute towards these linkages. As part of the broader Science Technology and Innovation Policy Program, a policy was made in 2012 but remains unimplemented. Incentives must also be given to universities to transform into third-generation institutes in line with modern trends. Establishment of incubators, science and technology parks, and other innovation centres must be encouraged and become part of the university ecosystem.
Real Estate Education – Taking the First Step
Imarat Group of Companies has taken the first step towards establishing industry-academia linkages in the real estate sector of Pakistan. Real estate is the second-largest sector in employment; however, no real attention towards educating professionals has been paid over the years. This has led to people setting up estate agencies with services offered by “property dealers” all over Pakistan that are more known for their malpractices in the market. The activity has accrued a negative perception towards the professionals working in the sector. This perception is now being changed through education, and the establishment of best practices followed worldwide.
Real Estate Science Level 1 offered by Graana.com in collaboration with PDC NUST was the first step towards making this change. The course targeted a foundation level knowledge for individuals who are not well versed in the best practices of real estate markets. The study looks upon real estate history and moves on towards Pakistan’s land and revenue system. One cannot understand the real estate sector unless there is a firm understanding of the country’s laws governing land, revenue, and tax. The course discusses laws and regulations and the differences between a real estate agent and an advisor. The course also details the features of primary and secondary markets specific to Pakistan. Perhaps the most crucial part is highlighting the ethical and moral standards required by a real estate advisor. Market malpractices are explored to understand the scope of right and wrong practice. Lastly, the course delves into the technology side of real estate. It explains the impact and role of the latest technologies like blockchain and Artificial Intelligence (AI) in the real estate sector.
Role of Federal and Provincial Governments in Promoting Best Practices in the Real Estate Sector
When considering the role of the state and private sector, the government’s role is that of a facilitator of activities that boost the private sector. An environment is created by the government where the private sector is flourished. Historically, in the first four decades of Pakistan’s creation, the real estate sector saw activity sponsored by the state to develop satellite towns and housing societies. However, in the last two decades, the private sector activity in real estate has generated significant momentum. Pakistan has seen players that define a thriving market, such as brokers, speculators, developers, etc. The real estate market has become self-sustainable now. Nevertheless, the state is not catching up with the level of growth achieved in the real estate market. There are huge gaps in terms of unlocking value potential through regulatory measures and job creation.
Pakistan has a plethora of sound policies that remain unimplemented. Policies must be implemented into laws based on objectives articulated in the policies. There is no overarching law for real estate regulation in Pakistan. Financing laws, corporate regulations, and joint ventures are missing in the real estate sector. Currently, there are no requirements for real estate agents in terms of training and education. This is a critical gap in terms of the development of high-quality players in the market. Another weakness is that every other sector has a trade body on the federal level; however, there is no thriving trade body in the real estate sector of Pakistan. Some authorities encompass builders across Pakistan, but the real estate sector is broader than just construction. Therefore, as long as proper implementation of laws and regulations are not practised, the challenges of the real estate sector will remain challenging to mitigate. There also needs to be a dispute resolution mechanism that can swiftly accommodate the large number of cases pertaining to real estate on a timely basis. Financing is another issue. The mortgage market is essentially non-existent in Pakistan, and the State Bank of Pakistan has recently brought welcome initiatives for boosting the mortgage sector. However, the collaterals demanded at the last stages of the application make many people ineligible for the scheme. Digital land records are another challenge for the real estate sector. Lastly, in terms of skills and training in the real estate sector, it is the responsibility of the government and the private sector to provide it.